1. Know your current lifestyle costs. Running a home is no different than a business, and understanding expenses is non-negotiable. So, study your bills and bank statements and figure out what it really costs you to live now, pre-mortgage.
2. An illness, job loss or any number of troubles can quickly erode your finances. So in today's slow economy, put aside - and keep - a comfortable six months' worth of living expenses.
3. Know your float factor. This is the equivalent of executive risk, vis-à-vis real life. That mortgage may be affordable now when you're floating, but if interest rates or another unforeseen expense take you out of that zone, you're sunk. Don't be lulled into a false sense of security.
4. Consider alternative financing. When dealing directly with a bank, your solutions are limited. But mortgage brokers have access to any number of financing sources and programs. They understand lenders' criteria, and will offer the best suggestion for your personal circumstances.
5. Become knowledgeable. A home is most people's biggest asset and piece of financing. Read, research and talk to as many experts as you can. Learning costs only time, and better-informed decisions can save you a fortune.
6. Understand your creditworthiness. Not all debt is created equal. Neither are all borrowers. Your credit score depends on many factors, and the better it is - the easier (and generally cheaper) the financing. Mortgage carrying-costs are some of the most reasonable debts, so pay down credit cards and other higher-interest obligations first.
7. Don't hesitate to double up. The ability to pay extra directly on the principal is a must-have for almost any mortgage. Even a small amount -$50 a week - can mean big savings over time. And, if you must miss a payment, a "double-up" can help you stay on track and avoid other penalties. Talk to your financer.
8. Understand interest rates. Know the difference between fixed- and variable-rate mortgages, and the pros and cons of each. With a fixed-rate mortgage, you're bound to the terms for the length of the contract. A fixed-with-double-up option is the best of both worlds.
9. Beware of the "extras". With a down payment of less than 20 per cent, you must insure the mortgage with the Canada Mortgage and Housing Corporation or Genworth Financial Canada. Consider also buying personal term insurance, which sometimes pays the mortgage off if you die, or provides salary replacement if you're critically ill and unable to work. Other "incentives", such as lump-sum-cash-back payments, increase your carrying costs and make you further indebted to your financier.
10. Never fall in love with the deal. House hunting and mortgage shopping must be treated as business transactions. Don't become enamoured with any one house or financing offer until you're sure that it's the best available to you.
For more information go here - http://www.torontogreathomes.com/
Alexandre Malkhassiants, Sales Representative and Mortgage Specialist,
Right at Home Realty, Centum Mortgage Decision
Office: (416) 391-3232
Cell: (416) 723-9383
Web site: www.torontogreathomes.com
Toronto real estate market blog: http://torontorealestate.wordpress.com/