Buying a home is a significant life step and it is important to choose a method of financing that’s right for you.

Canadians have many options when looking for a mortgage, including working directly with a mortgage broker or a financial institution such as a bank or credit union. Each has their advantages and it’s wise to evaluate them and make an informed decision before you begin the search for a new home. By doing the legwork at the beginning, you will avoid the rush and confusion of seeking financing while in the heat of the home buying process.

If you choose to work directly with a financial institution such as a bank for your mortgage, be sure to ask for a mortgage professional that is qualified to help you. You’ll need someone to help you navigate through the variety of products, terms and rates available so you can choose the mortgage that fits your individual needs.

A good plan is to arrange for a pre-approved mortgage, which confirms your ability to secure a mortgage with a lender. If you have a pre-approved mortgage, it not only assures the seller that you are a qualified buyer, it also gives you peace of mind and helps you determine how much you can afford.

To calculate the pre-approval amount, lending institutions review your current financial situation such as your salary, any assets you have and any debts. The amount you will use as a down payment is also taken into consideration. The amount of down payment you provide dictates whether you qualify for a conventional or high ratio mortgage.

Financial institutions like to reward loyalty. If you are an existing customer who utilizes services such as savings accounts or credit cards, you may be eligible for a preferred customer mortgage interest rate. As well, the quality of your credit rating can also affect your ability to negotiate a better interest rate. For example, a good credit report (a document financial institutions use to determine how well you pay your debts) can indicate that you are a good risk, and therefore the bank may be willing to offer you a better rate.

Visiting a financial institution, or meeting with a mortgage broker, is a good investment of your time before embarking on the house hunting process. Be sure to do your research and carefully consider your financing options. With
a pre-approved mortgage, you can confidently move onto the next exciting steps to homeownership.

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