Buying a home is always a stressful experience that is often made even more stressful by the thought of trying to scrape together a good down payment and finding a mortgage rate that’s not going to bankrupt you. Here are some tips to help you find the lowest mortgage rate available to you:
Don’t just settle for what your realtor recommends because they’re interested in speed rather than value. Take your time and do the work required to ensure you’ve found the best deal possible. Schedule appointments with a number of banks and get advice from friends, family members, and coworkers who have bought houses recently or in the past couple of years. Be thorough and don’t be afraid to ask questions.
Improve Your Credit Score
This is one of the most important things you can do prior to trying to get a mortgage (or any type of bank loan). Order your credit report from Equifax and TransUnion to ensure there are no errors (you should request a copy from both credit bureaus because there might be an error on one copy that is not present on the other).
Once you’re satisfied that your report is accurate, look for ways you can improve your score. Are there any old debts you can pay off or any loans that you can pay down? The higher you can bump your credit score prior to applying for a mortgage loan, the better.
Beef Up Your Down Payment
Do your best to put down a bigger down payment. The more money you put down, the lower your interest rate and the shorter the term of your mortgage over all. If you can afford to put down a downpayment of at least 20%, you’re also excused from having to take out default insurance from the CMHC (which exists not to protect the homeowner but rather the mortgage loan lender).
Review Your Employment History
Take a long, hard look at your previous jobs. Are there any patterns in your employment (or unemployment) history that might concern lenders? Long periods of unemployment or job related financial instability can raise some serious red flags with banks. If you’re self-employed, you’ll have to work even harder to prove to the bank that you’ll be able to make your mortgage payments without fail thanks to a guideline introduced in 2012 by the Office of the Superintendent of Financial Institutions called B-20.
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