One of the worst mistakes new homeowners make is taking on a mortgage before they understand the entire process. The last thing you want to do is make an irreversible decision on a whim, or at least without grasping all the implications of your commitment.
Taking on a mortgage is an exciting time in people’s life. It’s a milestone, one that comes with stress and responsibility. Mortgages can also be complicated subjects. Second mortgages, HELOCs, and home equity lines of credit can be tricky, too.
Don’t think that your time with a mortgage broker is over just because you’ve purchased a home! Leveraging your home’s equity to get excellent borrowing rates on short notice is a common practice when homeowners need capital to invest in their property or life.
Let’s look at five questions people should ask to get beyond common mortgage broker myths and understand what they’re getting into before signing on the dotted line.
1. What Can a Mortgage Broker Do for Me?
The first question is a basic one. What can a mortgage broker do for you that a bank can’t? Many people look to a bank first, thinking they have a solid reputation for securing the best mortgage rate and terms.
However, banks tend to offer their own lending products first, whereas mortgage brokers have broader access to other lenders whose products may suit you better. With mortgage brokers, there isn’t an embedded bias toward their own financial products.
Plus, we work with homeowners who were denied a bank loan, such as the self-employed, those with poor credit, considerable debt, or whatever else. Mortgage brokers use their expertise honed over the years in the industry to find the most suitable financing for your home, whatever that is.
2. What is the Difference Between a HELOC and a Home Equity Line of Credit?
Existing homeowners may need access to considerable capital on short notice, and leveraging their home’s equity to get better borrowing terms and rates is a popular way to get it. Two of the most common forms involve a home equity line of credit, or HELOC, and a home equity loan.
These two options are similar in that they both utilize the money you’ve invested in your home so far, but they provide different types of relief. First, an independent appraiser will determine your home’s current market value. The amount you’ve paid on the mortgage to date gets subtracted from this number, and the resulting sum is what you can borrow against.
A home equity loan is one lump sum with pre-determined repayment terms you can determine with your mortgage broker and lending partner. Such an arrangement handled by a trusted mortgage broker is perfect when you need to pay off one specific cost. It provides capital upfront and predictability and the terms can be quite beneficial.
A HELOC is an ongoing line of credit that the borrower repays gradually as they borrow. The HELOC is perhaps a little more flexible, but whichever of these popular methods suits you best is the one you should pursue.
For example, HELOCs tend to get approved quickly, making them perfect for sudden emergencies or opportunities. People use both for things like reinvesting into your home to boost its ROI or enhance your living conditions.
They’re also commonly used to pay for post-secondary education, cars, or other big-ticket items.
3. Can Mortgage Brokers Rehabilitate My Finances?
In short, yes! Burke Financial often helps people when refinancing a mortgage to consolidate high-interest loans and reduce the amount they owe each month. We streamline the process, so you pay less, and the process is simpler.
Anybody who has struggled with making various payments each month knows how easy it is for something to slip through the cracks and grow in real-time. As a top-rated mortgage firm accredited by the Better Business Bureau, we have provided meaningful relief for thousands of Canadians by giving them guidance and debt relief strategies.
4. What Can a Second Mortgage Do for Me?
Taking out second mortgage loans may seem daunting at first, but it’s another popular way to leverage your home’s equity to get financial relief and access to capital. Burke Financial will match you with the right second mortgage lender and help you avoid bad credit.
Homeowners can save more than $1,000 a month, which adds up quickly! As with home equity lines of credit or HELOCs, homeowners are free to use the money borrowed against their home’s equity for any purpose they want.
However, it’s safest to use it for things like repaying debt or a home renovation that increases your home’s value. That way, the additional value helps offset or even eclipses the interest payments. If you’re reckless, the failure to repay such debt can lead to losing your home.
Between mortgage loans, mortgage refinancing, and other financial services we offer, choosing the best mortgage broker will help determine the best path for your budget and lifestyle, then get you started walking the road.
5. Why Burke Financial?
Burke Financial is an experienced firm that has helped Ontario residents maximize their home’s value for years. We proudly go the extra mile for our clients, delivering professional and personalized services that exceed expectations.
We make it a point to find a way forward for people who were denied bank loans due to having credit below 650 or high debt levels. Burke Financial believes everyone should have recourse to put a roof over their head and build capital to give a strong financial footing for them and their family.
Life is rapidly getting more expensive in Ontario, from the cost of housing to groceries and more. Homeowners are fortunate to have a place to live and money down on a mortgage that would surely be higher if it was purchased today! Keeping up with paying for life’s necessities was difficult enough before rising interest rates and inflation drove prices even higher. Whether you’re looking to tap into your home’s equity to keep from drowning, or seize an investment or life opportunity, let Burke Financial help you today.
