|
Sue Pukas
905-702-1111
RE/MAX
Realty Specialists Inc.
(Brokerage)
45 Bramalea Road, Ste#102,
Brampton, Ontario
L6T 2W4
|
|
|
Platinum Award receipient for over 10 years |
|
|
| |
|
Affordable mortgage solutions for first-time homebuyers |
(NC)—Have you reached a stage in your life where you are ready to become a homeowner? Congratulations, this is a very exciting time! It can also be a bit overwhelming since you will be making a lot of decisions.
Financing for your new home of course is a big one. The most common approach is through a mortgage. And with today's competitive mortgage marketplace financial institutions are not only offering great rates but also innovative mortgage solutions to attract new customers. Now has never been a better time to start owning.
One of the most common mortgage offerings is a variable rate mortgage. Historically, it has proven to save consumers money over the longer term when compared to a fixed-rate mortgage. Even if you feel that the interest rates will rise in the near future, you should think about your decision from a long-term perspective. With a variable rate mortgage you are usually starting out at a lower rate to begin with, and you will benefit from any decreases in interest rates that occur in the future. For example CIBC's Better Than Prime mortgage offers a rate of 2.01 % below CIBC's prime rate for the first nine months and 0.35% below prime for the rest of the 5-year term (APR of 5.39% for 5-year term as of January 22, 2007). However, if you are risk averse, the security of a fixed rate mortgage may be worth the higher interest rate in return for the peace of mind of knowing that your payments and rate won't change during your term.
While the interest rate is an important factor when shopping for a mortgage, it is not the only consideration. One of the most daunting tasks when buying for the first time is coming up with the downpayment. Available mortgage options which can minimize your downpayment, ease the burden of saving, and allow you to live comfortably with your mortgage once you have it include:
The "zero" downpayment mortgage. This can be the ideal product for those consumers who have an excellent credit history, but have not yet saved up the required minimum downpayment. This mortgage allows financial institutions to offer homeowners either the 5% for the downpayment as cash back, which can only be applied towards the downpayment, or allowing customers to borrow the 5% for the downpayment. In either situation, the consumer is virtually obtaining their mortgage without using any of their own resources. However, if you choose this flexible downpayment option there is a higher mortgage insurance premium associated with it.
Extended Amortization. Financial institutions are now offering mortgages with 30, 35 or 40 year amortization periods compared to the standard 25 years. A longer amortization period will allow you to have a lower monthly payment and could help you afford more when searching for your ideal home.This will free up much needed cash flow that may have been otherwise unavailable had you opted for a 25 year mortgage. By lowering your payments you will increase the amount of interest that makes up your monthly mortgage payment. Given this, it is important to choose a mortgage that allows you to increase your payments and make prepayments.
Cash Back option. If you are able to save up for the downpayment there are still other fees to consider. Depending on the financial institution and the mortgage term you select, you could be eligible for an amount between 1/2% to 5% of your principal mortgage amount back in cash. This can be a good option to ease a tight cash flow, especially after saving for your downpayment. The cash back you receive on your mortgage is tax-free and can be used any way you wish. Some first-time homebuyers find it helps with the hidden or closing costs associated with purchasing a home which can usually amount from 1.5% to 3.5% of the total cost of your home.
CIBC offers both choice and flexibility in delivering mortgage solutions that will suit your needs so you can own the home you love sooner. For more information about your mortgage solutions, please contact your local CIBC branch or call 1 800 465-CIBC (2422) to talk to a personal banker. You can also visit the CIBC website at www.cibc.com.
Credit: www.newscanada.com |
| | |
News 
(5) 
