If you’ve got a mortgage renewing or plan to get a new one this year you probably know that it’s more complicated than it used to be. That said, I have some tips and strategies that can help you get the mortgage you need, tweak the one you have, or help you plan for renewal.
To get the best deal, you need options. When you go to your bank, you’re talking to one lender. Their best deal might not be THE BEST DEAL (last months article proved that). It’s also difficult to qualify at a bank if you’re self-employed, have past credit issues, or are finding the stress test a challenge. Credit unions, alternative, and private lenders are increasingly needed to help people get into new homes or refinance their current mortgage.
“What is your best rate”, has become a very difficult question to answer without first having all the information. Mortgage rule changes have thrown mortgage pricing up in the air. Your rate depends on a whole list of factors, which is why you can only get an accurate rate quote after an in-depth assessment of your personal situation. So be careful when checking out discount rate sites as they often over promise before they have the full picture.
The devil is in the details. People tend to focus on rate, but you can save thousands by making sure you get a mortgage that has fair penalty calculations, allows you to pay lump sums throughout the year, offers the ability to port or move your mortgage should you move, allows you to assign your mortgage to a potential buyer, and ensures you will also be treated fairly at renewal. The small print can cost/save you thousands and we help you understand the differences up front before you are facing an issue.
An insured mortgage might be a smart move even if you have more than 20% equity. If your mortgage is “uninsured” and you want to switch to a new lender for a better rate at renewal, that lender will qualify you using the “stress test”, which may affect your ability to move your mortgage, and giving your current lender no incentive to offer you the best rate available. It’s possible that you can switch your mortgage to a lower-rate insurable mortgage that has more flexibility.
Monitor and understand your credit score because the best rates go to borrowers with the best credit scores. Lenders are paying close attention to any warning signals that clients may have trouble paying their mortgage. If your credit slips and your lender feels your risk has increased, you may be offered a higher rate at renewal. We can help you better understand what drives your credit score and how to improve it.
A rental suite can be a sweet mortgage helper. A home with a rental suite could help you buy a single-family home instead of a condo, get you into that neighborhood you love, or help you offset mortgage payments in the house you’re in so you can become mortgage free sooner, but there are restrictions. Not all suites are eligible and we can help you to understand the differences.
Plug your biggest money leak. If debt is choking your cash flow and you have enough equity in your home, you may be able to move that debt to a lower-rate mortgage and save thousands. Using home equity to pay down debt is one of my specialties, but needs to accompanied by a plan to avoid the debt growing again!
Getting your mortgage pre-approved before you go shopping is more important today than ever. It helps you to target the homes you can afford and gives you the confidence and peace of mind to make a strong offer when you find the right property. Don’t assume you have a pre-approval unless the lender has reviewed your last 2 years income tax documents, current pay stub, and 3 months history of your down payment. If they didn’t require these things, you have a rate hold only, and you still don’t know if you qualify.
The New year is a new opportunity to make sure your mortgage strategy is working for you and helping you build wealth. If you want to discuss your personal situation and have me run your numbers, please let me know, as knowledge is power, and having the information will help you make better decisions?