Mortgage & Financing Information For Buying Real Estate
Here are several tips that will not only make the mortgage approval process easier it will also speed up the process enabling you to remove the finance conditions quicker in a competitive situation.
Obtain Credit
Establish credit and managing your credit responsibility is going to affect what you can purchase and or finance for the rest of your life; it will also affect the interest rate which you can borrow at.
When it comes to getting mortgage financing your credit score is one of the most important qualifying criteria in obtaining a mortgage approval.
Use your credit responsibly by making purchases and paying off the balance, or at least making the minimum payment on the required date which is typically 3% of the balance. Missing even the smallest payment can damage your credit rating; if you know you are going to be late making a payment be honest and contact the lender up front. You will be impressed by how accommodating they can be when you show the initiative.
Employment History
Although the length of employment required by a lender can be different for each individual, and vary from lender to lender, it is possible to get approved with as little a 3 month history with an employer. If you are in the same line of work as you have been for years and just changed companies than you may be able to be approved with less than 3 months.
Critical things the lender will look at include the type of employment, is your probation complete, how long have you been with the company or that line of work, the industry, the company size, the stability of the company and hey may want to verify the company does exist due to the amount of fraud that happens these days.
The lender will want a letter of employment stating the employee is in good standing, past their probation period if new and details on how they are compensated for their work.
Along with this letter the lender will want to see a few pay stubs, last years Notice of Assessment from Revenue Canada. If you have been working in Canada for less than a year the NOA is not required but it does strengthen your chances of being approved.
Down Payment
Your down payment must be verified to a lender with documentation. If the down payment is coming from personal savings, a 30 to 90 day history in the form of checking or savings account bank statements that show your name and account number are required. If the down payment is coming from a RRSP or GIC, only a current RRSP or GIC statement with your name and account number will be required. If the down payment is coming from a gift from and immediate family member, an easy to complete Gift Letter is required, along with bank statement showing the gifted amount deposited to your account.
Although none of these documents are required until just prior to the completion of the mortgage is is always a good idea to provide them as soon as possible, so the lender can review them and see if there are any areas of cocnern that may be problematic. This will prevent rushing around to collect information at the last second.
Although there are many options regarding the financing of your home, I have found one person, Win Lui consistently provides amazing service and amongst if not the lowest rates.