An article in today's Metro paper explains why having a pre-approval in writing is very important prior to submitting an offer. I believe the first step anyone should take when considering a home purchase, whether you are a first time home buyer or not is to get a pre-approval. If you are in that process now and would like to discuss your options, please feel free to give a call or send me an email.
A pre-approval should also come in writing. It should be a commitment from a lender who is offering you a product at a set rate for a specific period of time. For example you may be pre-approved for $375,000 at a fixed rate of 5.34% for a 3 year term and this rate will be held for 120 days while you look for a home. You can then let your realtor know how much you have been pre-approved for and you can start your search knowing what price range you can shop for.
I also advise that you include the financing clause in your offer even with your pre-approval because many things can change in 120 days and it is better to be safe than sorry.
To read the article from the Metro - click here.
Call me today to get your pre-approval!
Showing posts with label Mortgage Pre-approval. Show all posts
Showing posts with label Mortgage Pre-approval. Show all posts
Thursday, November 6, 2008
Friday, August 22, 2008
What is considered when a lender is looking at your mortgage application for a pre-approval?
Income and Job Stability – Your income determines how much you may borrow. In most cases, 32% of your gross income for salaried, non-self employed or commissioned persons is used to determine how much you can borrow to cover the cost of the mortgage payments, taxes, and any applicable maintenance. All other debts i.e. car loans, credit cards etc. must not exceed an additional 12% of your gross income.
Credit History – Your credit must show that you pay your bills on time. If not, you may still be approved but the interest rate may be higher than expected. What you need to supply the lender:
a) Income confirmation: For salaried persons: letter of employment and most recent pay stub.
b) Down payment confirmation: The lender will require that you demonstrate what source your down payment is coming from. You will have to send in bank statements, statements showing RRSP’s, stocks etc. You must show a 3-month history of the money. If there are any large lump sum deposits, you are likely to be asked to show where the deposit originated. For mortgages where your down payment is less than 20% of the purchase price, you will also be asked to
demonstrate that you have access to 1.5% of the purchase price in your bank account. You must be able to show this through a credit card, line of credit, gift from family or savings in case closing costs run higher then expected.
c) Contract of purchase and sale: This is a copy of the accepted offer of the home you intend to purchase and a copy of the MLS listing sheet.
Credit History – Your credit must show that you pay your bills on time. If not, you may still be approved but the interest rate may be higher than expected. What you need to supply the lender:
a) Income confirmation: For salaried persons: letter of employment and most recent pay stub.
b) Down payment confirmation: The lender will require that you demonstrate what source your down payment is coming from. You will have to send in bank statements, statements showing RRSP’s, stocks etc. You must show a 3-month history of the money. If there are any large lump sum deposits, you are likely to be asked to show where the deposit originated. For mortgages where your down payment is less than 20% of the purchase price, you will also be asked to
demonstrate that you have access to 1.5% of the purchase price in your bank account. You must be able to show this through a credit card, line of credit, gift from family or savings in case closing costs run higher then expected.
c) Contract of purchase and sale: This is a copy of the accepted offer of the home you intend to purchase and a copy of the MLS listing sheet.
Subscribe to:
Posts (Atom)