There are many questions that you should ask your mortgage lender in Ontario before you commit to anything. By doing so, you will be able to find the best loan package for your unique needs, and will also be aware of any added fees, if applicable.
In fact, failure to ask pertinent questions can add several years to your loan. This could be due to additional interest payments, unanticipated fees, and other obstacles that may present themselves in the not too distant future. Here, we will discuss seven questions that you should ask prospective mortgage lenders in Ontario before you commit to a mortgage.
What is a Mortgage Lender?
A mortgage lender is a financial institution that will use a mortgage as a form of collateral in return for the money that they lend to you. Moreover, a mortgage lender may also lend capital to real estate owners but may not necessarily do so for the purchase of said real estate.
They may lend money to the real estate borrower who will then use the money for some other reason. The borrower will still need to pay off a mortgage in return for the money that they borrowed from the mortgage lender.
How to Choose a Mortgage Lender?
Brand loyalty is a paramount factor for the vast majority of businesses. That is, most financial institutions want you to come to them for all of your financial needs. Evidently, you may also opt to do all of your banking or financial activities with one institution, as it may be convenient to do so.
As for branding, you should try and go with a brand that you like but also not limit yourself to the financial institution that you do most, if not all, of your finances with. Assuming that you will get the best deal because you do all of your financial activities with one company is a common mistake that many people make. Instead, try and avoid limiting yourself to one company and perform the necessary research to find the best mortgage lender for your unique financial needs.
Work on boosting your credit score. A higher credit score will provide you with more leverage when it comes time to negotiate the mortgage terms and interest rates. Furthermore, you should be aware of the mortgage lending landscape before you commit to a mortgage; compare and contrast different credit unions, correspondent lenders, mortgage bankers, and mutual savings banks to find the best deal for you.
If possible, try and get preapproved for your mortgage. Doing so will significantly increase the likelihood that your offer will be accepted. Compare the mortgage rates currently offered by various lenders on the market in order to find the best rate.
You must read the fine print and ask the necessary questions to be fully aware of what you are getting into. While interest payments and principals are given with a mortgage, there may be other fees that you will also have to pay. You should be aware of any additional requirements before you commit to your mortgage.
7 Mortgage Questions to Ask Your Lender
- The first question you should ask your lender is which type of mortgage is best for your unique financial situation? Your lender should provide you with multiple options and inform you of the pros and cons of each mortgage type so that you can make an informed decision.
- Next, you should ask them what interest rate you can get? If you opt for an adjustable-rate mortgage instead of a fixed-rate mortgage, you should ask your lender how often the payment interest rate will be adjusted, and what the highest cap rate is. Also, be aware of additional fees that can bring your interest rate up. Some unscrupulous lenders may try to conceal such fees to make their offer more appealing on the surface.
- Ask your lender if there are any prepayment fees, as well as other additional fees or costs, such as orientation fees, mortgage insurance, and closing costs. What’s more, do not hesitate to ask how much time it will take to complete the mortgage. The information that they relay will provide you with a timetable to work with.
- Another pertinent question to ask your lender is what documentation will be required in order to finalize the arrangement? You do not want to have to deal with processing delays or other obstacles that may cause your application to be denied.
- You should also ask them if you qualify for any type of down payment assistance? Interestingly, while most conventional loans will involve a down payment of at least 20%, you may be able to qualify for a lower down payment or no down payment at all. This depends on where you live and the type of mortgage and property involved.
- There are a plethora of down payment assistance programs at the national, federal, and local levels. If your prospective lender seems reticent to disclose the required information, then you should look elsewhere for your financing needs.
- Finally, do not forget to ask your lender if they charge to lock in the interest rate? Generally speaking, most lenders will offer higher interest rates for long-term locks and lower rates for short-term locks. The most reputable lenders will allow you to lock in their quoted rate when you first applied.