The Basics of Mortgage Approval

Buying a home, especially that first one, can be one of the most exhilarating experiences in your life. The thought of putting down roots, of decking out a piece of property using your own fashion sense and style is an emotional high. At the same time, the level of financial commitment can also be daunting. When you sign those mortgage papers, you are suddenly faced with the responsibility of paying back a sizeable sum. We can help you get through the mortgage approval process, thus allaying some of those doubts and fears. Just give us a call anytime. We’d be happy to answer questions and discuss your concerns.

Down payments are the norm on most mortgages. Zero down options do exist and we would be happy to discuss them with you. But you should expect to put down at least five percent of the property’s purchase price.

The more money you put down, the more money you will save in finance charges on your mortgage. If you can put down at least 20 percent, then you will avoid the 2.5 percent charged on the total purchase price that goes to insuring your mortgage via the Canadian Mortgage and Housing Corporation, or CMHC. This fee is usually incorporated into the mortgage, but adds to your overall financial commitment. A larger down payment will save you money in the end.

It’s also a good idea to explore mortgage options before you sign on the dotted line. And, before you do sign, read the documents and be sure you understand them. Mistakes can cost you even more money, and you are already committing to a sizable sum. We can help you explore those options.

Consider the various types of term mortgages and available interest rates. Learn the difference between a fixed rate mortgage and a variable rate option. Do you prefer knowing what your payment will be for the term of your mortgage, perhaps for budgeting purposes? A fixed rate mortgage might be better for you and your family. Depending on the interest rates available, a variable rate might work, but keep in mind that your payments each month will most likely vary. Consider your personality type as well when deciding on a fixed or variable mortgage.

We do encourage you to put as much money down on your home purchase as possible. It may mean cancelling a vacation or two, but you will save more in interest fees and usually get that mortgage paid off much sooner. Then look forward to a “celebration vacation” when you do make that final payment.

Getting the timing right on your mortgage shopping is also a plus. Do comparative shopping at both banks and brokers to see where you can get the best interest rate and the best overall deal. Most lenders will quote a rate that is valid for a stated amount of time. That gives you the chance to seek out other deals without sacrificing what you’ve already found.

When we buy a car, a bike, or an appliance, we know that these items depreciate, or decrease in value over time. Believe it or not, homes can also depreciate, particularly if you’ve purchased a new property. The way to compensate for this depreciation is to make improvements to your home. Think of it this way, as your family grows, you might need your home to grow as well. Putting in an extra bathroom, upgrading a kitchen or fleshing out the basement not only adds value, but makes your home a more enjoyable space for your family.

When we take on the role of REALTOR® that means that we commit to helping you through the home buying process. Wading through the mortgage maze can be challenging, even for the seasoned homebuyer. We’ve given you some advice to think about and we would be happy to help you make your way through that maze. Just give us a call.