Before shopping for a new home, getting a preapproved mortgage lined up several weeks before closing is essential; you also want to look at what mortgage brokerages are offering. Often you can find a competitive rate with excellent terms provided by an advisor who offers mortgages.
Often the mortgage rates advertised by your bank are higher than rates that a mortgage broker can find. Also, avoid restrictions on making lump-sum payments or high fees if you need to leave the mortgage before renewal.
Your checklist:
- If you own a current home, get it evaluated
- Get your credit score from Equifax or allow a brokerage to acquire it
- Taxes and assessments from the last two years
- Careful accounting of your household income
- Assess your liabilities, such as credit cards and loans
- Assess your assets held in investments and savings accounts
- Have enough for a down payment on hand
- Also, have enough cash for closing expenses for legal fees, mortgage and title insurance, and transfer taxes.
- Budget for extras such as buying new appliances or condo fees if applicable
- Research the meaning of mortgage contract terms as it applies to each specific company offering a lower rate. Know about:
- Variable rates
- Fixed rates
- Open versus closed mortgage
- A line of credit works well if you are going to renovate.