Tuesday, December 30, 2008

Mortgages don't need to be confusing!

Don't be Baffled by Mortgages

Buying a home today is an extremely attractive proposition. Interest rates are at their lowest in decades and the housing market is full of homes to suit just about any budget or family requirement. For most people, though, finding a house will also mean taking on a mortgage.

Sorting through the numerous options available to today's home buyers can be intimidating and baffling for everyone from first-time buyers to long-time owners. The rules seem to change constantly and there's a smorgasbord of terminologies to learn.

Fear not - the basics are fairly simple and there are a host of real estate professionals more than willing to help, with your REALTOR® and the bank's mortgage specialist at the top of the list.

Nonetheless, you will want to at least familiarize yourself with the mortgage process, how to arrange one and the different financing strategies involved.

First, it's necessary to know exactly which kinds of institutions will lend you money. Banks and trust companies lead the pack, but credit unions and private lenders also offer funds.

You may also find yourself in a situation where you can "assume" an existing mortgage held by the seller. Advantages of assuming a mortgage are that you can speed up the buying process because there is less paperwork and also save money in lower legal fees and closing costs. One disadvantage is that the current lending rate may be less than that of the assumed mortgage.

Now that you have an idea who will lend you money, you will need to know about the different kinds of mortgages that are offered. The most common by far is the "conventional mortgage." Lenders will loan you up to 75 per cent of the appraised value or purchase price of the property (whichever is lower), and you must come up with the remaining 25 per cent yourself. Many people save specifically for this purpose but, in some cases, alternate or "secondary" financing may be available.

Full OMREB Story


Jason Neumann

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