How to prepare to qualify for a mortgage

Article Licenses: CA, unknown, unknown, unknown
Advisor Licenses:

Compliant content provided by Adviceon® Media for educational purposes only.

---

When you apply for a mortgage, there are several questions that a lender may ask, for which you can prepare. They will want information relating to:

The primary information they will need.

1. Employment and income

2. A summary of your outstanding debts

3. Cash reserves, bank account cash, investments, and other assets

4. The down payment that you have on the property you are purchasing, and is it your own money

5. Will the loan also be to consolidate any debts

6. What will be the use of the property

7. What is the equity you now have in your current home, if applicable

Employment and income.

• Who is your employer?
• How much income do you make, and can you provide payment receipts/stubs?
• How long have you been working at your job?
• Is your income a salary or other income such as sales commission?

Your liabilities.

• What are your outstanding debts?
• What commitment level per month do you have to pay debts?
• What is the cost per month for auto loans?
• How much of your income goes to pay off credit cards, and what is the gross credit card debt?
• How much money will be left after you pay for your down payment and closing costs?
  • If you are refinancing debt, how much debt will your mortgage cover and reduce your equity?

What you will use the real estate for:

• Will this be your residence?
• Will you rent a portion of the home out?
• Is it an investment property?

Property type

• A condominium?
• A duplex?
• A single dwelling?

Replies which can work in your favour:

• I have steady employment with the same employer for two-plus years.
• I carry little debt with a debt-to-income ratio of 25% or less.
• The mortgage is only for a home purchase.
• My down payment of at least 30% of the purchase price with my own money.
• The cash reserves will pay several months of the mortgage payments once the property closes.

Replies which can work against you:

• Self-employed or contract worker.
• High debt with credit cards maxed out, with a total debt-to-income ratio of more than 30%.
• We intend to renovate the property for rental use.
• The liquid cash situation will be tight once all expenses are paid after we close the deal.

 

---

 

Publisher's Copyright & Legal Use Disclaimer

All articles are a legal copyright of Adviceon®Media and are for educational purposes only. The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This website is not deemed to be used as a solicitation in a jurisdiction where this representative is not registered. This content is not intended to provide specific personalized advice, including, without limitation, investment, insurance, financial, legal, accounting or tax advice; and any reference to facts and data provided are from various sources believed to be reliable, but we cannot guarantee they are complete or accurate; and it is intended primarily for Canadian residents only, and the information contained herein is subject to change without notice. References in this website to third party goods or services should not be regarded as an endorsement, offer or solicitation of these or any goods or services. Always consult an appropriate professional regarding your particular circumstances before making any financial decision. The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision.

Mutual Funds Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investment funds, including segregated fund investments. Please read the fund summary information folder prospectus before investing. Mutual Funds and/or Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.

Life Insurance and Segregated Funds Disclaimer

Life Insurance policies vary according to contract terms. Please read any Life Insurance policy contract provided, or the segregated fund summary information folder prospectus before the time of purchase. Full details of coverage, including limitations and exclusions that apply, are set out in the policy of insurance. Commissions, trailing commissions, management fees and expenses may be associated with segregated fund investments which may not be guaranteed and their market value changes daily and past performance is not indicative of future results. A description of the key features of a life insurance policy, a segregated fund; and any applicable individual variable annuity contract is contained in information provided by the company from which it is purchased. Talk to your advisor before making any financial decision. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. The information provided is accurate to the best of our knowledge as of the date of publication and is general in nature, intended for educational purposes only, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. Rules and their interpretation may change, affecting the accuracy of the information.