A Mortgage Pre-Approval – A Smart First Step When Looking for a Home

Even with interest rates touching historic lows, getting a pre-approval for mortgage financing before you start to look for a home is a smart move.

A pre-approval also assures you of a locked-in mortgage rate for a set period – so there is no risk of any interest rate increases while you are house hunting.  The great news for those who turn to a mortgage broker is that a broker may be able to obtain a longer pre-approval rate hold.  Also, with a pre-approval, you’ll get a clear-cut sense of how much you are eligible to borrow.

Keep in mind that the property you intend to purchase – along with your supporting information (such as income, down payment and employment history) – has to meet the financial institution’s criteria to be approved for lending.  Also, a pre-approval is not a guarantee of financing, and does not eliminate the need to make a conditional offer.

Getting a “full” pre-approval takes away much of the stress of your home purchase.  This is where the mortgage broker reviews in detail your mortgage application and supporting documentation.

Often, a bank or broker will just take your information without reviewing  your supporting documentation (e.g., job letter, pay stubs, down payment confirmation etc.).   This leaves the possibility of hitches should the documentation not match what was originally declared in the application.  While this make require an investment of time on your part and on the broker’s part, it is a smart thing to do so that your transaction flows smoothly.

Merix Offers 50-50 Fixed-Variable Mortgage

Innovation seems to be returning to the mortgage market after a long dry spell.  For the past couple of months, all we’ve been hearing is lenders tightening their credit or pulling pulling out of the market.

Merix Financial recently announced their “50/50 Wise Mortgage”. This allows borrowers to take half of their mortgage as a 5 year fixed rate mortgage and the other half as a variable rate mortgage.  Merix already offers one of the most competitive variable rate mortgage at Prime + 0.40.  Their fixed rate is equally competitive.

The terms of this product mirror the terms of their fixed and variable rate mortgage.  The prepayment options are the same.  The interest rate to convert their variable rate is guaranteed to be their best fixed rate at the time of conversion.

This probably will work well for those who can’t seem to decide whether to go fixed or variable.  The borrower would like to take advantage of the savings of a variable rate mortgage and, at the same time, hedge their risks by locking in for half of their mortgage.