Tuesday, January 8, 2019

Mortgage Questions: Answered

The idea behind this blog post and more to come over the coming days and weeks is to take actual questions and conversations from my clients and post them here to help people better navigate getting their next mortgage.

Lets get started:

Question:  Amy, I am looking to buy a home and need to know what your best rate is as I was offered 3.49% as the best mortgage rate.


Thank-you for contacting me and giving me the opportunity to earn your business.  Rates can very based on the length of rate hold and the type of mortgage you require, so I will need approx. 10 minutes of your time to go over what type of mortgage will suit your needs and how long we need to hold the rate.  It is impossible to just quote the best rate without asking questions to narrow down rate options.  here are a few examples:

1. Will you be buying a home and taking possession of the home within 120 days or less?
2. Is the home a build?
3. If it is a build - do you need a completion mortgage or a draw mortgage?
4. If it is a build - what is the estimated completion date?
5. do you have strong credit?
6. do you have your own down payment?
7. do you want a variable or fixed mortgage?
8. how long do you intend on staying in this home?

In the scenario I had today, the client was quoted a rate of 3.49% without any questions being asked.
When I was done working with the client, my best rate was 4.04% - Why?

The client was looking to build a home with the very reputable Park Royal Homes in Edmonton.  The builder was willing to set up a draw mortgage and take first draw in 6 months.  The clients had a 20% down payment to avoid CMHC fees and chose a 5 year fixed rate because this was the clients long term home and they didn't like the risk of a variable mortgage.

This meant the client needed a min. 6 month rate hold where the rate gets locked in at first draw on an insurable mortgage product.  ATB was offering a 6 month draw rate hold at 4.04% five year fixed rate.  

The rate they were quoted prior to speaking with me was based on a 90 day quick close possession, 5 year fixed rate with less than 20% down.  This rate was not worth the paper it was put on because it didn't apply to the customers needs.

Mortgages are not simple - you are borrowing a lot of money from the bank to make the biggest purchase of your life.  Be prepared to answer questions to get the right answers and take you time to ask questions to ensure you are working with a mortgage professional who has your best interests in mind and understands your mortgage needs.  

Quote of the Day

" What is your best mortgage rate? ………………….Depends:)"

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