Take the quiz to find out which option is best for you
Whether this is your first mortgage, your mortgage is soon due for renewal or you are thinking of refinancing; choosing an interest rate and mortgage term that is right for you can be a daunting task for some. You have to decide if you want to take a fixed or variable interest rate term, and then you need to determine what term length fits with your financial profile. Next step is to choose between a closed or open term, and lastly, you then have to choose the amortization that works best for you. Today’s interest rates are still at an all-time low, though that’s not a reason to ignore the value of doing your research before you commit. If you plan on getting a new mortgage within the next 90 days, or want to take advantage of the low rates with an early mortgage renewal offered by your current lender, this quiz should help you to make an informed decision about your mortgage future.
Get your pen and narrow down the options by taking this 19-question quiz to help you determine which rate and term suits your needs best.
1.Have you had a mortgage before?
A) No
B) Yes
C) Sort of
2. Are you on a strict monthly budget or do you have some wiggle room?
A) Strict Budget
B) Wiggle Room
C) Not sure yet
3. What is more important to you?
B) Potential mortgage interest savings
C) Uncertain
4. Do you plan on using your mortgage pre-payment privileges?
A) No
B) Yes
C) Maybe
5. Are you worried about rising interest rates?
A) Yes
B) No
C) Kinda
6. Do you plan on making a move within the next 3 years?
A) No
B) Yes
C) It’s up in the air
7. Is it important you know exactly how much your mortgage balance will be at the end of your term?
A) Yes
B) No
C) It’d be nice to know
8. Do you pay attention to economic news and trends?
A) No
B) Yes
C) Sometimes
9. Are you financing a rental property?
A) Yes
B) No
C) Not sure yet
10. Do you plan on making a change to your financial profile in the near future? For example, maternity leave, going back to school or a job change?
A) Yes
B) No
C) Uncertain
11. Do you have experience with revolving debt payments, such as a credit card or a line of credit?
A) No
B) Yes
C) Sort of
12. Are you interested in a home equity line of credit product?
A) No
B) Yes
C) Maybe
13. When it comes to your finances, how do you play it?
A) Safe and sound
B) Risky and potentially rewarding
C) Little bit of both
14. Do you have savings available in case of emergencies?
A) No
B) Yes
C) It fluctuates
15. Do you have other significant debts you are currently paying monthly?
A) Yes
B) No
C) Not really sure
16. Do you plan on taking a mortgage term that is longer than 5 years? (There are 7 and 10-year terms available)
A) Yes
B) No
C) Maybe
17. Do you have to “state” your income in order to qualify for a mortgage or can you confirm it in writing? This applies to self-employed borrowers who have low reported income.
A) Yes
B) No
C) Uncertain
18. Do you have good credit?
A) No
B) Yes
C) Not sure
19. Do you have more than 5% downpayment available?
A) No
B) Yes
C) Doesn’t apply to me
Now it’s time to review your selections, tally up how many of each letter you chose and read on for some potential rate directions.
Mostly A’s
Fixed it is
Fixed rate mortgage terms offer interest rate and payment stability. A predetermined amount goes toward interest and principal and there’s a low qualifying rate for a 5-year term if you’re trying to maximize your mortgage approval amount. This can be appealing to the budget conscious, first-time homebuyers and cash-flow savvy investment property owners. Fixed rate terms come in lengths between 1 and 10 years and most come with flexible pre-payment privileges and reasonable payout penalties.
Mostly B’s
Variable is the way
The variable rate mortgage feature is applicable to a few different product offerings including the Home Equity Line of Credit, open term, and closed variable rate term. Variable rate mortgage terms have historically seen interest savings over their fixed rate counterparts though are more difficult to qualify for. As the interest rate for a variable product fluctuates with the prime rate, be prepared for the possibility that your mortgage payment could change at some point during your mortgage term. This is why it is recommended a borrower taking a variable rate be prepared for fluctuating payments by having experience with revolving payments and for a potential increase in monthly mortgage costs.
Mostly C’s
Explore the pros and cons
If you find yourself circling mostly C’s, further research is required. I recommend taking an in-depth look at the pros and cons of the rate and term options available to you and if you’re still undecided at that point, talk with an experienced mortgage professional to get some recommendations based on your financing priorities and goals.
If you’re looking for an experienced mortgage professional, contact the Mortgagegirl at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca. 