Posts Tagged ‘Mortgage Lender’
Why The Lowest Mortgage Rate is Not Always The Best Rate For You
Many times I am contacted by mortgage clients asking about what my best mortgage rate is. It is common to believe that everything is an apples vs. Apples comparison with regards to mortgage rates, and that the lowest rate is always the best deal. However, this is often not the case.
Borrowers often overlook the terms of the mortgage, or do not receive disclosure of items that are not attractive to an offer (particularly from Canadian banks). Below are some of the situations where taking the lowest rate will often cost you money in the long run:
-Many times the bank will not even approve you for the amount you need to buy the home you want. However, there are other “A” mortgage lenders out there who will approve you and also give excellent rates.
-I have also had clients who were with a bank who required that the money was taken from an account at their institution, which is not where they banked, and they found it very inconvenient to have to transfer money every month.
-Your mortgage lender may offer you a low rate to get into the door, and then when it comes time to renew your mortgage provide you an offer that is significantly higher than the market is offering. At that time it may be difficult for you to get an approval elsewhere and you could be stuck with their offer.
-If you get a variable mortgage with the intention to lock in to a fixed mortgage rate at a later date, many bank lenders will only give you posted rates when you lock in, meaning your interest rate will be much higher.
-Do you want mortgage life insurance coverage to protect yourself in case of death or disability? Many lenders including all the banks offer coverage that is strictly tied to their institution, so if you become sick during that coverage and try to move your mortgage, they will discontinue coverage and you will be paying much higher premiums to be re-insured elsewhere.
-Home Equity Line of Credit (HELOC) mortgages are often reported on the credit bureau, particularly with the banks and credit unions. It is generally much more favourable to have a HELOC mortgage that is not reporting on your credit bureau, as it is more favourable for your credit score. This could save you money and allow you to borrow money easier in the future.
-Sometimes a lender has a product that works with a strategy that is of benefit to you but may not offer the very lowest rate to get those benefits. An example of this would be the TDMP mortgages, which is a structure to make your mortgage tax deductible in Canada, and can help to create a great deal more wealth than a lower rate may offer.
Save Money on your Mortgage, Not Just on Your Mortgage Rate
These are just a few examples of things that could cost you much more money than saving .1% on your rate will give you. Keep this in mind next time you meet with your banker about your mortgage and often it is best to seek a second opinion from a mortgage broker who can give you helpful advice.
Jeff Evans is a mortgagebroker with Centum Innovative Financial Inc. In Vancouver, BC, Canada. Since becoming a mortgage broker in 2007, he has helped many clients to save money on their mortgage refinancing, and to help them be approved at the best rates and best terms on their home purchases with “A” mortgage lenders.
Mortgage Insurance Basics – Its Types And Benefits
Many of you know that you should calculate your affordability while taking out a mortgage loan. However, even if you obtain a home loan according to your affordability, a sudden financial crisis may make it difficult for you to make the home loan payments on time. This is why you need to purchase mortgage insurance. Owing to its coverage, it is also sometimes referred to as mortgage protection insurance.
Mortgage insurance – Wherefrom to buy
You can purchase mortgage insurance policies from an insurance company or through a mortgage lender. It is advisable that you buy the required coverage when you take out a mortgage loan.
Benefits of mortgage insurance
Usually, the lenders foreclose a property when the borrower is unable to make the monthly home loan payments on time. However, a mortgage insurance policy may reduce your chances of losing your home as the insurer will cover the home loan payments during the period you’re unable to work.
Mortgage insurance – How it works
Like any other insurance policies, you need to purchase mortgage insurance and pay the premiums on time. Usually, you pay the premiums as a part of your monthly home loan payments. In turn, the insurer promises to make the monthly mortgage payments (in case of an injury or a disability) or pay the balance in full (in the event of the policyholder’s death).
Types of mortgage insurance
There are different types of mortgage insurance coverage, which are discussed below.
- Mortgage disability insurance – This policy covers the monthly home loan payments when you are unable to work due to a disability. The amount of coverage varies between 50-70% of your salary.
- Mortgage unemployment insurance – It becomes quite difficult for a person to make monthly home loan payments when he/she is suddenly laid off. In such a situation, mortgage unemployment insurance covers the payments for a certain period or till you get a new job.
- Mortgage life insurance – This policy covers the unpaid mortgage balance if the policyholder dies before paying off the home loan. Usually, you can purchase this coverage if your age is between 18-64 years.
Often insurance companies offer mortgage unemployment coverage and mortgage disability coverage as riders with mortgage life insurance policy. Moreover, you may not require purchasing mortgage life insurance if you already have a life insurance policy that allows the designated beneficiary/beneficiaries to utilize the cash as they want. So, it is advisable you should consult with an agent and decide whether or not you actually require purchasing a mortgage insurance policy.