Common Mistakes People Make When Applying For a Mortgage
Securing a mortgage is a crucial aspect of purchasing a new home. However, inexperience in the subject may lead to you falling short. So to help you avoid making basic errors that could prove to be costly, Centum Discount Mortgage Canada Inc. has put together a list of the most common mistakes people make when applying for a mortgage.
1. Believing that banks are the only source for mortgages
There is a wide array of lenders out there, and many of them offer better products or interest rates than the bank. Also, banks may not be able to approve specific customers as a result of internal policies. So consider calling a mortgage broker as they have access to many different lenders, including banks.
2. Not getting a proper pre-approval when buying a home
Many lenders do not do proper pre-approvals, and instead do something called a “pre-qualify,” which is okay to get a little info, but not sufficient when starting to look for a home. A proper pre-approval is where you complete an application, pull the credit of the borrower, verify income, and confirm a down payment. By getting a pre-approval completed, you save time and potential embarrassment when making an offer.
3. Mortgage renewals left to the last minute
It’s done on purpose to prevent the borrowers from shopping for a better deal. Customers should contact a broker a hundred and twenty days before the mortgage due date, as they can generally guarantee a better rate four months in advance. This way, if interest rates go up, then the borrowers have a better option.
4. Believing the loan officer at the bank is your friend
When it comes to mortgages, the loan officer is an employee of the bank and owes no fiduciary duty to the customer. In other words, they work for the banks and protect their interests. On the other hand, a broker has borrowers’ needs at heart.
5. Leaving large balances on credit cards and loans
The cheapest interest rate a consumer will find will be on a mortgage, so it makes sense to consolidate higher interest rate debts into the lowest interest rates. Consider talking to a broker to see if it makes sense to consolidate now or at renewal time.
6. Believing that the new qualify rules provide limited scope
The federal government has created new regulations where consumers have to qualify for a mortgage using a qualifying rate of 5.19% and an amortization of twenty-five years. As a result, many people with less than twenty percent down payment or equity do not qualify. However, people with more than twenty percent in equity or down payment can qualify for a higher mortgage with the help of a broker.
To avoid these mistakes and qualify for a mortgage, reach out to the experts at Centum Discount Mortgage Canada Inc. We are mortgage brokers in Kitchener, Ontario, our team is committed to securing the best lenders.
Our services include assisting with first time home buyer mortgages, private mortgage lenders and non-conventional financing, self-employed mortgages, mortgage refinancing and debt consolidation, and mortgage renewal or transfers.
We offer Mortgage Services to clients across Cambridge, Guelph, Kitchener, Waterloo, Wellington County, GTA, and the rest of Ontario.