Mistakes to avoid when applying for a mortgage:
Not knowing how much money you can really put down
The first step in finding a house is figuring out how much you can afford to spend. It's very important to know how much you can afford to pay in down payment and closing costs before you apply for your mortgage. The more you're able to put down the better rates and terms you're likely to get. At the same time you also need to stay within your normal standard of living.
Not knowing or understanding the mortgage process
How many mortgages did you take last week? If you are like most people, probably none. In fact, most people don't shop for a mortgage more than a few times in a lifetime.
Therefore, it is not a process we are very familiar with. It's very important to work with a mortgage broker who will listen and answer all your questions.
Buying a new car or purchasing a big item before you apply for a mortgage
A lot of people think that it is in their best interest to complete large purchases before applying for their mortgage. One of the key components in determining the amount of home you can qualify for is your total debt. Big purchases should
therefore be done after your house purchase has closed. In fact, you will be in a much better position to assess your needs after you purchase your house. So many things can go
wrong...
Over shopping your mortgage loan
When a new possible lender needs information on you, he will have your credit report pulled. The problem here, is that every time your credit report is pulled, there is a
possibility that your credit score will decrease. If your credit score decreases, your chances of getting the best rate and terms are also decreasing. Mortgage experts
recommend that you choose a mortgage broker who has a good number of investors and that you limit your shopping to that broker.
Not revealing all the facts to your mortgage broker
Who hasn't experienced some moments of financial difficulties at some point in the past? While it may be embarrassing to reveal such issues to your mortgage broker, you have to keep in mind that he/she is there to help you to get loan approved... despite such issues. Your mortgage broker will certainly not be able to help you with those issues if he knows nothing about them.
Not paying on time
Not paying on time, or late payments, in particular those done within the last year, can be very detrimental to obtaining the best loan rates, terms and, in some cases, can
even make the difference between being approved or not. Even if this looks like unnecessary advice, always, and we mean ALWAYS, pay your bills on time.
Credit cards
Credits cards are used everyday by a majority of people to make purchases, they are convenient, secure and easy to use. When you apply for a mortgage if your credit card balances are not paid off or kept low, you might find it more difficult to get the best rates and terms on your mortgage. If you keep your total debt as low as possible, it will help
you get the mortgage that best meets your specific needs.
Too many credit cards
When a lender studies your mortgage application, he basically wants to find out how much money you can borrow without putting yourself in a default position. The amount
you can "borrow" with your credit cards is therefore an important factor - event if you don't use your credit cards. Why? Because you could... The total amount you could "borrow" on your credit cards should be kept low.
Cosigning on a friend's or loved one's loan
Your friend or your loved one will certainly be happy, but when you give such a guarantee to someone else, you are, in effect, assuming the liability on that loan. Your total loan potential will be lesser than if you didn't cosign.
It's important to get all the facts before you contract a loan. Find out what will be the total cost of your mortgage loan, including at closing and for the life of the loan. Not
all mortgages are alike, there are many subtle differences which can save or cost you thousands of dollars. Get all the facts and know what to expect.
The most important questions to ask your mortgage representative:
1.What are the loan's Interest rate and the Annual percentage rate?
The annual percentage rate and the loan interest rate must be compared. The Annual percentage rate, better known has the "APR", is a combination of the interest rate, points and other charges (service charges, bank charges, etc.) divided by the loan's term to give an annualized interest rate. It's one of the best ways to compare loans because all the costs are summed up and compared.
2.What will be the final total closing cost fees?
Lending institutions and lenders charge fees for their services. Closing your mortgage is usually a charged service. By law (in the United States), closing costs must be disclosed within 3 working days of the loan application. Each lender has is own way of calculating the closing costs. Some will first give you some closing costs that seem very
affordable, but they will give you some much higher numbers as the closing date approaches. Therefore, make sure you ask what the real closing costs will be and ask the lender to give them to you in writing.
3.Are there additional charges to "lock-in" the rate and the points?
Some lenders offer to "lock-in" the interest rate and discount points for a specific amount of days. If they do make you such an offer, ask that lender or that lending institution if there are any extra charge for that guaranteed interest rate an discount points. One way to avoid such extra charges is to accept the prevailing rate and points on your closing day. It's a guess game. Rates change daily, an extra charge that guarantees you a "lock-in" fee could save you thousands of dollars; on the other hand, it might save you nothing.
4.How fast can the mortgage be processed?
A lender usually take between seven to ten days to prepare the loan for underwriting and approval. The real amount of time that is needed varies a lot. It mainly depends on the
lender's system to process the data and to provide the funding. If time is an important factor, use a large lending institution.
5.Do you have a pre-payment penalty?
Usually, you can prepay a loan without any penalty if you notify the lender or the lending institution in writing that you are selling or refinancing. Like everything else, there are some exceptions. Make sure you are not one of them! Ask about your specific mortgage, and if needed, have it configured for your specific situation.
6.What is your track record?
Your lender's reputation is an important factor. Does he do speedy processing, is he knowledgeable of all the loan services, does he meet the contract deadlines? You just don't want to hire a mortgage broker that has a bad reputation with the lenders. The broker you want to hire has to be one that treats it's customers with respect and professionalism.
Best and worst reasons to buy a home:
Best:
Stable housing costs
Unlike rent, which usually increases every year, the second you get a fixed mortgage, you know your monthly payments for up to 30 years. Not only do you know your payments, but since your earnings will probably continue to grow, your mortgage will take a smaller percentage of your total dollars as time goes. Do you know how much rent you will be
paying in 10 or 15 years from now?
Savings
A home is an automatic savings account. First, you put money aside every time you pay part of your principal. Second, over time, your property takes value (approximately 5% every year). Now 5% might not look like a big amount at first, but in fact, it's probably much more than you would think. Lets say you bought a house for $150,000, after one year, it's worth $7,500 more. Some people may think that it's only 5%, but if fact, if you only put 20% down ($30,000) when your purchased the house, your real return on investment is 25%!! (minus your mortgage payments and other expenses).
Liberty
As an owner, you can do whatever you want to improve your home. You are your own landlord, and you get the benefits of your improvements. If you were renting, would your landlord change the kitchen tiles because you did not like the color? What about that garden that you couldn't have before?
More living space
Indoors and outdoors. It's a fact, home owners have more space than tenants. Even condominium are usually more spacious than apartments. Your own garage, storage room, laundry room, and, very often, bigger rooms.
Worst:
It's better than the stock market
Some people think, with the current anemic stock market, that homeownership is the best way to build great wealth. But... past performance results is no guarantee of future results.
It's true that being a homeowner can be a good financial foundation for the future, because it forces you to save (in mortgage payments that build your equity).
House prices, however, don't always go up. Just ask homeowners in Boston, Dallas, Houston, Los Angeles, etc. They all suffered major real estate recessions in the past
20 years.
The home prices in Los Angeles took almost 10 years to regain their peak after dropping more than 20% in the 1990s!
It's better than throwing away money on rent
When you send a check to your landlord you are exchanging it for a place to live. You're also getting the flexibility and freedom to move much faster then when you buy a house. When you rent, it's the landlord, not you, who is usually responsible for maintenance, repairs and fixing the toilet that blows up in the middle of the night.
Homeowners don't have to deal with rising rents and recalcitrant landlords, they are, however, stuck with rising taxes and maintenance costs, as well as sometimes not too
good neighbors.
Home Loan Direct lends across Canada, specifically, but not limited to the Greater Toronto Area (GTA):
Toronto, Thornhill, Vaughan, Woodbridge, Richmond Hill, Scarborough, Etobicoke, Aurora, Newmarket, Markham, Stouffville, Unionville, Pickering, Ajax, Whitby, Oshawa, North York, East York, Oakville, Muskoka, Niagara, Guelph, Windsor, Barrie, Mississauga and Hamilton.
Other major cities in Canada include: Vancouver, Victoria, Edmonton, Calgary, Saskatoon, Regina, Ottawa, Montreal, Fredericton, Halifax and St. Johns.
