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Mortgage Guide & Glossary

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Your Step by Step Mortgage Guide

What is a mortgage?

A mortgage is a loan that uses the home you buy as security. This loan is registered as a legal document against the title of your property. Here’s a quick overview of some of the most common aspects of a mortgage that you need to understand.

Mortgage Terms

The principal is the amount of the loan, or cash actually borrowed.

The interest is the amount the lender charges for the use of funds, or principal. Interest rates vary according to the many factors, including terms and conditions of the mortgage as well as a borrowers credit history. Mortgage payments are usually applied towards booth principal and interest.

The amortization period is the actual number of years that it will take to repay the entire mortgage loan in full. This normally ranges from 15-25 years but can be extended in certain circumstances. A longer amortization period will result in lower payments but it will take that much longer to pay off the mortgage which in turn means you pay more interest.

The term is the length of time for which a mortgage agreement exists between you and your lender. Typically, terms range between six months and ten years. A longer term means you will keep he interest rate agreed upon for that longer length of time. Rates vary with the term and the difference in payments and interest costs can be calculated by your mortgage professional. Once your term is up you are able to re evaluate your financial situation and consider new term and amortization periods.

The maturity date marks the end of the term, when you can either repay the balance of the principal or renegotiate the mortgage at interest rates in effect at that time. If you should choose to repay the balance or renegotiate the mortgage before this date, penalties may be charged.

Payment Schedule is the frequency at which you will make your mortgage payments. These can occur monthly, semi-monthly (twice a month), biweekly (every other week) or weekly. Generally, more frequent payments can result in lower interest costs over the life of your mortgage.

Mortgage Options

Options let you tailor the mortgage to fit your personal needs and circumstances. Open or closed mortgages, pre-payment options, fixed or variable rates or portable mortgages are just a few of the most commonly available options.

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Fixed vs. Variable Rate Mortgage (VRM)

We offer some of the most competitive fixed rate mortgages in Edmonton, AB. Whether you're looking for a 15-year loan or a 30-year loan, a fixed rate mortgage could be your ticket to financial stability in a world of economic uncertainty.

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CMHC & Genworth - Default Insurance

Default insurance is mandatory in Canada when you put down less than a 20% down payment. The default insurers are CMHC, Genworth and Canada Guarantee. Wondering why this is mandatory and what the fees are?

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Mortgage Brokers vs. Banks

We strive to make your next real estate purchase a smooth and hassle-free process. Leveraging our experience and extensive network of mortgage lenders, we work hard to find our clients the best terms and rates available to them.

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Steps to a Speedy Approval

Here are a few requirements you will need when applying for a mortgage. Having these ready and on hand will make the approval process move quickly.

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Credit Score

Credit scores are used by the majority of companies to determine if you are a good credit risk or not.

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