Basic Mortgage Rules to Follow

[Janos Sztojka]

Basic Mortgage Rules to Follow

What IS A Mortgage?

In the most basic sense a mortgage is a loan to buy a property. The process of securing a mortgage means lender approval based on your income, credit rating and other debt.

Understand Your Fixed Costs

Before you decide what you can—or should—spend on a mortgage it’s important to take stock of your habits and your true fixed costs. Be honest with yourself when putting together your household budget, if you’re going to be miserable without your daily premium cup of coffee, then along with your student debt and car payments, consider that a fixed cost.

Be PITH Safe

According to the CHMC (Canadian Housing & Mortgage Corporation), your monthly housing costs should be less than 32% of your gross monthly income. These are considered your PITH or Principle and Interest (of your mortgage payments), Property Tax, and Heating bills.

5. It's a Good Year to Sell

Overall, expect real estate prices to jump 3 to 5 percent in 2016. That means it's going to be a very good year to sell.

Supply is still tight, which is advantageous to the seller. The buyer doesn't have a lot of choices and may have to settle on paying a little more than originally planned just to get into a great place.