5 Steps to getting a mortgage

Author: Noble Mortgages Inc. | | Categories: Best Mortgage Rates , Lowest Mortgage Rates , Mortgage Agent , Mortgage Broker , Mortgage Company , Mortgage Financing , Mortgage Professional , Mortgage Specialists , Refinance Mortgage

5 Steps to getting a mortgage

Although purchasing a home can be both exciting and stressful trying to get a mortgage can stress you even more. So before taking the next step on getting your mortgage approved, we’ve created a 5 step checklist to assist you along the way.

Step 1: Down payment

The 1st step is the hardest and one that will be the most time consuming, saving up for a down payment isn’t always easy. Depending on how much you can save will determine what you are able to afford.

These days 20% down payment is no longer required, as 5% down payment will suffice (Let’s be clear, that you will be required to obtain default insurance on anything less than 20%).

Once the down payment has been determined, you will have an idea of what is affordable. Your down payment is one of many factors to consider as you still have to account for your credit score, your income & employment.

Step 2: Setting your budget

Most people set a budget before evening knowing what they can afford, so it’s imperative not to jump the gun so quickly in looking for a home. This is why it’s important to speak to one of our Noble Mortgages agents’ before committing to a price range when trying to purchase a home. So let’s create a scenario.

Your annual income is let’s say $100K you have managed to save $40K for your down payment (that’s on top of additional costs that need to be considered such as taxes, closing costs, legal fees, insurance etc.). So let us assume, you receive a rate of 2.99% and 25 year amortization, you would be able to afford a home for $507,280.00. Keeping in mind that you would need default insurance (of $18,691 if you were to go ahead with the insurance). Which means you would either need to save up a larger down payment or adjust your budget to $200K if you are set on $40K and putting 20% down.

At this point you may want to play with some numbers a bit more.

Now that you have an idea of what approximately you can afford it is time to figure the financial side of it.

Step 3: Getting pre-approved

This is the time to consult your mortgage broker and get pre-approved. Pre-approvals can determine what you will qualify for and what is affordable for you. Once the rate is determined, a pre-approval can secure your rate for up to 4 months. What does this mean? It means, lower mortgage rate & lower mortgage payments. The pre-approval is not the final approval, it is only to give you an approximate idea. Our mortgage broker will finalize and approve your mortgage once next steps of the process are completed.

Step 4: Providing your documents on a timely manner

At this time, you can commit to your broker. To ensure an easier process this is where you play your part to ensure all documents are ready to go upon request. This can speed up the mortgage process quite a bit. Be diligent by eliminating the back and forth and having your broker chasing you for documents.

Being a step ahead always helps everyone involved. Try to be proactive by perhaps having your credit report ready as this will eliminate any issues that may affect the final outcome. Ultimately a high credit rating will help a significant amount when trying to get a lower mortgage rate.

Documents that you will need to provide can include: identification, proof of employment & salary, proof of down payment, notice of assessment (NOA), your assets and outstanding debt. Sounds like a lot of documentation but it is a large financial commitment you are taking. Here at Noble Mortgages, we work as a team to ensure you have a smooth transition.

Step 5: Choosing the right type of mortgage for you

Mortgages are dependent on the amortization period, fixed or variable rates, and the mortgage term that suits your needs best.

These are only 3 major considerations when choosing a mortgage. You may have questions like: what are the pre-payment penalties? Is my mortgage portable if I decide to move?

These are questions you may want to have prepared for one of our Noble mortgage agents. Do keep in mind that choosing the lowest rate isn’t always the right answer for you. You have to think long term (such as; are you planning on staying in your home long term? are you planning on using half of the home as a rental unit?) there are numerous factors to consider when choosing the right type of mortgage.

Once you have completed this checklist you should be ready and on your way to getting your mortgage and putting in an offer to a home.

Here at Noble Mortgages, we are ready to answer all your questions and assist you with all your mortgage needs.

Call or email us today at 416-241-2227 or info@noblemortgages.ca



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