September 28, 2023

Mortgage Myth Busters:

Today our post we will be busting common mortgage myths.

Myth #1: Mortgage Brokers Cost Too Much Money – BUSTED

While there may be times when a mortgage broker needs to charge a fee, in most cases we are paid directly by the lender a commission or fee that is based on the size of the mortgage and the length of the mortgage term.

Myth #2: I Need 20% Down To Purchase My Next Home – BUSTED

Anytime a home buyer is purchasing their primary residence or secondary residence for their own use the minimum down payment rule applies of a minimum of 5%.

Myth #3: I Must Use My Bank For My Mortgage – BUSTED

A homebuyer can use whatever financial institution that fits their needs better. Whether it is a Bank, Credit Union, Monoline Mortgage Lender, or Trust Company, the borrower is free to do what is best for them.

Myth #4: The Lowest Rate Is Always The Best For Me – BUSTED

Everyone loves to get the lowest mortgage rate. However, in many cases, the lowest rates come with a lot of strings attached and fine print. The lowest rate today may mean higher costs if you want to break your mortgage, refinance, or even sell your home. It is usually best to have the best rate with the best terms for your own unique situation.

Myth #5: I Must Renew With My Current Lender – BUSTED

Upon the mortgage renewal date, you are free to shop around for the best rate and terms. In many cases, the new lender will pay for your legal and transfer fees. We recommend you start this process 4-6 months before your mortgage renewal.

Myth #6: My Credit Score Will Suffer If I Shop Around – PLAUSIBLE

In general, having your credit score checked many times isn’t a good thing. However, when you are shopping for a mortgage, multiple inquiries for the same purpose within a certain period of time are generally counted as one inquiry.

Myth #7: Borrowing My Down Payment Is Prohibited – BUSTED

While many lenders will not allow a borrowed down payment, Canada’s default mortgage insurers do have a program. You may borrow 100% of your down payment and closing costs, as long as the repayment of the borrowed funds still allows you to qualify.