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Qualifying for Home Mortgage Loan - Made Easy!

To get an approval for Home Mortgage Loan, the borrower needs to meet the strict qualifying conditions of the mortgage lending institution. In very many cases, even when the borrower qualifies for the loan, the mortgage may not be approved or the approval may not come in time for the purchase simply because the borrower is either not ready or slow in providing answers and documents needed for the mortgage approval.

Tips to Get Home Mortgage Loan

Here below are some of the important points that can help getting approval easy and have the funds available in time to close the home purchase.

  1. Before approving the home mortgage loan, the lending institutions carefully scrutinize the applicant's credit report. Many times, there are errors in the credit report--common examples are where, the loans that have been paid back in full still show as outstanding. At times, there are credit disputes that have been resolved but still show up as delinquent payment history. So it is a good idea to get your credit report before you apply for a mortgage. It will give you enough time to resolve any outstanding issues.

  2. Make a list of your assets and liabilities, gather all documents relating to your assets, these will help if you are asked to prove the right ownership.

  3. Have easy access to your down payment. If the funds are in a fixed deposit in a bank, speak to the bank manager so that the funds can be accessed when you need them.

  4. Don’t forget the closing costs. It is not uncommon for people to overlook these costs as these must be paid and are considered by the mortgage company while approving the mortgage. I have seen many people running at the last moment when they find themselves short of funds because they did not consider closing costs. In Ontario, these costs are about two percent of the purchase price.

  5. Pre-calculate your GDS (Gross Debt Service ratio) and TDS (Total Debt Service ratio). These guidelines sometimes vary from institution to institution, normally required GDS is around 32% and TDS is 40% of the gross income.

  6. Before you apply for a home mortgage loan, pay off all credit cards, if you can. It will reflect well on your mortgage application.

  7. Don’t apply for any new credit when you are applying for a mortgage loan.

  8. Don’t apply for the home mortgage loan at several mortgage companies. If you wish, you can make general inquiries to find out the best mortgage but avoid making written submissions.

  9. If you are considering a high ratio mortgage, there is a mortgage insurance fee, don’t forget to include that in your cash requirement as it may not be included in the total mortgage.

  10. It is unlikely that you will be able to hide any financial information. The mortgage company has full access to applicant’s credit history, so be open and do full disclosure of the information asked for.

  11. Don’t volunteer to give additional credit, financial information, if that is not needed for the mortgage approval.

  12. Ensure that your credit worthiness does not change between the time mortgage is approved and the closing of your home purchase.

Above list is not exhaustive in nature but will help you with your home mortgage loan and you will have fewer surprises while closing your home purchase.

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