OK, so let’s make this really, really easy. The real key is not the total costs but comparing the costs of 3 different companies. Here is my quick and easy guide that anyone can follow.
1. Get your credit report from experian.com as you can get these once a year for free.
When you know what your score is that can help you. Typically over 750 is excellent. Below 650 is fair. To better your credit score always, always, pay your bills on time.
2. Get 3 good faith estimates from 3 different banks. If you plan to stay in the house more than 5 years get a 30 year fixed rate and DO NOT PAY POINTS. They rarely make sense unless you can really justify why you are paying them. Paying 1% on a loan to buy down the rate by 1/4 point may only save you $40 a month on a $240,000 loan if you pay it off over time. So, pass on this plan to buy down the rates.
3. Use the 3 good faith estimates and cross out the taxes and insurance as they will be the same for all 3 offers.
4. Focus on the rates, 6%, 6.5% 5%, etc. That is what is most important.
5. Also, add up all the fees such as courier fees, bank fees, processing fees, etc. You want to compare those total costs for each and call back your banks and tell them what the other guy is offering as they typically will work with you.
6. Go to bankrate.com then the calculator section and put in the rate they are offering you. You can figure out what your cost is for your monthly payment based on how many years. Add in your taxes and insurance and that is our payment.
7. If you do not understand the mortgage information then DO NOT SIGN ANYTHING. If you need other help get a Kelowna mortgage broker who can help you compare the best deal. Do not let someone talk you into something you cannot afford. At no time should your mortgage payment be more than 31% of your gross take home pay.
8. Use the 3 good faith estimates and see who has the best rates and the lowest fees. Never get an interest only loan unless you are an investor and are 100% confident in what you are doing. If you like to gamble then go for it but if you are not a gambler than do not!
9. Always, always, negotiate. They all want your business no matter what they tell you. When you act desperate they will feed off that fear so do not show your fear.
10. Above all, compare the rates, do not pay points, and negotiate the fees. Consult at least 3 family and friends who truly UNDERSTAND everything. If you have no one than go to your local school and ask to speak with a math teacher from a high school or a college as they can help you understand the numbers. You can give them a gift card for $25 in appreciation. No matter what though, if you do not feel comfortable than keep asking questions until you do understand. If a bank changes the deal at the last minute walk away from the deal as they will typically fix the paperwork as they have time involved and they want to close the deal as well. Do your research, speak to friends, family, schools, etc.
I hope this helps a few people. Just to let you know I am not a mortgage broker or in the industry. I have just seen what happens when mortgage brokers just want to close deals and make monies for themselves. Some take advantage and do not give the right deal or explain it to the customers properly.