Common Mistakes People Make When Applying For A Mortgage
The mortgage application procedure can be demanding due to the complexities and several steps involved. Unfortunately, in haste to get their mortgage funded, many tend to commit errors that affect the whole process adversely.
To help you steer clear of the mistakes that could slow down or have a negative impact on your mortgage application process, Heidi Hamano of TMG - The Mortgage Group has put together a list of the most common mistakes people make when applying for a mortgage and how to avoid them.
1. Choosing a mortgage solely based on rate
It is often common for people to seek the mortgage at the lowest rate, but careful consideration should be given based on which mortgage best fits your situation. You must be aware that all mortgages are different in terms, rates, and conditions. Therefore, you should look beyond the rate itself and give more thought to overall flexibility and type of mortgage programs. A mortgage professional can assist you in selecting a mortgage that is most beneficial to you.
2. Apply for a mortgage at multiple financial institutions
The internet has allowed consumers to collect information and made it easy to take advantage of the technology. However, the consumer must be aware of a potential negative impact that can be caused by applying for a pre-approval at multiple financial institutions. Whenever you apply for a mortgage, the financial institution likely pulls your credit bureau, and if that happens numerous times, then that can impact your credit score negatively. Talk to a mortgage professional and find out what course of action you can take in terms of applying for a mortgage to avoid any unexpected surprises.
3. Increased liabilities before securing a mortgage
Following the implementation of the stress test imposed by the Canadian Government, it became more challenging for buyers to qualify for a mortgage. For this reason, you need to understand that increasing your liabilities will reduce your borrowing power when it comes to securing the mortgage. Make sure to refrain from obtaining a new loan, such as a car loan or personal loan before applying for a mortgage.
4. Not seeking professional advice
It is worth acknowledging that the service provided by mortgage professionals is free most of the time (OAC). A mortgage professional is a licensed individual who has updated industry knowledge and access to numerous financial institutions. You may assume that becoming a homeowner is almost impossible due to your current situations being a new immigrant, self-employed, or having a challenged credit. Make sure to seek professional advice as they will likely have solutions to your problems.
5. Not having a clear financial goal
Buying real estate is the most significant purchase people ever make in their lives. You do not want to be house-rich and cash-poor. Having a clear financial goal upon purchasing real estate can put you on the right financial path. Owning a home is a huge financial commitment, but building equity in your property can benefit you down the road. Talk to a mortgage professional to gain the necessary knowledge to use your real estate as a financial tool.
6. Not comparing different mortgage options
Many people make the mistake of assuming all the mortgages are the same. Some financial institutions offer a program specially designed for self-employees or even new immigrants. Explore different options through a mortgage professional so that you will be confident in the decision you make throughout an application process.
To avoid these mistakes, reach out to Heidi Hamano, a mortgage specialist at TMG - The Mortgage Group, in Vancouver, BC. I ensure to provide support to my clients through the mortgage application process and continue to do so even after the approval of the mortgage. I help them fulfill their dream of homeownership and achieve their financial goals. My mortgage services include new purchase, mortgage refinances, mortgage renewal, investment property, alternative (private) mortgage, new to Canada, self-employed program, reverse mortgage, purchase and improvement, construction mortgage, land financing, commercial mortgage, and challenged credit.