Getting a Residential Mortgage: The Ultimate Guide
Deciding to purchase your own place, rather than renting is a big and exciting decision.
Maybe you have your eye on a condo located conveniently in the heart of downtown. Buying a condo is a huge and sometimes overwhelming step, that may even seem unattainable.
With a little perseverance and patience, it can be yours once you get a mortgage. We will walk you through the steps so you know what you need to do and what you can expect. In no time, you’ll have a set of keys to your first home.
What is a Mortgage?
We hear the term “mortgage” thrown around a lot, and we know it’s important, but what is it exactly?
A mortgage is a long-term legal agreement in which you will be paying monthly payments for decades. In many ways, it’s like monthly rent.
A mortgage is a loan from a bank, in which the bank holds the title of the property until it’s paid off.
In some ways, a mortgage is like other may loans, like student loans or a car loan, and it’s just as important to stay on top of your mortgage payment and pay on time.
Preparing for a Mortgage
You may already have a property picked out that you would love to own, but before you even take a look inside you need to be realistic about a few things.
If your finances are in order and you have some money saved up in the bank, your chances of getting a mortgage are much better than if you appear financially unstable.
How’s your credit? If it’s poor, work on making it better.
Take a look at a mortgage calculator to determine how much you can afford each month without too much stress. When selecting a monthly payment, don’t forget to factor in other home expenses.
Meeting with a Mortgage Broker
Once you have taken a look at your finances, get in contact with a mortgage broker. Even if your finances are less than stellar, he or she can help you determine the next step to take.
Although many prospective first-time buyers go directly to a bank to apply for a loan, a mortgage broker can be valuable if you are denied or have a complicated situation (i.e., foreclosure property).
A broker acts as a “middleman” with the lender.
Brokers can also be particularly helpful if you’re planning on purchasing a condo because these types of properties can be more difficult to obtain due to strict guidelines.
Get a Second Opinion
Working with brokers and lenders can be frustrating and confusing, but you have the right to “shop around” and talk with other brokers or lenders; you don’t need to settle.
A good broker or lender will explain all of your options and help you find the loan that will work best.
You should also never feel pressured into accepting a loan without knowing what is best for your current and future financial situation.
Be Prepared for “Hidden” Costs
Even if you qualify for a mortgage and you are given the “go ahead” to look at properties, don’t forget about financial extras.
For example, in addition to closing costs you will need to pay for a home inspection, and you may have to pay for property taxes and a year’s worth of homeowners insurance upfront.
Avoid using credit cards or applying for a credit card if your mortgage is pending as it can complicate the process.
Be Positive but Don’t Be Surprised By Denials
Getting a mortgage can be a difficult process, but the best thing you can do is to make yourself as financially prepared as possible.
Although the process may end up being quick and easy, it’s a good idea to expect a few setbacks and maybe a few denials.
With the right broker and lender, you can have the property you’ve always wanted.