Mortgage Application Tips - what your mortgage agent (me) will need to know

Your mortgage broker or lender requires certain information before they can approve you for a housing loan. Use this list to make sure you bring everything you need with you when applying for a mortgage.

The Importance of Being Prepared
The most common reason for delays in getting approved for a mortgage is missing or incomplete information. As a home buyer, the best way to make sure your mortgage or pre-qualification application is processed as quickly and accurately as possible, is to bring all the information you need with you when you meet with your mortgage agent.

What Do You Need to Bring With You?

• Several pieces of government-issued identification, preferably those including a photo.
• Your current address and at least two previous addresses (as applicable).
• If you’re renting, a letter from your landlord confirming your rent history.
• The name and address of your current employer and past employers (as applicable).
• Proof of employment, including pay stubs or other proof of income (salary, commission, pension, etc.), your position with your current employer and past employers depending on how long you’ve been working there. Other useful documents include a T4 or, if you are self-employed, Notices of Assessment (NOA) for the previous two years.
• Proof of a down payment and where your down payment will come from (e.g. savings account, RRSP, sale of another property, gift, etc.). If a family member will be paying for a portion of your down payment, you will also need a signed letter from them acknowledging the purpose of the gift, and that it is non-repayable.
• Recent financial statements for the past several months (bank accounts, investment statements, sale of previous property if applicable, etc.) to show your down payment as well as the contact information for your bank.
• Your current debts and other financial obligations (including credit card balances and limits, car loans or leases, student loans, personal loans, lines of credit, child support or alimony payments, other mortgage loans, etc.).
• Information about the property you are looking to purchase, including a copy of the MLS listing, a signed Offer to Purchase, cancelled deposit checks, copies of previous appraisals, building specifications, current property tax statements, heating costs and condominium fees (if applicable) once you have made an offer on a home.

Talk to Your Mortgage Agent
Not all lenders have the same requirements. So talk to your mortgage agent before you meet with them, and ask them what they’d like you to bring to your initial interview.

How Much Will My Home Really Cost?

Once you know what kind of mortgage you want and the price of the house you can afford, you should add up all of the other costs involved in buying a house so that you know the true cost of buying your home.  When you buy a house, it isn’t only the cost of the house that you need to save for.

Don’t forget these other costs:
Appraisal Fee
An appraisal is an estimate of the value of the home. Your bank or credit union may require that the property be appraised at your expense. This can range between $250 and $350.

Deposit
A deposit is required to ensure that the buyer is serious about purchasing the home. It can form part of your down payment, but it must be paid when you make the Offer to Purchase.

Down Payment
You will need a down payment (money paid up front) to obtain a mortgage. With a down payment of 20 per cent or more of the home’s price, you can obtain a conventional mortgage. Your down payment must be at least five per cent of a home’s price for you to benefit from a competitive interest rate.

Mortgage Loan Insurance Premium
If you have less than a 20 per cent down payment, your bank or credit union may require that you buy mortgage loan insurance. You can add the mortgage insurance premium to your mortgage or pay the full amount when you close the sale on the house.

Home Inspection Fee
A home inspection, which costs around $500, is a report on the condition of your home. You may want to make your inspection a condition of your Offer to Purchase, to make sure you are aware of the condition of the house before you agree to buy.

Estoppel Certificate Fee (not applicable in Quebec)
This fee costs up to $100, but applies only if you are buying a condominium in a strata unit or condominium and costs up to $100.

Land Registration Fee
This is charged in some provinces and territories, and while the charge varies depending on the province, it is usually a percentage of the home’s price.

Prepaid Property Taxes and/or Utility Bills
These charges are meant to reimburse the person who is selling the house for amounts already paid for, such as property taxes, filling the oil tank, etc.

Property Insurance
The insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on the day you close the sale.

Survey or Certificate of Location Cost
The bank or credit union may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. This can range in price from $1,000 to $2,000.

Legal Fees
These fees must be paid when the sale is completed and costs a minimum of $500.

Title Insurance
Your bank or credit union, or lawyer/notary, may suggest insurance to cover any loss caused by problems in the ownership of the property.

Water Tests
If the home has a well, you will want to test the quality of the water to ensure supply is adequate and the water is drinkable.

Septic Tank
If the house has a septic tank, you will want to have it inspected to make sure it is in good working order.

Other Costs to Consider
Appliances
Gardening expenses
Snow-clearing equipment
Window coverings
Decorating materials
Hand tools
Moving expenses
Renovations or repairs
Service hook-up fees
Condominium fees

Estimate the Total Cost of Your Home Purchase

The cost of a home is made up of more than just the purchase price. Once you have picked a price range and decided on the type of mortgage you want, you will need to add up all of the costs of buying a house to determine what you can afford. 

This worksheet will help you do just that.

Description of Cost	Cost
Cost of Home	$
Purchase price	$
GST (if applicable)	$
Total Cost of Home (add the purchase price and GST if applicable)	$
Up-Front Costs	$
Appraisal fee (if applicable)	$
Deposit (to be paid when you sign the Offer to Purchase)	$
Down payment	$
Estoppel certificate fee (for condominium unit)	$
Home inspection fee	$
Land registration fee	$
Legal fees and disbursements	$
Mortgage broker’s fee (if applicable)	$
Mortgage insurance premium (can be included in your mortgage)	$
Prepaid property taxes and/or utility bills adjustment	$
Property insurance	$
Survey or certificate of location cost	$
Title insurance	$
Other	$
Total Up-Front Costs	$
Other Costs	$
Appliances	$
Gardening equipment	$
Snow-clearing equipment	$
Window treatments	$
Decorating materials	$
Hand tools	$
Dehumidifier	$
Moving expenses	$
Renovations or repairs	$
Service hook-up fees	$
Condominium fees	$
Total Other Costs	$
Total Costs (add up Total	$

Please contact me to pre-qualify for your mortgage.  This will help you greatly in determining what you can afford!

Determining Your Household Budget

Preparing a monthly budget -- and sticking to it -- is one of the keys to successful homeownership. You should watch what you spend each month and see if you are getting closer to meeting your financial goals. If you continue to spend more than you make, you must find ways to spend less. Use the following worksheet to help develop your budget.

Details	Average Monthly Payment
Housing Expenses
Electricity	$
Heating costs	$
Mortgage (principal and interest)	$
Parking fees (if paid separately)	$
Property insurance	$
Property taxes	$
Water	$
Non-Housing Expenses
Cable TV/Satellite/Video Rental	$
Car fuel	$
Car insurance and license	$
Car repairs and service	$
Charitable donations	$
Child care	$
Child support/alimony	$
Clothes	$
Dental expenses	$
Entertainment, recreation, movies	$
Furnishings	$
Groceries	$
Internet	$
Life insurance	$
Lunches/eating out	$
Medical expenses, prescriptions, eye wear	$
Newspapers, magazines, books	$
Personal items	$
Property and contents insurance	$
Public transportation	$
Savings (bank account, RRSPs)	$
Telephone/Cell phone/ Internet	$
Other expenses	$
Total Monthly Expenses	$

Note: You may have other costs not shown on this worksheet. Make sure you add these other costs when you fill out this form.

Blog Post Number One, for want of a better title

Welcome to my new blog. This first post I'm sure will fail to be as enlightening or inspiring as I'd hope, but here we go.

Are You Financially Ready for a Mortgage?

Buying a home is one of the biggest financial decisions you will make, so it is important to know your current financial situation to be sure that you buy a home that you can afford.

Get Your Mortgage Pre-Approved
Getting your mortgage pre-approved will let you know what kind of house you can afford. It will make the search for your home easier and less time-consuming.

To get your mortgage pre-approved, you will need:

• your personal information, including identification such as your driver’s license; 
• details on your job and proof of your salary;
• information about your bank accounts, financial assets, current loans and other debts;
• how much your down payment will be and where the money is coming from; and
• proof that you have enough money to cover the costs of closing the sale — usually between 1.5 — 4 per cent of the cost of the house.
  

Trouble Qualifying for a Mortgage?
Sometimes, after everything has been taken into account, you may find that you can’t afford the house you want. If that happens, you may want to:

• pay off some loans first.
• save up a larger down payment.
• revise your target house price.

The Importance of Your Credit Rating
Your credit history gives mortgage providers information on your financial past and how well you have paid your debts and bills.  If you have no credit history, it is important to start building one. This can be done, for example, by applying for a credit card.

If you have a bad credit history, you can still qualify for a mortgage as long as you have a guarantor — a person who meets the bank’s or credit union’s requirements, has a good credit history, and can guarantee your loan.