Getting the best rates for mortgages in Oshawa depends on proving to lenders that you are worth the money you are asking for. Lenders need to be selective about homeowners they lend money to in order to minimize their risk. When lenders review your mortgage application, they are trying to determine your ability to pay off your loan. Here is a look at some of the main factors lenders look for when potential homeowners apply for mortgages in Oshawa.

 

Credit History: Before a lender agrees to forward any funds to borrowers, they will want to look at the credit history of the borrower. The lender is looking for assurance that the money they lend out is safe and will be repaid on time. Your credit score must reflect that you pay your bills on time. If you have a poor credit history, speak with your mortgage specialist about the most efficient way to raise your score.

 

Income and Debts: A lender can calculate if you are able to afford mortgage payments by looking at your income to debt ratio. The calculation of your monthly housing costs should not be more than 32 percent of your gross monthly income if you are applying for a mortgage. Housing costs include your monthly mortgage payment, property taxes and heating expenses. If your monthly payments exceed these levels, you may not qualify for further credit.

 

Employment History: The longer you have been at your existing job, the better. Consistent employment history is very valuable when applying for a loan. Many lenders require two years of consistent employment before approving a loan. Lenders want the assurance that you are able to hold down a job long enough to pay back the money they loaned you. Be certain to have proof of employment such as pay stubs or past tax information.

 

Down Payment: From a lender’s perspective, a larger down payment indicates more financial strength, and you will be rewarded with a lower interest rate. Generally speaking, the bigger the down payment, the more comfortable the lender will be with your application. Lenders also care about where the down payment is coming from and will often request documents to confirm this. Down payments from your own resources are viewed as more favourable.

 

Appraisal of the Property: Unfortunately, some things may be out of your control, such as the appraisal of the property. An appraisal is a document that gives an estimate of a property’s fair market value. A home appraisal is usually required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. If the property has a low appraisal, you may be out of luck, regardless of how well prepared you are.

 

Mortgage providers primarily use your information to assess your risk level. Lenders want to determine how much of a risk you are for mortgage default, how likely you are to fall behind on payments and how much you can afford per month.

 

For mortgages in Oshawa, a mortgage specialist can lead you through each and every aspect of the mortgage process.