Mortgage Application Tips
When you are planning to buy a home it is important to get pre-approved
for a mortgage before you even starting looking at houses. Sellers
will be more likely to accept your offer if you are already approved
for a mortgage. A seller does not want to take the chance on accepting
an offer from a potential buyer who may not be able to qualify for
finance when there are other buyers who are already approved. Here
are some tips to increase your chances of getting pre-approved for
a loan.
The very best tip is to use a mortgage broker to find the right
loan, and to prepare the loan application. There is no substitute
for experience and brokers understand the application process and
the banks requirements, making the process much simpler than doing
it on your own. I wasted lots of time and effort applying to 3 banks
and was rejected by each but a mortgage broker was able to obtain
a loan for me without any trouble. If you don't know a broker, see
our recommendation at the bottom of the page.
Pre-Application Considerations
- This goes without saying, but be honest about everything on your
application.
- If you will be borrowing your down payment from a relative be
sure to do it more than six months before you apply for your home
loan. Lenders will typically not allow you to borrow your down payment.
Some lenders will accept this situation if your relative provides
a statement that money is a gift without repayment obligations.
- Request a copy of your credit report and review for mistakes.
If there are any errors attempt to clean up before you submit your
application. You can send a letter with documented proof to the
credit bureau requesting a correction of the mistake.
- Catch up on all bills and continue to pay all your bills on time.
Late payments can hurt your credit and your ability to get approved
for a loan.
- If you have too many debts consider consolidating these loans.
Too many debts can cause lenders to question whether you will be
able to take on additional payments.
Mortgage Application
You will need to bring certain documents with you when completing
your mortgage application. These include:
1. A copy of the purchase sales contract.
2. The property legal description.
3. Your tax returns for the previous two years including all schedules
if you are self employed, employed in a family business or receiving
a portion of your income from commissions or own rental property.
When completing the home loan application you will typically need
the following information.
- Your employment history for the last two years.
- Bank account information including account numbers and balances.
- Stocks, bonds and investment account information.
The value of your superannuation with a recent statement and supporting
documents.
Automobile information.
Life insurance policies including the name of the insurance carrier,
policy number, and amount of insurance.
With a little preparation your mortgage application process will
go smoothly and you will be on your way to owning that new home.
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