This writing, of Information needed for a mortgage loan includes a list of documents required to obtain the loan and inside tips for smooth transition when acquiring the desired real estate.
When contemplating to purchase a home or property it is imperative to consider the following;
Current and Projected Income and Expenses
Assess your Current and projected income and fixed expenses to decide on an average monthly payment that can be afforded. In addition to the mortgage payments additional payments for Utilities should be considered since this is often downplayed but becomes foremost every month after you would have settled into the new home. Importantly, in addition to a Down payment must have at least $5000 – 10,000 as closing costs which covers Home Inspector fees, Lawyer’s fees, Transfer taxes and partial /all Property taxes for current year.
Zerodownpayment and Downpayment Options
Next are you considering a Zero down payment option or Down payment option; if the latter what is the maximum can you afford. Since the Real estate issues has surfaced in North America, Zero down payment option is harder to obtain and has high Insurance costs factored into the loan payments. Majority of loans offered are down payment options which require at least 5% down payment. This leads to the next issue of securing a pre approved Mortgage Loan so that you can know ahead how much you are Preapproved for and what your Down payment is likely to be.
Preapproval of a Mortgage either Online or Personal Contact with broker/ lender
Preapproval is obtaining the best tentative amount of financing that will be available to purchase the property. This is key to help deciding the type of house, location and affordability. This makes your decision more feasible. Contact with a broker is better since there will be many more options available to you with less stress while the cost is ‘built into the Mortgage loan and not direct from pocket. Preapproval can also be done Online and forms filled will require all written information and not necessarily hard copies (actual paper) immediately. Hard copies will be requested however with the formal application when you are ready to purchase. Most cases Online options are usually forwarded to a broker or lender and have to begin the process all over again.
Document check list.
In order to obtain approval from the lender there are documents that must be supplied as PROOF to ensure that You are who you say you are, Marital status(single, married,divorced), Stable job and income and that you are Creditable with a Monthly Expenditure that can still afford you this loan.
1. Proof of Employment and Income
Letter of Employment stating Full name, date started employment, position of employment, salary. Must indicate if full time/part-time and if on probation or not.
Usually if less than 2 years of employment then request letter also from previous employer.
Last pay stub
Recent tax Assessment and T4 slips for last 2 years.
Self employment -Proof of income (financial statements of business/company and Tax assessment.)
2. Proof of Down payment
Statement of chequeing and savings account for last 3 months
Photocopy of gift cheque and gift letter if down payment is fully or partially given to you
RRSP statement (recent) may also be required
Property Owner – contract of property to be sold and mortgage statement of this property.
3. Other Bank Requirements
-Documents for Property for purchase
Copy of MLS listing
Contract of property to be purchased
Property Appraisal
Tax assessment
Name of Lawyer of Purchase transaction
Void cheque for future mortgage payments
– Proof of Identity and Credit Worthiness ( also requirements for lender)
Credit Report- lender will request a credit check
List of all liabilities such as automobiles, insurances, dependents ,rental obligations.
Proof of Identity / citizenship
Social security number will be required for application forms
Photo ID will be required on signing
Whether you are a first time home buyer or are upgrading or downgrading your house purchase a practice that gives you adequate assurance of affordability is to live on the budget for at least 3 months that you will have when in your new home . If this can be done comfortably then there is an assurance of owning and enjoying that new piece of real estate.