Does your head start spinning when you start thinking about the mortgage approval process? Stop worrying! Leave it to Diane Bertolin– a mortgage agent in Hamilton with your best interest in mind – fill you in on what to expect during the mortgage approval process. Below is a quick overview of the process.

Pre-approval

Whether you choose a mortgage agent in Hamilton, ON or a bank, the mortgage approval process is still the same. Starting at the very beginning, you must be pre-approved before the process can continue. Getting a pre-approval letter is paramount, as it allows the seller, realtor, and all parties involved in the process to know for certain how much you can afford on a home (along with expected monthly payments and the interest rates on your future home’s mortgage). Treat these numbers as guides as you continue home hunting!

Choosing the mortgage offer that’s right for you

If you choose a traditional method to obtain a mortgage like a bank, you’re only going to get one offer. By choosing a mortgage broker in Hamilton, those offers could increase to the hundreds. It’s the best way to ensure you are getting the best deal on a home mortgage. As you shop around, consider these types of home mortgages and decide for yourself which one is best for you.

Fixed-rate mortgage:

This type of mortgage has terms that last up to a decade. Interest rates and monthly payments will stay the same. If you are planning on living in the home for over five years and value the stability of a fixed price and rate (most do) this may be your best bet.

Adjustable-Rate Mortgage (ARM):

The terms on ARMs last between three-to-five years. As you pay on the mortgage, you could possibly see the interest rate on the loan increase and/or decrease depending on the mood of the market. If this happens, expect your monthly mortgage payments to fluctuate. If you benefiting from lower interest rates supersede the convenience of fixed monthly payments, consider this option.

Understand your credit score

Your credit score plays a major role when communicating with your mortgage broker in Hamilton. It literally measures how healthy you are financially and it’s the number used to disdain how risky it will be to let you borrow money. If your credit score is between 680 and 900 you’re golden: getting a mortgage should not be a problem whatsoever.

Below 600 is where things can get a bit tricky. You may have to settle for a higher-than-average interest rate before a lender will approve your home mortgage. Or you may have to pay a large sum on your down payment. Maybe a bit of both! Speaking with your mortgage broker in Hamilton, ON is essential to not only getting the best deal on a home mortgage but ensuring that you are getting the perfect mortgage for your financial situation.

And if your credit score is too low? There are proven methods to improve it. If you have time to wait, improving your credit score so you can avoid a higher-than-average interest rate and large lump sum on the down payment is a good call.

Debt-to-income (DTI) Ratios or Total Debt Service Ratio (TDS)

Known as the DTI Ratio, this measures how much money you will have leftover if awarded a home mortgage. The lower the DTI Ratio the more confidence the lender has in giving you a mortgage. The higher the DTI Ratio, the less likely a lender is to give you a home mortgage. A high DTI ratio isn’t exactly the kiss of death, though. You may have to pay a higher interest rate, higher down payment, and possibly mortgage default insurance. We can get into this much more once we do an application.

 

What documents will I need?

Including, but not limited to:

  • Information concerning employment
  • Down payment details
  • Financial information
  • Details concerning the home

Speak to your mortgage broker in Hamilton, ON to get a full list of documents needed to get the final approval on a home mortgage.

Final step

The underwriter

Once your mortgage agent in Hamilton has gone over all of the offers lenders have sent your way, it’s time to choose the best one for your situation (your mortgage agent will help you with this). After choosing an offer, your application will be sent to the financial institution. An underwriter will use various debt service ratios to learn whether your application fits within the financial institution’s guidelines. If you’re a good fit, your mortgage will be approved.  If rejected, you will get a letter in the mail explaining why the institution arrived at this verdict. Rinse and repeat until a lender approves you.

Happy mortgage hunting!