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Financing Your New Home


Blog by john redekopp | September 27th, 2018


Unless you’ve won the lottery, played your lucky numbers at bingo, or robbed a bank, you’re going to need to borrow money to purchase your first home. There are few people who can afford to buy their home without the help of a mortgage. A mortgage is a loan from a lender for which you will use your new home as security. Your mortgage is essentially a contract that states if you fail to pay your mortgage, the lender will take the house / property as collateral. Not only will you have to pay for the entirety of the loan, but you will also have to pay the interest on that loan. 





Your first step should be to consult with a mortgage broker. A mortgage broker has a wide range of lenders and products to choose from and best of all, there is no cost to the borrower for this service unless, of course, there are credit problems or extenuating circumstances (like unverifiable income). The mortgage broker will determine the mortgage amount you qualify for based on credit, income, assets and liabilities. Note that the borrower must have a minimum of 5.00% of the purchase price available for down payment. While in the past, 100% financing was available, this is no longer the case because of the new mortgage rules implemented by the Federal Government in October of 2017.

 




One mistake people make is contacting a number of institutions or brokers. By doing this, you become what the industry calls a ‘shopped loan’. Too many applications and credit checks hurt your chances of obtaining the 
the best product for your needs. An experienced mortgage broker can help you determine whether a fixed rate mortgage or a variable rate mortgage is for you based on your risk tolerance.

Choosing an experienced, qualified mortgage broker can save you thousands of dollars.  It’s similar to choosing a financial planner. Remember that a mortgage broker works for you, not the bank.