If you are looking into getting a mortgage in British Columbia, there are a couple of things that you should know, especially if it is your first time. It is wise to do your homework and research and acquire some knowledge about mortgages. This includes the things to look for while hunting for a mortgage, interests, applications, and what to do throughout and after the entire process.
Here are some of the most important things to know;
Your Credit Score
The rule of thumb is, the higher your credit score, the better your chances of getting better mortgage deals. A good credit score is essential, not because you can’t completely get a mortgage with lower credit, but because it gives you more options and better interest rates.
A good credit score can also be determined by the lenders’ requirements (which vary from one lender to the next), your own requirements (the type of mortgage you are looking for).
Mortgage lenders also want to know what our budget is. They want to know that you will be able to repay their debts and how you will pay. Your credit score is one of the contributing factors to your budget. Your mortgage payments should align with and be relative to your income.
Some of the things that account for in your budget include mortgage principal, interests, taxes, insurances, utilities such as electricity, gas, internet, water, and cable, repair expenses, and association dues. The down payment is also an important factor; the more the better.
You also have to know that there is a wide range of mortgage options available to you. They vary based on a couple of things such as the size of the loan, the term or period it will take you to pay it back, the type of interest rate, and whether or not they are part of any special programs.
Make sure to learn about all the risks associated with all of the options there are to you before you decide. Another thing that should determine what option you take is your requirements. Don’t be swayed by the multiple options you have.
Loan Terms and Conditions
You also have to be well versed with the loan terms and conditions. Generally, the terms could be 15 or 30 years, but there are other options too. Shorter terms have high monthly payments, while longer terms may have lower monthly payments. Shorter terms, however, also have lower interest rates while longer terms have higher interest rates, and are more expensive in the long run.
Types of Loans and Interest Rates
Another thing to know is that there are different types of loans. Most mortgage loans are typically conventional loans. There are other types like the special loans offered to first-timers, or those with unusual situations. You can always find different organizations that offer these types of loans.
There are also two main types of interest rates; adjustable or fixed interest rates. Fixed has lower risks because they don’t change. Adjustable interests, on the other hand, may start off lower, but considered riskier because they can change over time; increase or decrease based on the market.