Buying your first home is an exciting, and possibly nerve wracking experience. One of the biggest financial decisions you’ll make in the process is getting your mortgage, and you could be missing out on thousands of dollars in savings by rushing through this important stage. If this is the year you’re planning to buy a home, here are 5 things you should know about getting your mortgage.
1. Shopping around can save you thousands.
One of the biggest mistakes first time homebuyers make is assuming that the first lender they apply for will offer them the best rate. Shopping around with a mortgage broker could save you thousands of dollars over the life of your mortgage. Taking the time to research different lenders, compare rates and terms, and choose the mortgage that suits your situation can pay dividends years into your homeownership journey. At the time of publishing, Perch offers a 4.47% 5-year fixed mortgage rate compared to the banks, which are offering around 5.54% on a 5-year fixed rate mortgage.
2. It’s simple to get pre-approved online.
Before you pick a realtor and start shopping for your home, it’s a good idea to get pre-approved for a mortgage. The last thing you want is to find your dream home and then find out it’s above your budget. Getting pre-approved will let you know how much you can afford and show sellers and your realtor that you’re a serious buyer.
You can get a pre-approval through a mortgage broker, bank, credit union or other lender. You’ll have to send in supporting documents such as bank statements, pay stubs, tax slips and ID, and wait for them to review which could take up to 1 week to hear back. When you sign-up for Perch you can get pre-approved online in as little as 20 minutes.
Keep in mind that pre-approvals aren’t a guarantee however. Regardless of where you get pre-approved, you’ll still need to qualify for your mortgage after you put an offer on your new home.
3. Choose the terms that are right for you.
When it comes to choosing your mortgage terms, you’re going to want to consider your current financial situation as well as your long-term goals. If you’re someone who likes stability and doesn’t like to take risks, a fixed rate mortgage might be the best option for you. If you’re planning to move or expect your financial situation to change in a few years, you might want to go with a 3 year or a 1 year term instead of a 5 year. Talking to a mortgage advisor can help you to plan your mortgage strategy and let you know your options.
4. The first option might not be the best one.
Going with a big bank over a mortgage broker is one of the most common mistakes first time home buyers make, and this usually leads to you leaving money on the table. Sure, it can take a little longer to shop around and compare offers, but if you apply at a mortgage brokerage like Perch, you can shop and compare mortgages from 30+ lenders in one place and see what you qualify for. Your mortgage advisor is your best friend in this process, and they can let you know about the pros and cons of each lender’s offer.
5. You can always break your mortgage early
While there will be mortgage penalty fees to pay, you aren’t stuck with your mortgage.
Often times we find owners are scared to break their mortgage because they don’t know where to get the best mortgage terms. If it turns out later on you can save money by breaking your mortgage, Perch will let you know when it makes sense to do so. If you take the time to shop around for your mortgage, consider multiple lenders, and know that you can always break your mortgage if it makes sense to do so, you’ll be in a much better position to make a decision that’s right for you. Working with a mortgage broker will help guide you through the process and answer and questions you may have.
At Perch, our mortgage advisors are available to help you with your situation when you sign-up for free.