MORTGAGE ESSENTIALS ~ Learning as much as you can is time well spent

Source: New Condo Guide

By Wayne Karl

Mortgage interest rates, still at historical lows and expected to remain so well into this new year, represent a window of opportunity for those looking to buy a home. The mortgage industry is ultra-competitive, lenders often introduce new products and otherwise there are plenty of options for borrowers.

If you could lock in at a low rate over 10 years, for example, that gives you the comfort of knowing what your mortgage payments will be over that period, while over that time you can also take advantage of any pre-payment and lump-sum payment options to pay down your mortgage.

Another appeal of this scenario is that, as we often point out, experts advise you take a long-term view of your home purchase. For example, there is some talk at the moment about cooling prices and softening sales. But even if that were to happen in your market and housing type, ask yourself: in 10 years, is a home you buy today likely to be worth more or less? If you need an answer to this question, just take a look back at prices 10 years ago. Of course, there are no guarantees, but if you’re in the homebuying mode anyway, today’s low rate environment makes a pretty compelling reason to act sooner than later to take advantage of these opportunities.

Low rates notwithstanding, the banks, financial firms, brokers and other experts still advise homebuyers to practice smart borrowing – everything from putting down a larger down payment to taking advantage of pre-payment options and even “stress testing” your mortgage at a higher rate to ensure your finances can accommodate rate fluctuations or other unforeseen circumstances.

Thee mortgage market is a complex beast, and as a prospective homebuyer, these are not lessons you’re going to learn overnight – nor do you likely want to. You’re focused on saving a down payment, getting your finances in order, searching potential neighbourhoods, choosing a home and, when buying new, selecting interior finishings.

But just as important is to also spend as much time as necessary to find a broker or banker you trust and who knows their business. More so than in any other area of homebuying, you’re going to rely on the advice of this member of your team – now more than ever.

It will prove to be time well spent.