Knowing your budget is a very important part of the process, as buying your home will probably be the most important purchase you make in your life. The cost of buying a home includes down payment, inspection fees (if chosen), taxes, and legal fees. The monthly cost of buying a home includes a mortgage, maintenance bills, insurance, property taxes, utilities costs, and community or condo fees.
It is most beneficial to have a small mortgage, meaning you should make as big a down payment as possible. Keep in mind, some money may need to be put aside for renovations, moving, repairs, or possibly, new furniture.
There are many options of banks and other lenders who would love your business. Talk to your banker, mortgage broker, and John Mattiello & Associates for mortgage advice. One option is a traditional bank; this would work well, especially if you already have a good relationship at your bank. A second option is a mortgage broker, a person who specializes in working with many banks to provide you with the best options and rate. A third option is refinancing, making your options endless; this could be a preferred alternative if the seller is locked into a lower interest rate than you can get right now.
Getting pre-approved is beneficial for reducing the amount of stress you may have because you don’t know what you are able to afford. It also saves time by reducing the number of properties you consider, knowing you aren’t able to go beyond your limit.
Getting pre-approved is beneficial for reducing the amount of stress you may have because you don’t know what you are able to afford. It also saves time by reducing the number of properties you consider, knowing you aren’t able to go beyond your limit.
- Talk to your current mortgage broker or financial institution
- Complete, then submit your application
- Gather necessary documents
- Verify all your details
- Obtain a copy of your mortgage approval certificate
- Personal data
- Employer details/salary verification
- Banking info
- Current/past debts
- Verification of down payment
- Credit investigation check
- List of all assets
The Canada Mortgage and Housing Corporation (CMHC) provides mortgage loan insurance to help lenders offer mortgages at the lowest possible rates, allowing borrowers to obtain home ownership with as little as 5% down or home owners renovate or refinance a property.
CMHC ensures you receive a steady supply of low-cost funds for residential mortgages by guaranteeing timely payment on a range of mortgage-based securities.
CMHC is Canada’s leading mortgage loan insurance provider and is an affordable financing route, aiding Canadians all over the country.
- Letter of employment confirmation
- List of assets
- List of liabilities
- Social Insurance Number
- Chequing account number
- Your lawyer’s contact information
- Information about the house you want to buy
A mortgage approval should only take a few days, but it’s probably best to allow up to two weeks. During this process, the lender will do a credit check and will spot check other information you have provided. In addition, an appraisal of the value of your home may be obtained. Whether the lender approves your loan application will be determined by an evaluation of the following:
Capacity: Do you have enough income to repay the debt?
Credit history: Do you pay your bills on time and do you live within your means?
Capital: What are your current assets?
Collateral: What assets can you pledge as security against the mortgage? If required, a request for mortgage loan insurance is submitted to CMHC, Genworth (GE), or a private insurer. The lender then approves or rejects your mortgage loan.
- Gross Debt Service - housing costs should not exceed 32% of your gross income
- Total Debt Service Ratio - This is a summary of all your debts. Your monthly housing costs and payments on all of your other debt (loans, credit cards, leases, etc.) should not exceed 40% of your gross family income. This equation will be different for everyone.