Applying for a Mortgage in Calgary
There are 2 types of mortgages that are available. If you're buying a new home you would be applying for what is called a 1st Mortgage. This the primary mortgage carried by all homeowners. The other type is called a 2nd mortgage and can be use for a variety of purposes. You can use it for debt consolidation or to purchase an additional property such as a second home or cottage for example. You may even use it to finance the educational costs of your children. You must own property to get a second mortgage.
One of the first things you need to do is to determine how much available money you will have to pay for the mortgage. This means you need to sit down and draw up a very detailed monthly budget. You will need to consider your rent (which can be used toward a mortgage payment), all household bills including phone, utilities, credit card payments, insurance, car payments, existing loans payments, and incidentals for entertainment, clothes and miscellaneous expenses.
Banks take a serious look at your credit history, especially looking for a poor payment history and bankruptcies, and your credit score. Don’t despair if your credit rating is not too stellar because there are some mortgage lenders who will still give you a break. You may have fewer choices in picking a mortgage lender, but you still have a chance of owning that dream home.
The best thing you do to find out where your credit rating stands is to get a credit report before you apply for a mortgage so there are no unexpected surprises. Mistakes are made and with the advent of identity theft you don’t want to get caught up in a nightmare that was not of your making. If there is something that doesn’t belong on your credit report, you must get the problem addressed right away and get everything straightened out before you apply.
You will also need to provide full verification of all employment and income sources when you submit your application for a mortgage. You need this information because it allows the mortgage lender the ability to determine your ability to repay and handle the mortgage payments.
Additionally, by comparing what percentage of your monthly expenses are relative to the money you’re bringing into the household, the lender will have a better idea of what terms and monthly payments you will be able to comfortably afford.
Once you are comfortable that you will be able to manage a mortgage then it’s a good time to go shopping for that new home. Once you’ve found that dream home there will be one final piece of paperwork that you will need to present to the lender with your application. This is a copy of the purchase contract for the home you wish to buy.
The purchase contract will clearly spell out the amount you are paying for the home and the amount of the down payment you intend to pay toward the purchase of the house. The balance would be the amount you will need for your mortgage.
Do your research before you begin your house hunting so you don’t waste your time. There is an abundance of material to advise people on how to apply for a mortgage and what is required. You can also use the services of a mortgage broker who help you find the best deal for your circumstances and it won’t cost you a thing. They have a lot of expertise and guide you successfully through the process.