We
often need to restructure our finances for a variety of reasons; sometimes it
may be due to loss of employment, sometimes you may need extra cash for
unforeseen reasons, or it may even be something you’ve wanted to do for long
but just couldn’t muster the courage to undergo the excess expenditure.
Irrespective of why the restructuring is required, it becomes crucial for you
to figure out how the new financial scenario will pan out in the future. One
way, and possibly the best way, of doing so is using a mortgage calculator.
Mortgage calculators are offered on websites of numerous financial organizations which
give out loans and mortgages. While these calculators are tremendously
effective in helping you get an accurate picture of your financial situation (which
is essential for making a sound decision), many people tend to make mistakes
while using them, which throws the entire calculation into disarray and ruins
your best laid plans.
But
what are these mistakes? Here’s a list of the top 5 mistakes which you can
avoid and get a correct assessment, which will consequently help you make a
wise decision.
1) While calculating a mortgage, we often
tend to use the best interest rate offered, even though that may not be valid
for us. This may be due to a bad credit rating, or the amount of our mortgage
not falling into the bracket or some other factor. Either way, avoid
calculating your mortgage until you have a clear idea of the interest rate
which will be applicable to you.
2) Another very common error is not
factoring in the extra costs that will go along with the mortgage. These
include:
i.
Closing costs
ii.
Maintenance fees
iii.
Insurance that you may be
required to take out.
3) Incidentally, insurance often burns a larger hole in your
pocket than you had imagined. Firstly, the lenders themselves may require you
to take out an additional insurance for safety purposes. Besides this, even the
regular insurance rates vary drastically depending on factors like age of
property, changes made, location, etc. Ensure that you have the correct data
with regard to every one of these aspects when you’re feeding it into your Canadian mortgage calculator.
4) Sometimes,
people seeking a mortgage refinance confuse the term ‘payoff’ with ‘balance’.
Don’t hit the buttons on the calculator with balance as your data; first find
out what the payoff value actually is and then use this information; it’ll help
you get a realistic picture.
5) Last on
the list come property taxes, which one often calculates using the last stated
value. However, if any improvements or changes are brought about on the property,
this will result in a corresponding change in the property tax as well. Get an
appraisal in this regard if possible so that you can get the correct data.
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