23 Sep

5 Common Mortgage Mistakes


Posted by: Amie Shackleton

Like many aspects of your life, obtaining a financing on a new or existing home can be a lot less stressful and a whole more straight-forward if you are prepared.  But if you are not prepared, there are many common mistakes you can make.  Most of these mistakes are easily avoidable with some preparation and informed advice – feel free to call or email with any questions or concerns!

Below are the top 5 Mortgage Mistakes people make when trying to find financing for their home:

Failing to choose the best Product for Their Situation:

There are many different types of mortgage loans available on the market.  There are fixed and variable rate products, hybrid and no-frills mortgages, lines of credit, term options, amortization choices, and much more.

And although having a choice, it can be quite overwhelming without expert advice.  While one person would benefit from a variable rate product, their neighbor may be better suited to a fixed rate product.  The key is to always explain your current situation and future goals in detail so we can select a product that best meets both your current and future needs.  The best rate does not necessarily mean it is the best product for you.

Automatically Renewing With Your Existing Lender:

Although you may feel and allegiance with your current financial institution that holds your mortgage, they may not be able to offer you the best choices.  When refinancing or renewing, it’s important to always shop the market for your best available options, much like you did when you applied for your first mortgage.  This ensures you end up with the best mortgage rate and terms customized to suit your unique situation.  In many cases your bank will offer you the posted rate in hopes that you’ll simply sign and return the commitment without shopping around.  Make sure you do your due diligence when refinancing and renewing.  After all, this your home, your mortgage and your money!

Signing Documents Without Reading Them

Never sign documents without reading them.  If you are unsure about something, always ask for clarification.  Remember that you’re the one entering into a law abiding agreement, so you need to read and understand and agree what is in the commitment.

Taking Your Credit to the Limit

Make sure that your credit balances are in your favour when it comes to your mortgage application.  Lenders are looking for an appropriate debt to income ratio.  In other words, you need to have more income than you have debt.  Avoid running up a balance on your credit cards and pay down existing debts as much as possible.

Failing to Plan Ahead

If you know that you’ll need to obtain, renew or refinance a mortgage, it’s essential to plan for it by ensuring your credit is in order.  If it’s not, start preparing.  Don’t make any purchases on your credit cards that you can’t pay off and if you carry a balance on your credit cards, start them down.  Refrain from making any large purchases before securing your mortgage.  If you’re planning to buy a car, wait until after you have secured financing, as your debt to income ratio will rise and you don’t want this to happen while trying to get a mortgage.

Understanding how the mortgage process works and how lenders qualify you loan will help you avoid the above mistakes.  As always, if you have any questions or concerns, need clarification we are just a phone call or email away. 

Amie Shackleton  |  519-949-1225  |  ashackleton@dominionlending.ca