Home Loans For First Time Home Buyers | Types of Mortgages Series 1 of 3

Home Loans For First Time Home Buyers | Types of Mortgages Series 1 of 3

oftentimes when a home buyer shops for
a mortgage the only criterion that he's looking for is the rate and oftentimes
they will go with the lender that gives them the lowest rate in this three-part
video series I will share with you nine steps in choosing the right mortgage
right after this hi my name is Lei Villar-Cisneros your
real estate go-to resource in the Greater Toronto Area where I help families like
yours achieve their home ownership goal in this first of the three-part series I
will share with you three steps in choosing the right mortgage let's get
started. number one, should you choose an open or a closed mortgage/ what's the
difference? open mortgage as it says is open so that
means that you can change lenders, sell your house, move to another house or
break your mortgage at any time just paying off the whole mortgage and
because of that, it is at the highest rate. this is basically something that
you will do if you have a construction loan then you just need the loan for
three to six months or if you are waiting for a better mortgage that's
coming up or let's say that you are selling your home and you are expecting
to pay down the full amount sooner .so these are the types of situations where
you would get an open mortgage.

Another special case is for example, your current
lender did not renew your mortgage for whatever reason so while you're looking
for a way to qualify for another mortgage in another lender then you have
no choice but you have to stay with the current lender at a higher rate, normally
this is at posted rate or higher. now, what is our closed mortgage, as the name
suggests it is close so that means that you have a contract that you have to
fulfill and this can be from 6 months to 10 years for example if you have a
mortgage that is closed whether it's a variable or
fixed, if it's say three years you have to complete that three-year term
otherwise, you are going to pay for a penalty.

We will talk about penalty in
another video because that has a long computation. number two, amortization
period amortization period is the number of years that you will keep your
mortgage before you will be paying it off and normally it will be from a
minimum of five years to as high as 30 years take note that the longer the
amortization, the lower your monthly payments so if
you're looking to have more cash flow right now because the budget is tight
and if it's possible you are better off with the longer amortization, however, if
you are paying lower monthly mortgage that means that it will take you longer
to pay your complete mortgage. the third step is the term of the mortgage. the
term is the number of years in which you will keep your mortgage with the same
lender before its renewal or expiry date and in Canada the available terms are
from six months to ten years. if you keep your mortgage at the longer term and you
decided to break it before that, then you will have a penalty.
now when is the time that you will use a one-year term? short term mortgages that
are like one to two years have sometimes the lowest rate possible but at the same
time when you are renewing it's kind of cumbersome because you have to keep on
providing the documentation especially if you are thinking of switching to
another lender.

9 Steps To Choose The Right Mortgage | First Time Home Buyers

If you take a three or five year term
normally the lenders have special rates for them take note in Canada majority of
home buyers break their mortgage from three years
to three years and six months so if you are thinking that you will be breaking
your mortgage sooner than five years, it would be advisable that you do your term
at three years. five, seven and ten year term mortgages are typically have about
same rate offers if the market is unstable and the rates are going higher
and higher switching to a five ,seven or ten year rate is the best way to go.

you have it, see you on my next video to watch the continuation of the nine steps
in choosing the right mortgage. if you are interested in buying, selling or
financing a home, subscribe to my channel now and don't forget to hit the bell so
that you will be notified when a new video is coming out thank you so much
for watching. bye for now don't forget to share!!!.

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