With so many options available in the market, choosing a mortgage plan can be a daunting task. Before venturing out and getting a mortgage plan, it is advisable to educate yourself with all the details and information regarding mortgages. This helps avoid choosing the wrong mortgage plan which would undermine your financial situation for several coming years. Also, being well informed helps in understanding your financial capacities and which mortgage plan will best suit your lifestyle.
Mortgage broker firms and banks have a plethora of plans custom made for individual needs and they would tell you all the benefits you can get from choosing their plans. But in the end it all boils down to how well can you handle your finances and maintain your lifestyle while paying back your mortgage. To keeps things easy, you should do a thorough analysis of your financial needs over both the short and long term horizons. This would help prepare for any contingencies in the future. Usually, the lending agency does a background check on your financial stability and all the current standing assets and liabilities before granting eligibility. They also advise how to resolve any bad credit that you may have accumulated.
There are several types of loan rates available for mortgages which include fixed loan rates, adjustable loan rates, negative amortization rates etc. Regardless of whatever loan rate your plan may have, Annual Percentage Rate or APR is what determines how much you will pay over the loan period. In layman terms, APR determines how much interest you will have to pay for the loan period. Except for a fixed interest loan, you would pay more interest for a longer loan period. For example, a 20 year loan period would cost more interest as compared to a 10 year period for the same principle lending amount.
Apart from the interest, there are other costs associated with a mortgage plan such as Kelowna broker commission, appraisal fees, home inspection cost, taxes etc. Costs can also mount due to certain obligations demanded by the lending bank or mortgage firm. For example, if you decide to pre-pay your loan, you are supposed to pay a pre-payment penalty. Another cost is the Yield Spread Premium. If you decide to get a loan approval through a mortgage broker then it’s expected to pay the broker a commission for getting you a good lending rate. If you bypass a mortgage broker and deal directly with a bank, then you are not obliged to pay the loan officer this cost. Therefore, working smartly can help you cut such costs.
Loan approval period ranges between 3 to 6 weeks. Before choosing a mortgage plan you should inquire about the turnaround time required by the lending bank or mortgage firm. Deciding the loan closing date is the prerogative of the lending agency or bank and finding the right lender who can fund your mortgage within 48 hours of approval of your loan application is crucial to avoid any last minute problems.
Choosing between a mortgage broker and lending bank is debatable because both have their own advantages and disadvantages. Mortgage brokers usually demand a commission for the services they offer. On the other hand they also help you get the best deal available in terms of interest rate for your mortgage. A lending bank would benefit if all mortgage deals fall in high interest range. This is far from the reality and going through a lending bank directly will reveal the truth. Besides, a lending bank does not charge extra fees as commission. You may also benefit immensely if a bank underwrites its own loan deals thus avoiding any conditions or nasty surprises during closure.
Keeping the above information in view should help you get started in your search for the right mortgage plan.