How To Apply For A Mortgage In Canada

Trying to buy a home can be a stressful task. Just finding the right home is difficult, then you have to secure a mortgage to purchase that home. Much of what you need to do is simple common sense.

There are many steps in the process to secure a mortgage for your home. First you apply and pre-qualify. Pre-qualify means that the lender will accept the information that you have provided at your word. This sets the guidelines for your house-hunt. When you submit the information for your final purchase of the home, the lender will require you to provide documentation of your income, expenses, and credit history.All of this information is what helps to make the final decision on whether or not the lender will fund your loan. The best way to ensure that you are providing all of your documentation and that it is sufficient is to work with a licensed mortgage agent. The mortgage agent can advise you when you need to provide more in order for the lender to secure your loan.

Using the same guidelines that lenders use can help you determine how much you can really afford to spend on the purchase of a home. A person who works based on commission need to be prepared to give a lender more extensive documentation of income than salaried wage-earners. As common sense would suggest, a person who pays or receives child or spousal suport would have that income added to or subtract from their income accordingly. This is all based on you being able to provide proof of steady payments. The lender then will calculate your "Gross debt service" by using an algorithm. This can make or break your application. All of the financial information that you have provided the lender will now come into play. It is during this process that the lenders determine if you can actually afford the mortgage that you are applying for and if you are too high of a risk for the loan.

During the applicatio process you must decide how much of your own money that you will be able to pay up front for the purchase of your home. This is your down payment. Most lenders require at least a 5% down payment. In Canada, if you are a newcomer, you can expect some lenders to demand a 35% down payment. If a family member is giving you the money to use as a down payment then lenders require a statement from that family member saying that you are not required to pay that money back to them. You also have the option to borrow money from a retirement plan for your down payment. Their are restrictions, so make sure that you research your specific restrictions thouroghly.

Finally you have reached closing for your home. Now you must be prepared to pay clsing costs. This usually works out to be about 2.5% of your purchase price. However, before closing your deal on your new home, most realtors advise that you have a building inspector inspect for any problems. your lender also may require an appraisal of the property. Sometimes you are required to pay for this as well.

The mortgage application process in Canada is pretty straight forward. The headache is all the details. This is where your qualified mortgage agent is a savior. They are specially trained for exactly this and can help you through every step of the buying process.

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