Monday, July 6, 2009

YOU ALWAYS HAVE CHOICES...



Top five tips to getting best mortgage
Expert has advice on avoiding pitfalls
By Barb Livingstone
Calgary Herald
July 4, 2009

The following are answers by Valerie Rasmussen, assistant vice-president, credit services, for First Calgary Savings, to questions by New Homes editor Barb Livingstone:

Question: What are your top five tips for people thinking of getting a mortgage and buying a house/condo in this market?

Answer: Buying your first home can be an overwhelming and daunting process.

Getting the right information before you begin can alleviate stress and increase confidence as you go through the process.

Here are some tips:

-Evaluate your financial situation. Understand your current credit history, and your monthly debt obligations.

This will help you plan a budget with realistic expectations and a comfortable mortgage payment that you can live with.

-Get pre-approved. Let the personal banking representative do all the work for you and don't hesitate to ask questions.

Educating yourself on the variety of mortgage loan options and how the application and approval process works can equip you with the knowledge you need to chose the right product.

-Get all your figures and approvals in order before you get to far into the buying process. Then you can be sure to be looking at homes within your means of affordability.

-With your figures in mind, don't push your finances to the max of your ability to pay, this could become overwhelming later.

Everyone has heard the term, "house poor." This can be avoided with the right planning and information prior to choosing your home.

-Wait until the time is right for you. If you plan to live in the home, you do not need to look at a home as a speculator or investor would.

Market predictions can be wrong and should not prevent you from purchasing your first home.

However, once you have reviewed your budget, and perhaps met with a personal banker, you may make the decision that for example one more year of saving could get you a better down payment and lower mortgage payments.

Do what will work for you.

Question: What is the biggest mistake homebuyers can make in relation to getting a mortgage?

Answer: Borrowing too much can be the biggest mistake new home buyers can make.

Many people will hear that they are approved up to a maximum limit of X dollars and immediately begin looking for the maximum priced homes they can afford.

First-time homebuyers need to understand just how expensive home ownership can be -- and many bills and fees are not planned for.

There are lawyers fees (closing costs), insurance set up, utilities, taxes and moving costs, and for condos, such things as condo fees and so on.

Adhering to a realistic budget can help new home buyers avoid the stress of being overextended.

Question: What is different this year that people should keep in mind in terms of buying a house and getting a mortgage?

Answer: There are many differences this year as opposed to last

when first-time homeowners are looking for a mortgage.

They will now have to come up with a minimum of five per cent down as Canada Mortgage and Housing Corp. has discontinued the 100 per cent mortgage.

In addition, the longest amortization has been decreased from 40 years to 35.

Some of these changes will make it harder for people to get into the home owners market.

But with that said, the housing market currently is a buyers market, meaning decreased home prices.

Low prices of homes, coupled with historically low mortgage rates, are making it much easier for first-time homebuyers to get into the market -- and with plenty of choice.

Question: How long have you been a mortgage broker and how do you compare the current market for buying a house to past years?

Answer: I have been in lending for over 20 years. I am currently the AVP of credit services for First Calgary Savings.

With the low rates, the vast variety of mortgage products and options, and the prices of homes with plenty to choose from, I believe there hasn't been a better time to buy.

First-time homebuyers are now getting in at phenomenal rates compared to years ago, when first time homebuyers would sign up for rates of 18 per cent.

This is incredible value makes it easier to pay down mortgages faster than ever if a proactive approach was taken.

Question: If you had one piece of advice for first-time homebuyers, what would it be?

Answer: Get the right assistance working for you--from realtors, to your banker.

The more educated and prepared you are, the better decisions can be made and the sooner you can be enjoying living in your new home.

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