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 The
Money Management Newsletter: Home
Ownership
Buying a new home:
Being prepared for a meeting with your mortgage specialist
By John-Andrew Newman, AMP, June 2009
A Money Management Newsletter article
If you’re in the market looking to apply for a mortgage either for a purchase
or refinance, here are some pointers before you engage your mortgage representative.
From a mortgage originators perspective, the most important part of your mortgage
is your application. Before you even schedule a meeting with your mortgage representative
- know your personal situation and disclose everything. Your mortgage specialist
will only be as good as the application you provide and if the application is
erroneous or misleading, then chances are your mortgage approval will be as
well.
Once the application is in the banks hands, there are three main criteria the
banks use to analyze your application and by understanding the banks point of
view, you will be able to understand the logic behind your approval.
Think like the banks; think that you are about to lend a stranger a quarter
million dollars. Lets be honest, the bank doesn’t even care what your name
is, like I said before, you are only as good as your application. The banks
use a common sense approach to lending and they always ask themselves, “Can
this person afford to pay me back”, “How is this person going to pay
me back?” and “Is this person likely to pay me back?”
It is important to know how much you make per year and no rounding up. Before
your initial consultation, have your income documents ready. With out getting
into the specifics, it would be ideal to contact your Human Resource department
and speak to them about getting a salary letter; if you make commissions, overtime,
bonuses or self employed income, collect your Notice’s of Assessments and/or
T4’s. What ever your application states, you will have to prove it before
you get any money from the lender, so it’s best to know upfront. Provide
as much detail to your mortgage representative and allow them to package your
application because there are dozens of mortgage products with different policies
on income verification.
When your mortgage specialist checks your credit, they may have some questions
regarding your regular credit facilities, especially if you have missed payments
in the past. There is some leeway for missing payments, so don’t get discouraged,
sometimes stuff happens. However, if you have made a habit of it, then don’t
be surprised if your not approved. With this information combined with your
income, the bank will be able to determine if you can afford to pay them back
and at what amount your eligible to borrow.
With that said, sometimes what the bank is willing to lend you, is not always
what you can afford, it’s an inviting trap that should be avoided. Just
because you can seemingly borrow more than you need - be cautious and use a
common sense approach to borrowing money.
Another way to pre-pare yourself is to write down all your life carrying costs
such as food, utilities, cell phone, insurance, mortgage payments, car, gas,
taxes etc and really make an informed decision, don’t get caught up in
chasing a unrealistic dream. It s been widely reported by relationship counselors
that financial stress in and around owning and maintaining a house hold is one
of the most pressing issues for families. Not to mention the lessons learned
from the US, which screams, “live with in your means”. Consider all
aspect of your mortgage approval and allow your real estate agent to show all
the price points for different types of homes, so choose wisely.
As a consumer you need to be savvy not only by being prepared for that mortgage
meeting, but through whom you decide to work with. Remember you can shop around
for better rates, products and service but finding the right person to help
you with your financing needs is just as important.
Ultimately, try to pick someone who feels more like a trusted advisor and can
coach you through your overall goals. Pick someone who asks you those hard to
answer questions and can help you talk about them. Try to avoid people who make
promises with out even looking at your application and seem impatient with your
questions. Now, I think your now ready to speak with a mortgage specialist,
good luck and remember buying your first house can be stressful so try to minimize
that stress by pre-paring yourself and by selecting a mortgage agent you can
trust.
John-Andrew Newman. AMP is a mortgage financing
specialist with Mortgage Intelligence and can be contacted at 905-630-7205 or
johnandrew.newman@migroup.ca
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©
, Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6J 5B4.
(905) 844-7700
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