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Searching for the right mortgage lender and terms can be an arduous process filled with questions and options. Most people aren’t inherently equipped with the knowledge required to navigate the road to mortgage approval. Applicants need to ask the right questions to an experienced mortgage professional.

Some of the common questions borrowers ask revolve around credit profiles, types of mortgages and what are some of the hidden costs and fees.

Credit Profiles

Most applicants focus on their credit score, thinking it will help determine the loan amount. In fact, an entire credit profile could impact an application, which includes payment history, debt load, and unpaid debts.  This profile helps paint a clear portrait of the applicant’s financial history and situation. If the profile is strong it can reassure the lender that a borrower can handle the loan.

Credit scores do matter to lenders but it is not the only aspect that can determine a mortgage approval or rejection. 

Different Types of Mortgages

There are a lot of different types of mortgages and it can get a bit confusing for first-time borrowers or even the seasoned pros.

Mortgage types include but are not limited to:

• Traditional mortgages (20% down payment, loan-to-value ratio)
• High-ratio mortgages
• Fixed rate mortgages
• Variable rate mortgages
• Convertible mortgages
• Open mortgages

Each mortgage has its own stipulations and terms so sit down with a mortgage specialist to determine which is best for your situation.

Costs and Fees

Mortgages contain a lot of fine print which can balloon the cost of your home. One of the costs is insurance that the borrower must purchase if their down payment is less than 20%. Other costs include taxes, processing fees (usually $200-300), lawyer fees and interest adjustment.

Borrowers need to be aware of all the costs and fees and make sure they are covered in their budget.

The best way to approach a mortgage application is carefully, thoroughly and with knowledge. Contact us to learn more about your mortgage options. We can walk you through the entire process and answer all your questions.

Making the leap from lifelong renter to homeowner is exciting but it can also be stressful and time-consuming.  Homeownership comes with a ton of responsibility but it results in finally having a place to call your own. A place where you can settle, make all the choices and plant roots.

Here are some tips to help make the transition from renter to owner as smooth as possible.

Create a Detailed Budget

Entering homeownership for the first time is expensive and a big financial change for most. You need to know where your money is going every month. Create a detailed budget where you outline every monthly cost and be sure to leave some room for those pesky costs that pop up every month.

Your budget will guide most of your monthly spending. The more detail you include, the less chance you have of being surprised. If you come under budget some months you can consider making a larger mortgage payment, which will go towards the principal.

Learn to be Handy

Renting can be nice and breezy. When your faucet breaks, you call your landlord and they call the plumber. When you have an electrical problem, you call your landlord and they call the electrician.

Owning a home means being responsible for every broken appliance, leaky faucet and every part of a home that requires maintenance. Learning to be handy and being able to make small repairs can save an owner a lot of money and get your home running at optimal capacity quicker.

There are a ton of DIY classes people can take to improve their skills and knowledge. Home Depot and community centres tend to offer these classes in the GTA.

Do not Overlook…

An important tip for homeowners is to stay organized. If you are upgrading the size of your home, you will have more space so use it wisely. This doesn’t mean acquiring more stuff, but instead, make sure you keep your storage spaces organized and don’t let your garage devolve into a room full of tools and boxes of old clothes.

There might not be a bigger lifestyle change than the one that comes with becoming a homeowner for the first time. Go into the situation with a plan and do your best to execute that plan every month to ensure the transition works and to minimize stress.

A loan application is thorough and requires a lot of supporting documentation. It can be something of financial audit meaning applicants need to have their numbers in order if they want to get approved.

The information that will be required depends on the type of loan, and in some cases varies based on the applicant’s situation. For instance, a self-employed applicant requires more proof of employment and a first-time homebuyer could be asked to submit additional information.

Let’s review what information is generally required for a loan application.

Personal Information

Lenders need to know who they are considering so applicants need to provide a lot of personal information. This can include but is not limited to:

• Legal name(s)
• Date of birth
• Contact information
• Current address
• Current and past employers
• SIN

If you require a co-signer, then the borrower will need the same information for them as part of your application.

Credit History

You will need to a provide credit history to lenders, including a credit score. This will also help determine your interest rate and amortization options. This history provides insight into how you repay loans and your monthly debt load, both key factors to a lender.

It doesn’t matter if you’re applying for a mortgage, second mortgage, home equity line of credit, a car loan or a small business loan, you must submit your credit history to be scrutinized.

Appraisal or Inspection

For a loan to buy a property, you must pay for an appraisal or inspection. Once completed, the lender will ask you to submit the findings. The lender wants to make sure that you are paying for value and not overpaying for a declining or flawed asset. A lender is the one forking the bill for your property so they want to make sure its major systems are running and that it is a worthy investment.

Contact us today to learn more about the loan application process. We can walk you through everything you need to do and help you understand what your loan could look like with respect to interest rate and repayment.

Buying a home is a complicated process that involves banks, real estate agents, lawyers and a ton of moving parts. The very first step a buyer should take is to get pre-qualified for a mortgage. It’s not a necessity but it helps remove murkiness and confirms that people can borrow funds to buy a home, and how much they will have to work with. It will save you time and possibly heartbreak as you search for your first or next home.

It’s a simple process and qualification is based on your financial profile. Here are some tips to help you get pre-qualified.

Credit Report

A credit report is a snapshot of a borrower’s credit history. It outlines their debt history and their ability to repay loans. It is a vital document for lenders to review as they make their decision.

Typically, you need to provide a credit report as part of your pre-qualification application. If you have a poor score, consider holding off for a few months as you work towards improving it. During this time, focus on paying off debts, pay incoming bills on time, and don’t borrow any money.

You can also meet with a credit counselor to create a strategy to improve your score.

Your Financial Information

Pre-qualification doesn’t require you to submit all your documentation but you need to have your numbers in order. Numbers refer to your financial information, which can include household income, assets, liabilities, down payment amount, bank statement and the previously mentioned credit score.

Before contacting your lender to start the pre-qualification process, consult with your bank to get your financial information in order.

Be Honest and Transparent

To get pre-qualified, a lender needs to assess your financial situation and history. To do so, you need to provide accurate information. Under no circumstance should you try to conceal a debt or lie about your credit score. Not only will a lie on your application result in rejection, it could put you in bad standing with the lender.

Contact us today to learn more about mortgage pre-qualification, or to start the process.