Applying for a Mortgage

Applying for a mortgage can be quite stressful for some individuals, with all of the required paperwork necessary and questions that you need to answer.

However, knowing what's involved in the process and allowing a qualified mortgage broker who has direct associations with many lenders and understands their policies will make things a lot easier.

Here's some information to get you started.

It is important that you do some of your own homework before you apply for a mortgage.

Think and decide about what type of home you want to buy, what your current budget will allow, and what type of mortgage product you might want to seek( fixed or variable). Be prepared to answer any questions that a lender / broker might have for you, and make sure you are open and straightforward about your immediate circumstances.

When you apply for a mortgage, the broker/lender will want a lot of pre-qualifying information about you to best determine your loan eligibility.

A privacy act will be required to be signed, that allows the lender to verify your income, employment, credit file report and possible bank account/s information.

In many cases, you will want to know how much mortgage funds you can apply for before you begin your search for homes. This is important, so you won't be wasting your time getting excited over places that you end up unable to afford. Your associated broker will be in a position to pre-qualify you on your borrowing position using many of his different lenders servicing calculators.

Each lender has their own servicing calculator, which some are favorable to your situation while others are not so favorable. It would be wise to leave this important stage in your broker’s hands, so you get the best information on which lender will approve you the most mortgage funds.

This simple strategy can determine what possible market price you can look for in a residential security, while also knowing approximately how much of your own funds will be required to finalize the settlement transaction.

The interim pre-approval, however, means that the lender has checked out your income and credit and is happy with your submitted application.( pre-approvals most of the times come with special conditions which your broker will inform you about.) You'll get a letter of commitment stating that you'll be given a mortgage up to a certain amount.

Preapproval lets you know exactly how large a mortgage you will be funded. In addition, it gives you more credibility as a buyer, since a seller can see in the lender's letter that you are going to get the mortgage if he or she accepts your purchase offer.

Lenders will not fund you more than a certain percentage of the value of the property. If your deposit payment will be less than 20 percent of the value of the property, your loan will require lenders mortgage insurance, which the lender will submit on your behalf to obtain insurer approval.

The applicable premium nowadays can be capitalized into your loan, which allows you less requirement to find the funds necessary for its payment. Unfortunately, there are still some lenders which do not capitalize this mortgage insurance, only to either deduct it from loan proceeds, or requiring you to find these funds for its payment.

Since the home that you are purchasing will serve as collateral for the loan applied for, the lender will order a market valuation report of the property. This condition is the final stage to receiving your Formal Approval also called Unconditional Approval.

One final note, applying for mortgages with several banks can possibly harm your credit
rating, because each lender registers a credit report on you to assess your application and these inquiries are reflected on subsequent credit reports from each different lender.

A good credit rating is critical in getting the best mortgage rate and terms.

A mortgage broker will help to protect your credit by using just one credit report and submitting it too any number of lenders on your behalf, allowing you to get the best possible mortgage amongst many lenders without damaging your credit rating.


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