Seek Expert Advice and Read the Fine Print
In the excitement to get their very own dream home as fast as possible, many Canadians grab a pen and immediately sign the mortgage. Before they know it, they are in the home of their dreams – and in for a payment of that home for the next several decades. With the recent change imposed by the Department of Finance in 2008, the period of time has been adjusted to 35 years. – but what are the true implications of a 15, 20, 25, or 35 year mortgage. Which Canadians can benefit from a short term mortgage and who will benefit from a long term? This question is among the many that organizations and mortgage brokers have been active in educating Canadians with regard to financial literacy, credit education being one of them. Why?
First, Canadians need to be better informed about the decisions they’re making when it comes to mortgages. It is to know their choices and the impacts these choices will have for the next few years. Second, the recent real estate collapse in the US is enough to incite fear among Canadian bankers, creditors, and just about any other person who understand the importance of the real estate market.
To do your part, the advice given by The Globe and Mail is simple: read the fine print of the mortgage before you sign it. This advice sounds simple enough that it almost sounds absurd to even explicitly say it.
If, however, you encounter a mortgage contract or agreement of any sort, you will notice how complicated it really gets. No, the confusion does not end at how much more you’re going to pay if you choose a 30-year amortization plan than a 35-year plan. Even the financial literate may not fully understand what is meant by certain provisions and circumstances that are detailed in the mortgage fine print.
For that reason alone, among many others, you should not rely solely on your interpretation when getting a mortgage of your own. Expert consultation with a qualified mortgage broker is a must. In more ways than one, the mortgage will help shape the comfort level of your financial life for the next decades. It will determine how much your maximum spending capacity is. It will decide where you can take your children to college. Or the quality of life you’re going to have. Because of all these, you should not be haphazard when it comes to the first seemingly simple but complex task: signing the mortgage.
