Frequently Asked Questions When Applying for a Mortgage
Buying a beautiful new house is an exciting time for the whole family. However, if you’re looking to finance the property, you may have tons of questions about the documents you need for the mortgage application but may find it tricky to get all the answers that you’re seeking.
To ensure you have all your doubts cleared, Leanne Gould Mortgage Broker has answered some of the most frequently asked questions about mortgages.
1. I don’t have a down payment, can I still buy a house?
The answer is “yes,” as there are several options for where you can obtain funds. The money can come from immediate family members, personal investments like RRSP, or a loan if you qualify for both payments.
2. Do I have to use a Realtor?
A realtor provides you with legal advice that can save you thousands of dollars down the road. So, do you have to use a Realtor? NO! But keep in mind that if you’re a buyer, there are no charges for their services. Free expertise? Why not!
3. I have damaged credit, can I still apply?
The answer is “yes”, however you need to realize that you will require a much higher down payment than the minimum of five percent, and in many cases, you will be looking at private lenders who will charge a lenders fee. It’s not to say private lending or B-lending is a bad thing, as they can help you get re-established.
4. How quick is the deal closed?
It’s a more challenging question to answer as the speed of the application depends on several factors. At given times of the year, lenders are extremely busy, and buyers can wait a full business week to decision from the lender. Once we get the decision, the lender then reviews the paperwork we sent in upfront to ensure they are satisfied with the income and down payment as well as you as a client and to ensure our information as submitted was accurate. At this time your employer may receive a verbal employment confirmation request so I advise you to let your employer know this could be required.
So, make sure you provide your broker with all the documents they request, or this process can drag on for longer. Once all the conditions of the approval are met, the file can then be instructed/sent to the lawyer for closing preparations. The lawyers firm then gets current property tax information as well as calculates their fees and connects with sellers lawyers to ensure proper figures have been given and that your interest in the property can be properly registered with Land Titles.
Consequently, from the application date to the actual signing day with your lawyer, you can expect to wait no less than fourteen business days (of course, we can get some rush deals done, but on average, it is 14 business days minimum). After signing the paperwork with your lawyer, the funds can typically be released to the seller’s lawyer within one or two working days.
5. How do you get paid?
Brokers get paid through the lender that provides them with the approval, so our services are free in most cases. The exception is on “B” lending or private deals where the lender charges a fee that gets split between the lender and the broker. So again, it’s a chance to get FREE expertise.
6. Can I buy a rental property with five percent down?
No, an investment property requires a minimum of twenty percent down, but it can be raised from savings, borrowed, and sometimes gifted.
7. Why do you ask for so much information like past tax returns, T4’s, pay stubs and employment letters?
The information is required to find an accurate average of your total income. The lenders and your broker have a responsibility to ensure you can handle the debt load that comes with a mortgage as it is the largest financial transaction you will make in your lifetime.
As a result, there are guidelines to ensure that you can still eat, have utilities and clothing after paying the taxes from your salary, and debt you may owe. We hear very often people say, ‘I’m paying my bills now, so who cares?’ The answer is that we all do as no one wants to see you and your family lose your home.
Therefore, we will sit with you and assess the maximum level of mortgage debts you can safely handle, given your current employment situation. Besides, we’ll give you options on how to increase those levels.
8. Can I use roommate income?
The basic answer is “No” if using traditional financing. For high ratio mortgages (meaning less than twenty percent down payment), the lenders cannot use any income other than employment, pension, disability coverage, child tax, child support, or alimony.
If you have any more questions about mortgages, get in touch with the experts at Leanne Gould Mortgage Broker. As a mortgages specialist in Alberta, Canada, I endeavor to find a suitable lender for my clients.
My services include construction/draw mortgages, mortgage renewals, mortgage refinancing, a home equity line of credit, self-employed mortgages, rental property finance, reverse mortgages, and alternate/private lenders. I serve clients across Wetaskiwin, Ponoka, Bashaw, Lacombe, Blackfalds, Rocky Mountain House, Sylvan Lake, Red Deer, Stettler, Innisfail, Bowden, Olds, Didsbury, and anywhere in Alberta with Canada wide access as well.