One of the most stressful aspects of buying a home is obtaining a mortgage. You have expectations for what you want in terms of a mortgage approval, but your lender may have different expectations. Sometimes things pop up and your mortgage isn’t going to be as you hoped. Looked out for these things that can cause you stress during the mortgage process.

The difference between posted rates and discounted rates

You may have googled mortgage rates online and saw that there are posted rates and there are discounted rates, but do you qualify for the discount? Don’t automatically assume that you do. Ask yourself if you are what is considered a good candidate for a mortgage. Essentially, you need a certain level of income, a great credit rating and a long history at your job. You want to be the type of borrower that lenders will throw their money at because they know they’ll get it back and those are the people who get those discounted rates. To be sure you get the best rate on your new mortgage, use a mortgage broker, who will find you the best deal for your mortgage.

Getting your documents together

Lenders need to see proof of your work status, income and credit, plus any assets you may have. They’ll want to see:

· Notice of assessments from the CRA

· Pay stubs

· Bank statements

· Credit report

· Letter from your employer

As well, they may need documentation on the property, including:

· The offer

· The appraisal

· Proof of insurance

Getting these documents together can be harrowing, but they are important pieces of the mortgage puzzle.

Ensuring you have the right down payment and deposit

In Canada, you need a minimum down payment of 5% for a home under $500,000. Over that amount, you need an additional 10% for the amount over it. You need these funds in your bank account and accessible before closing. You will also need a deposit to put down with your offer, which can be an amount of your choosing, but the better deposits often get the most traction.

stressed about a mortgage

Getting a pre-approval

Many homebuyers go into the home-buying process assuming what they can afford without really knowing. It is really important that before you even contact a local real estate agent that you get a pre-approval. This will tell you the maximum amount you can afford, so you can tailor your home search accordingly. Many buyers are shocked that they can’t afford as much as they thought, so this is one step that shouldn’t be ignored and one surprise that isn’t always very fun.

Proof of income

Did you get a part time job to aid in the saving of your down payment? Are you assuming that part time job will be included as income in your quest for a mortgage? Think again, because lenders usually have strict stipulations on what they’ll consider as regular income. If you’ve had that part time job for more than two years, it may be included with your full time earnings, but any less than that and it may be seen as something you won’t continue earning. As well, self-employed people need to be aware that the amount they made last year may not be the only consideration for the lender. If your income increases and decreases each year, lenders will have their own formula for deciding on what your yearly income truly is.

Don’t be caught unaware during the mortgage process. Talk to a lender early in the process to find out what you need to do to get a mortgage and buy your dream Collingwood home.