Started your home search and looking for answers?
Before deciding on a mortgage for your new home, you must understand every element of the residential mortgage process to ensure you make an informed financial decision.
Preparation is key when buying a home. Become informed and understand your options to make the best decision for your situation.
Various loan products from different mortgage lenders are available to suit consumers with diverse needs. Enhancing your knowledge gives you confidence and enables you to find the right mortgage product that suits you best.
When looking for the best mortgage solution and advice, working with a full-time professional mortgage broker who can provide tailored recommendations that suit your specific needs and circumstances is important. Most importantly, you should feel confident in your chosen mortgage.
This blog simplifies the search for the most fitting mortgage solution and lender by providing you with the necessary tools and resources.
What questions should I ask before getting started?
When hiring a mortgage professional for your purchase, it is vital to ask the following questions:
Be sure to verify that you are working with the right specialist.
They provide full transparency to ensure they can fulfill their commitment to providing you with the best possible deal.
Educating yourself and gathering as much knowledge as possible will help protect you when buying a home.
The following questions should be asked:
- What steps do I need to take to buy a house?
- What are the products you offer?
- What makes this particular mortgage option for you the very best?
- What is the connection between you and the lender?
- What is your compensation?
- For how many years has your business been operating?
- Could you provide me with references?
- What is the estimated timeframe for my application to be processed?
- Which documents should I submit?
CREDIT SCORE
Your credit score is a snapshot of your credit history, revealing how reliably you manage payments.
Excellent credit history and score are essential to buy a house. Your credit score indicates how well you are likely to repay future debt, and it can either accelerate or delay your mortgage application. A strong credit profile will make it easier for you to borrow money and pay a lower interest rate; Conversely, if your credit score is weak, you may not be able to get the loan or have to pay higher rates.
In Canada, two major credit bureaus, Equifax and TransUnion, maintain records related to your credit. Use the links provided to get more information on what goes into a credit score, how important it is to review your credit report periodically, how to obtain your report and how to enhance your credit score if needed.
PRE-APPROVAL / PRE-QUALIFICATION
Getting pre-authorization or pre-qualification for the amount of money you are eligible to borrow from a lender is essential. It will stop you from viewing houses that may be beyond your financial means. The pre-approval ordinarily provides a rate assurance for three months, whereas a pre-qualification does not offer such a guarantee. Occasionally, a lender may demand somebody act as a guarantor, offering extra security to the lender. Guarantors sign the mortgage paperwork alongside the borrower but do not possess the real estate.
Understanding the different aspects of a mortgage loan can assist you in planning for your future.
Not everybody can pay for the total cost of a house outright and thus require a loan to fund their purchase. As a form of security, the lender takes control of the property, called a mortgage. A mortgage loan permits people to acquire property without paying its entirety instantly. The borrower of money is referred to as the mortgagor, while the loan provider is known as the mortgagee.
When considering a mortgage, here are some elements to take into account:
When negotiating the mortgage loan amount, it is essential to remember that you will need to make a down payment. This is an upfront payment towards the purchase price; the loan amount is equal to the purchase price minus your down payment.
The borrower must make monthly mortgage payments, like any other loan, plus the interest.
Making payments on a mortgage involves two parts – payment of the principal (the amount of money borrowed) and the payment of interest (the fee charged for borrowing the money).
Like with any other loan, regular payments go towards paying off the mortgage over time.
The larger your down payment, the lower the amount of money you need to borrow and the less interest you’ll need to pay during the repayment period.
If you can make a down payment of 20% or more of the purchase price, you can qualify for a conventional mortgage.
With a down payment lower than 20% of the purchase price, you will have a high-ratio mortgage. For protection, lenders require that these mortgages be insured with mortgage default insurance to cover them in case the borrower cannot repay the loan.
Canada Guaranty, Canada Mortgage and Housing Corporation (CMHC) and Genworth Canada offer assistance to
First-Time home buyers incentive for people with limited disposable funds for a down payment. Ask your mortgage professional for more details.
First-Time home buyers incentive can benefit from Canada Guaranty, CMHC and Genworth Canada. Ask your mortgage professional for more information about the First-Time home buyer incentive.
Make your dream of homeownership a reality today!
New to Canada
You can obtain a residential mortgage even if you are not a Canadian citizen yet. Permanent residents, International students and skilled workers on Work permits are allowed to buy a house in Canada.
Furthermore, it is important to understand the different aspects of a mortgage loan, and the cost of home ownership and to consider the following questions:
- What is the amount I am eligible to borrow from a lender?
- How much of a down payment will I need to make?
- What are the monthly payments for my mortgage loan?
- How much interest will I need to pay on my loan?
- Is there an incentive available for first-time home buyers?
- Are there any special programs available for new immigrants or international students looking to buy a house in Canada?
- Do not forget to ask your Mortgage advisor about the costs of Borrowing, Non-interest charges, Service fees, if any, and Closing costs. The Mortgage advisor should advise you on all of the Borrowing calculations. Borrowing calculations are dependent on the type of product and, the type of lender, the mortgage interest rates. Generally, Closing costs are calculated at 1.5% of the purchase price, which the borrower must have over and above all of the down payment.
- Lastly, The mortgage brokers will introduce you to Mortgage Loan Insurance and Mortgage Loan insurance premiums
In conclusion, first-time home buyers must consider the amount they are eligible to borrow, the down payment they need to make, the monthly payments for their mortgage loan, and the interest they will need to pay. They should also ask about any incentives for first-time home buyers and special programs for new immigrants or international students looking to buy a house in Canada. Finally, borrowers should be aware of all borrowing costs, borrower default penalties, non-interest charges, service fees and closing costs associated with their mortgage loan.
Find out if you qualify for a better mortgage.
You can ask us any mortgage questions and discuss your mortgage needs with us.
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