There is one magic number that can make or break your income. Here’s a hint, it’s not your credit score (although that definitely matters) and right now it is very attractive. It is your home’s mortgage rate; it doesn’t take a genius to realize that having a high interest rate on a large-scale loan such as a mortgage means paying a lot of money over time. Buyers today certainly have an advantage over those who have financed homes in the past, but there are still a number of ways you can secure the best of the best. Whether you are a first time buyer or are looking to refinance, being prepared and knowing where to look is very important. A helpful word of advice is to never take the first offer that you find.
Since you shouldn’t rush to buy a home anyways (unless you’re getting a rock solid deal or if the listing is a short sale), spending plenty of time running lender comparisons will work to your benefit come closing day. Since most people don’t have a clue about where to start, here is some helpful information to ensure you hit the ground running and get the best rate out there. Bear in mind that your credit is going to have an impact on what you will be eligible for, so be sure to have your financial ducks in a row as well. Buying a home is indeed exciting and an excellent investment, but you don’t want to be getting in over your head. If spending hours searching for a great rate doesn’t seem worth it, just ask yourself whether an extra twenty or thirty thousand (or more) dollars in your pocket is. This is the kind of savings a lower mortgage rate can generate, so keep that in mind.
How to find the lowest mortgage rate
- Hire a broker; if you haven’t done so already, start researching brokers in your area. These independent consultants charge a fee for their services, but can open up financing doors you may never have thought possible, especially if your credit isn’t in top notch shape. Brokers bring buyers and lenders together, and many a time they work with firms that are only accessible via this route.
- Stay up to date; the mortgage market can change on a daily basis, so don’t automatically assume you are going to get the rate being advertised by a specific lender. The best thing to do is to make a list of top lenders and call them on the same day to see what they are offering.
- Consider financing a shorter term; depending on your financial situation and how much you can afford, going with a shorter term might be a better option. The current rates for a 5-year term in Canada is 2.79 for a fixed vs. 3.64 for a 10-year term. This difference can mean thousands in potential savings.
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