Mortgage Application
B efore an application gets filled out, it’s important to first asses your financials. Figure out how much money you have and how much you need to borrow. It’s always critical to sort out how much you can afford so that when you apply for a mortgage you will be able to financially sustain. A mortgage associate can help in preparation of application. Once it has been submitted, the mortgage application process will begin by verifying the information you have provided.
Choose the Right Mortgage Program
L ike all homes, Canadian mortgages also come in all shapes and sizes. You have to pick which loan is more aligned with your financial situation and goals. Common types of Canadian home financing loans are:
A) Fixed Rate Mortgage
A Fixed Rate mortgage usually has terms that can last from 1 year to 10 years. As the name suggests, the interest rate and monthly payments will remain the same for the specified term.
This type of loan should appeal to you if you:
- Plan to live in the home for duration of the term
- Like the stability of a fixed interest payment
- Think your income and spending will stay the same
- Don’t like the risk of having a higher monthly payment
B) Variable Rate Mortgage
Variable Rate Mortgage (ARM) lasts for 3-5 years. But during these terms, the interest rate on the loan can go up or down which means monthly payments can increase or decrease.
This type of loan should appeal to you if you:
- Plan to stay in your home for less than 5 years
- Don’t mind having your monthly payment increase or decrease
- Are comfortable with risk of possible payment increases in the future
- Think your income will probably increase in the future
C) Lines of Credit
Line of Credit is becoming an innovative way to finance your home purchase. You can take the amount you need from the credit limit that you were granted. You only pay interest on what you use and this money can be put towards things like home renovations, a child’s education, and debt consolidation.
Mortgage Submission and Approval
O nce you select the appropriate mortgage program, your mortgage associate will submit the application along with any other required documentation. You will then wait for the mortgage approval from the Lender. After the approval, the associate will also review your commitment of the mortgage with you. Any additional documents that are required by the lender before funding should be sent to the lender at earliest possible time.
Lawyer
T he lender will send the mortgage instructions to your lawyer who will review it with you and then you will sign the documents. Part of lawyer job is to review all the terms and conditions prior to signing to make sure the interest rate and loan terms are same as what were promised. Double check to see that the names and address are correctly spelled on the documents. Signing takes place in front of a notary public or lawyer. There will be several fees with obtaining a mortgage and transferring property ownership which will be paid at closing. Buyer need to bring the down payment and closing costs to lawyer for closing. Buyer also need to obtain homeowners insurance policy and other requirements before closing. During the closing day buyer’s lawyer will collaborate with seller’s lawyer to register the deed and transfer of funds to seller and the key exchange.