Mortgages in Oshawa –
What Do Lenders Look For?
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.