Becoming a homebuyer and applying for a mortgage can seem very  overwhelming, especially if it's your first time.  With the help of ALLIANCE lockhart's mortgage specialist, it can be easy. She will meet with you any time to guide you through the process and help you find the best mortgage for your specific needs. ALLIANCE lockhart wants to share with  you 8 common mistakes most home buyers make and how to avoid them.

Thinking you won't qualify for a mortgage

Dreaming of owning your own home but not sure if you qualify for a mortgage?  Even if your credit history is less than perfect, talk to a mortgage specialist first and let her find you a solution.

Not knowing all the down payment choices

You will be glad to know that there are different options available depending on how much of a down payment you can afford.

Conventional Mortgage = [20% down]
Low Down Payment Mortgage = [Minimum 5% down] - low down payment mortgages require mortgage default insurance. 

Focusing too much on the interest rate, rather than the overall solution

All too often, homebuyers give more thought to interest rate than the mortgage solution itself.  While the rates are a valid consideration, the different types of mortgages, their payment structures, terms and flexibility will have a much greater bearing on the overall cost of homeownership.

Fixed Rate Mortgage

Fixed rate mortgages offer the security of locking in your interest rate for the term of your mortgage, and your payment amount stays the same, providing ease of budgeting.  The main advantage is that the interest rate stays the same during the term of the mortgage and that you know exactly how much of your payment is applied to the principal and interest.

Variable Rate Mortgage

With a variable rate mortgage, your payments remain the same, regardless of fluctuating interest rates.  When rates go down, more of your payment goes to pay the principal and less to interest, enabling you to pay off your mortgage sooner.  When rates go up, the reverse happens:  less of your payment goes toward the principal and more to the interest, extending the amortization period.  Many experts believe variable rate mortgages offer the greatest potential for long-term savings on interest rates.

Combined Fixed and Variable Rate Mortgage

You can also enjoy the advantages of both variable and fixed rates by diversifying your mortgage.  That means the variable portion allows you to take advantage of potential long-term savings, while the fixed rate portion protects you if rates rise.

Being unrealistic about how much you can afford to pay for your home

You may be under- or over- estimating how much you can afford to pay for your home.  By using the online mortgage calculator located on our RESOURCES PAGE and entering your income and expense information; the calculator will tell you the maximum mortgage payment amount you can afford each month.  The mortgage calculator can also be used to quickly figure out monthly payments for different mortgage amounts and rates.
You may find out you can comfortably afford more than you originally thought.  If you contact our mortgage specialist, she can quickly determine how much you can afford and answer any and all of your questions that you might have.

Not considering a mortgage pre-approval

Knowing the amount you will be approved for gives you the "confidence" to begin looking at homes within your price range.  You can easily make an offer to purchase as soon as you find the right home.

Not choosing your own mortgage payments schedule

Customize your amortization period depending on how much you can afford.  Paying off your mortgage sooner saves you interest costs,, while a longer amortization period reduces your regular payment amount and gives you more room to manage your cash flow.  Regardless of the mortgage option that you choose,  buying and owning a home is likely to be one of the best financial investments of your life.  Talk to a mortgage specialist as they will have the answer to any questions that you might have.

Fogetting about closing cost

By this time, you've selected a house, picked your mortgage options and are getting ready to finalize everyting and make an offer.  This means getting down to cedrtain details and their associated costs.  It helps to know what these are up front so you can minimize any last minute complications.  When calculating closing cost, it's fairly safe to assume you'll need an additional 1.5% of the purchase price to cover such things as:

Professional home inspection

Lawyer or notary fees

Land transfer fees

Land transfer tax

Property tax/utility bill adjustments

Property insurance

Moving costs

Ongoing cost to maintain the home

Not knowing your credit rating

A credit rating is a record of your credit history and current financial situation, which typically translates into a credit rating score.  Lenders can use your credit rating to verify your repayment history.  A good credit rating can improve your ability to get loans and mortgages.  If your credit rating needs improvement to help you qualify for a mortgage, you can improve your credit rating by always making at least minimum payments on your credit cards, loans or utility bills on time.  


meet ALLIANCE lockhart's mortgage specialist.

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BARBARA McCAUGHERTY

contact
604.761.7565
barbara.mccaugherty@rbc.com