When you’re looking for Alberta’s lowest mortgage rates, it’s important to know the most important facts about finding a good rate. Whether you are looking for a new mortgage or to refinance, keep the following mortgage facts in mind as you look for Alberta’s lowest mortgage rates.
1. Mortgage lenders consider your mortgage in arrears if you have missed more than three monthly payment dates within a year (thus, making it harder to refinance).
2. “Sub-prime” borrowers are considered by lenders to meet lower than average industry credit standards. Typically, borrowers with a low credit score or state income will look for a sub-prime mortgage. These rates are typically higher than other financial rates.
3. “Near-prime” market is the section of borrowers that are close to the industry standard for lending, but are still a little below the mark.
4. A “low-ratio” mortgage means that the loan-to-value ratio is 80% or less. Typically, mortgage rates with less than 20% down will be mortgaged at higher rates.
5. Low-ratio mortgages have less rigid requirements than other loans, which means that the interest rates are also lower.
6. If you took a 40-year loan down to 35 years on a house worth $200,000 at a 6% interest rate, you’d increase your rate $41. However, over the long haul you could save up to $49,000 in interest with the shorter term.
7. High-ratio mortgages that start the term with interest-only payments or home equity loans can also benefit from amortization reduction like the scenario mentioned above.
8. When your lender refers to “total debt service” ratio, it’s referring to the ratio of gross income to debt and housing related payments.
9. With the purchase of mortgage insurance, a lender who would need to put 20% down might be able to put as little as 5% down with the purchase of insurance.
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