Frequently Asked Questions About A Mortgage Application

Author: Kati Asgari - Mortgage Architects | | Categories: Mortgage Agent , Mortgage Broker , Mortgage Renewal

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Acquiring a mortgage is a big responsibility that must be approached with caution and good understanding of the application process. However, if you are new to mortgages, there may be a ton of questions you have but find the answers difficult to come by. To arm you with the most accurate information about mortgages, licensed mortgage agent Kati Asgari has answered some of the most frequently asked questions about a mortgage application.

1. How does my credit impact a mortgage application?
A minimum credit score of 620 is required to get a mortgage from “A lenders.” But, most “A-lenders” will be easier on files with a credit score of 680 and above. Alternative lenders will easily consider lending to an individual with a lower credit score or bruised credit.

2. How does the down payment amount impact the affordability?
If you are putting down 20% and above, the deal is considered “Low Ratio” or “Conventional.” Additionally, you will not have to pay an “Insurance Premium” and can choose a thirty-year amortization. If you put 5% to 19%, the mortgage is considered a “High Ratio,” and it will be on twenty-five-year amortization, and insurance premiums will apply. You will also afford less on a twenty-five-year amortization, and the ratios will be tighter.

3. Should I choose a fixed or variable rate?
This really depends on a few factors, including the time you are getting the mortgage, your personality type, and your future plans. When interest rates are historically low (like now), the fixed rates might be a very safe option to secure a low rate for at least five years. If you have the prospect of selling the house earlier than the maturity of the mortgage, the variable rate is safer due to the lower manageable penalty.

4. What other fees and expenses are there to expect?
In addition to the down payment, you should be prepared to cover legal fees, appraisal fees, inspections fees, Title Insurance, and PST (provincial sales tax) on the insurance premium if you get a high ratio mortgage. The biggest expense of all you’ll need to prepare for is the Land Transfer Tax, so make sure you do your research and save money accordingly.

5. Does a pre-approval really work?
A pre-approval can only approve your income, credit, and down payment. The other important pillar of a mortgage application is the “property.” Once you have a real live deal, the lender may NOT support the value of the property, or the property may have other issues that the lender does not feel comfortable to lend on. Therefore, having a pre-approval does NOT guarantee you a mortgage.

6. Which one is better? Pre-approval or pre-qualification?
As a mortgage professional, I always recommend a pre-qualification to my clients instead of a pre-approval. For pre-qualification:

a. I ask my clients to obtain their credit reports from www.equifax.ca instead of me hitting their credit.

b. I collect all their income and down payment documents upfront and assess their affordability in detail.

c. Once we reach an estimate of the mortgage they can qualify for, we work hand-in-hand. That is they send me the MLS (multiple listing service) of any property they are interested in, and I run the numbers based on that specific property (each property has different taxes, maintenance, rentable basements, etc.)

d. By doing this, I ensure that their credit is hit only when they actually have an offer.

7. Should I put down a firm offer?
Putting a firm offer has its own risks, even if you have a pre-approval or have done a pre-qualification. There is always a chance that a property may not meet the lenders’ criteria. Having financing and inspection condition will enable you to have a firm approval without risking anything.

If you have any more questions like these about mortgages, get in touch with Kati Asgari. As a leading mortgage agent In North York, ON, I provide the best expertise and knowledge to help you with all your financing needs. I am available to you throughout your mortgage journey so that you can reach out to me at any time. I have access to more than fifty lenders across Canada with a wide range of products, rates, and solutions for almost every situation. This allows me to offer you flexibility and feasible services.

To learn more about how I can help you, please click here or contact me by clicking here



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