Applying for a Mortgage Isn’t Always Easy

Mortgages, by their very nature, are complicated. Many homeowners and prospective homeowners might not have the strongest foundation of knowledge on which to base decisions, and even those who do might have wrong information. When it comes to applying for a mortgage, there’s a ton of differing opinion.

Bad Advice Might Steer you in the Wrong Direction 

A quick Google search for anything to do with mortgages will quickly reveal contradicting opinions. How does someone looking for a mortgage approval sift through the bad advice and come to a solid conclusion? Remember, you don’t need a license or accreditation to share an opinion on the web.

Let’s look at some common mortgage advice that you might want to ignore:

#1: Getting a Mortgage Pre-approval Offers No Advantages

This tends to be a popular one and is simply not true. Some claim that you’re too early in the process or that it’s not official so why bother. The truth is, a pre-approval can make you more attractive to a seller if there are multiple bids. In addition, it gives you a framework on what you can spend.

#2: The Fine Print is Just Legal Mumbo Jumbo

Once you’re approved for a mortgage, there’s a lot of legalese that you’ll have to sort through. While it might feel daunting, there’s important information in there, and it shouldn’t be dismissed. Don’t think of it as fine print, instead, think of it important clauses that could make or break your deal.

#3: Avoid Being “House Poor” by Paying the Least Amount Every Month

Another common one is to avoid bi-weekly payments or accelerated payments or try to amortize over 30 years instead of 25 years. All of this can drag your mortgage out whereas fewer years and accelerated payments can chop months if not years off of your regular payments.

#4: Take Every Penny Offered by the Bank

This might be a tough one to ignore since it sounds so enticing, but it’s not sound advice. You need to stay within your budget and shop accordingly. You can enjoy life and find your dream home for a bit below your means, and this way, you can continue to save or top up your emergency fund.

This list could be a lot longer, but the point is, you need to consider all of the advice given to you and to choose what is best for you and your finances. The best piece of advice might be to do your research, be diligent and trust the experts.

Speaking of experts, if you want sound mortgage advice, contact Canadalend today.

Home equity loans are simple yet are sometimes treated as complicated. It’s a type of loan that allows a person to borrow against the value of their home, and to take advantage of equity they’ve built up.

Most industry experts express that homeowners should take more advantage of home equity loans, believing it to be a viable treatment of their best asset.

Here’s some basics that are important for everyone to know.

Low Rates, Relatively Easy Approval and Potential Tax Benefits

Typically, with home equity loans you can receive a fair interest rate, especially when compared to other loans. While not guaranteed, most homeowners can get approved even if they have bad credit, because your home is strong collateral.

As well, interest on a home equity loan can potentially be tax deductible, but not in every case. This is one question you will want to ask your accountant.

Large Amounts for Borrowers and Secured Loans for Lenders

Home equity can help you access a large sum of money if you need to overcome financial difficulties. It can also help you pursue a business opportunity or to fund an education or deal with a medical emergency. These things cost money, sometimes more than you have liquid in savings.

These loans are secured loans because banks feel comfortable extending you a loan based on the equity in your home.

You can borrow with a Home Equity Loan in Two Ways

Borrowers have two options when they are approved for a home equity loan. They can receive a lump sum or it can be dispensed as a line of credit. With a line of credit the money will be made available and you only repay what you use.

The way you borrow effects the repayment plan and accrued interest.

Be Wise in how you Borrow when your Home is Involved

As with anything, there are some pitfalls with home equity loans. Since your home is involved you don’t want to borrow against it to travel or repay a credit card. It is best used in specific situations and can be incredibly beneficial in those circumstances.

Timing is a tricky thing. When it comes to finances, it’s sometimes hard to know whether one should be proactive or reactive. There’s even a tendency to put things off until things have hit rock bottom or until every star has aligned.

This isn’t to say there’s a right way or a wrong way when it comes to taking on a loan or accumulating debt. These are big decisions and there’s quite a few variables to wade through.

Let’s look at some factors that should be considered when deciding if now is the right time to apply for a home equity loan.

Why do I need the Loan?

This might be the biggest question. You never want to take a loan or put your house up as collateral unless the reason is a good one. There are a ton of good reasons—medical emergency, business opportunity, home renovations.

If the reason feels legitimate then the timing is probably legitimate as well.

Will I get the Best Interest Rate and Repayment Plan?

It’s a simple question: will you get the best deal when you apply? If you believe that there’s a better interest rate around the corner or that you can improve your credit score, then the best advice might be too wait.

Timing isn’t just about what’s happening in your life. It’s also about what’s happening with the lender and if you can secure the best deal.

What if my Situation Changes?

If you need the money today but believe that your situation can change, then it still might make sense to borrow money against your home. In this case, the solution might be a home equity line of credit where the funds will be available to you. Like any line of credit, you only must pay back what you use so if your situation changes then no harm done.

Applying for loans is a big deal and the timing must be right. Be honest with your situation and logical and, most importantly, speak with a professional who can help guide you to the right decision.

If you have been reading this blog for some time, you have probably learned that there are some serious benefits to a home equity loan. Surprisingly, it’s still an avenue that many people have left untraveled. It might be the most proven yet underused way for homeowners to access money in times of need.

When you want a loan, most people have several options. Lines of credit, credit cards and even borrowing from someone they know. Each has benefits and drawbacks but none have the specific benefits of a home equity loan or line of credit.

A Home Equity Loan is like Enjoying the Perks of your Investment

For most, their home is their greatest asset. To be able to leverage your investment to access a loan is to leverage your own personal equity. The process comes with a greatest level of ease. For years, you pay your mortgage every month, so why not have it work for you when you need it? This is one of the benefits to purchasing instead of renting.

Since these are secured loans, approval is easier and you will be more trusted in the eyes of the lender.

A Home Equity Loan Allows you to Potentially Borrow More

The way a home equity loan works is you get to borrow against whatever you have invested into your home. If the value of your home is $500,000 and you’ve paid $200,000 of your mortgage, then you can borrow $200,000.

Not many loans give you access to that kind of money. Your home equity affords you greater borrowing ability.

You’ll Probably Enjoy a Lower Interest Rate

Home equity loans generally yield a lower interest rate, which means you can enjoy more of the money while you pay more towards the principle. With interest rates being the biggest detriment to borrowing, this is obviously a huge boon and should be a deciding factor.

There’s lots of options and each situation is different. Consider a home equity loan and see if it’s the best option for your life.