Tuesday, June 13, 2006

Navigating the mortgage maze

Going crossed-eyed over the myriad mortgage options these days? Don't despair, says a local real estate expert and author.

With the right knowledge, research and professional team backing you up, there are some great deals to be had, says Douglas Gray, president of National Real Estate Institute Inc, and author of Mortgages Made Easy: The All-Canadian Guide to Home Financing.

And it all starts with proper preparation, including doing an online credit check to make sure your financial affairs are as they should be, and knowing how much a lender will potentially grant you, Gray says.

His No. 1 piece of mortgage advice: Don't deal directly with lenders, but work with a mortgage broker who can seek out the best deals from up to 100 different lenders.

'They know all the big players, and who's hungry - and you don't pay a penny to the mortgage broker,' says Gray, who also advises homebuyers to do a little comparison-shopping, and talk with at least three different brokers.

But with affordability rates in Vancouver at an all-time low, sometimes the best deal is still out of financial reach - and that's where parents come in.

More and more often, 'parents are giving their children a leg up, maybe because they've got a lot of equity in their own homes,' says Gray.

But don't expect them to hand over a down payment or co-sign a mortgage at the snap of your fingers - if you want your parents' help, impress them with your research and 'plant the seed' early, he says.


KNOW YOUR OPTIONS

When it comes to mortgages, getting the best deal almost always comes down to preparation and research. Here are 10 key questions to ask yourself before you sign on the dotted line:

1. Is your income secure? Will it increase or decrease in the future?

2. Are you planning on increasing the size of your family, and therefore your living expenses?

3. Can you afford to put aside a financial buffer for unexpected expenses or emergencies?

4. Are you planning to purchase the property with someone else?

5. If so, can you depend on their financial contribution?

6. Have you determined the amount of mortgage you'll be eligible for?

7. Have you determined all the expenses you will incur relating to the purchase transaction?

8. If you're relying on income from renting out part or all of your newly acquired property, do you know the city and strata bylaws?

9. Have you researched mortgage brokers and companies on the Internet?

10. Have you run a credit check on yourself to see what lenders will see?

Source: Mortgages Made Easy: The All-Canadian Guide to Home Financing, Douglas Gray (John Wiley & Sons Canada, Ltd, 2006).

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