How to Choose the Right Mortgage

By: Anjali Harvie

How to Choose the Right Mortgage

Tags: How to Choose the Right Mortgage

Before you start the house-hunting process, it is important to get pre-approved for a
mortgage. Getting a pre-approval will save you time and make the process go more smoothly.
This process determines the home price that you can afford so you are not looking above your
price point. 
With a pre-approval, you will go through the following types of mortgages and be able to lock in
a mortgage rate if you decide, this can save you money if the mortgage rates increase during
your home search. 

What is a Mortgage Pre-approval?
A mortgage pre-approval is the process providing you with important information to help you
on your home search. You will find out:

The pre-approval process is free with no commitment to a single lender. Getting pre-approved
does guarantee a specific mortgage rate from that lender for an average of 120-160 days. Being
able to "lock in" your rate protects you if interest rates rise while you are house hunting. Rather
if the interest rates decrease, the decreased rates would be honoured and you would not be
locked in at the higher rate. 
Obtaining a mortgage can be intimidating and confusing. Similar to the buyer and seller guides,
I’ve outlined the mortgage process for you in 4 easy steps!

Step 1: Mortgage Application

Before an application gets filled out, it's important to fist assess yourself financially. Figure out
how much money you have and how much you need to borrow. It's always critical to sort out
how much you can afford so that when you apply for a mortgage you will be able to financially
sustain yourself. A mortgage associate will then take an application by phone, in person, or
online. Once it has been received, the mortgage application process will begin by verifying the
information you have provided. 

Step 2: Choose the Right Mortgage Program 

Like all homes, mortgages also come in all shapes and sizes. You have to pick which loan is more
aligned with your financial situation and goals.
There are four basic types of Home Financing Loans: 

A) Fixed Rate Mortgage 

Fixed Rate mortgages usually have terms that can last from 1 year to 10 years. As the name
suggests, the interest rate and monthly payments will remain the same for the specified term.
This type of loan should appeal to you if you:

B) Adjustable Rate Mortgage

An Adjustable Rate Mortgage (ARM) lasts for 3-5 years. But during these terms, the interest
rate on the loan can go up or down which means monthly payments can increase or decrease.
This type of loan should appeal to you if you:

C) Combination Rate Mortgage 

A Combination Rate Mortgage combines fixed interest rates and adjustable interest rates.
This type of loan would appeal to you if you:

D) Lines of Credit 

Utilizing a Line of Credit is becoming an innovative way to finance your home purchase. You
can take the amount you need from the credit limit that you were granted. You only pay
interest on what you use and this money can be put towards things like home renovations, a
child’s education, and debt consolidation.

Step 3: Mortgage Submission and Approval 

Once you select the appropriate mortgage program, you will submit this information to your
mortgage associate along with any other required documentation. You will then wait for the
mortgage approval from the mortgage associate either through email or fax. After the approval,
the associate will also review your commitment to the mortgage. Any additional documents
that are required by the lender should be sent to the associate no later than 10 days after the

Step 4: Lawyer 

The associate will send the mortgage instructions to your lawyer to review and sign the
documents. First you will review all the terms and conditions prior to signing to make sure the
interest rate and loan terms are what were promised. Double check to see that the names and
address are correctly spelled on the documents. Signing takes place in front of a notary public
or lawyer. There will be several fees with obtaining a mortgage and transferring property
ownership which will be paid at closing. Bring a bank draft check for the down payment and
closing costs if required. Personal cheques are not accepted. You will also need to show
homeowners insurance policy and other requirements such as flood or fire insurance and proof
of payment.