5 Facts About Mortgages You Didn’t Know

If you’re in the market for a new home, it’s important to understand the ins and outs of mortgages. A mortgage is a loan that allows you to purchase real estate, and it’s likely one of the largest financial obligations you’ll ever take on. While most people are familiar with the basics of mortgages, there are many lesser-known facts about them that can be helpful to know.

Mortgage brokers in Toronto can save you money: Many people think that working directly with a bank is the best way to get a mortgage, but this isn’t always the case. Mortgage broker Toronto has access to multiple lenders and can often negotiate better rates and terms than you could on your own. Plus, their services are usually free for borrowers.

There are different types of mortgages: The two most common types of mortgages are fixed-rate and adjustable-rate mortgages (ARMs). With a fixed-rate mortgage, your interest rate remains the same for the life of the loan, while with an ARM, your interest rate can change periodically based on market conditions. However, there are also other less common types of mortgages such as interest-only mortgages, balloon mortgages, and reverse mortgages.

Your credit score matters: Your credit score is one of the biggest factors that lenders consider when approving or denying a mortgage application. A high credit score can help you qualify for a lower interest rate, which can save you thousands of dollars over the life of the loan. Instead, a low credit score can result in a higher interest rate or even denial of the loan.

You don’t need a 20% down payment: Contrary to popular belief, you don’t necessarily need to put down 20% to qualify for a mortgage. In fact, some government-backed loans allow for as little as 3.5% down. However, putting down less than 20% may require you to pay private mortgage insurance (PMI), which adds to your monthly payments.

You can use gift funds for your down payment: If you don’t have enough savings for a down payment, you may be able to receive gift funds from family members or friends. However, there are rules around using gift funds, so it’s important to work with a knowledgeable mortgage broker in Toronto who can guide you through the process.