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Mortgage

Mortgage- A simplest way to buy a home!

Buying a home with mortgage is a premier option for most of home buyers. There are certain advantages of mortgage starting from savings to creation of equity. Here is a simple guide to give you exact idea about what mortgage borrowing is and how you can make you decision-making easier.


Application and Pre-qualify

You should start by applying and pre-qualifying for mortgage. At this stage, your lender would accept supplied statements at face value. A mortgage "pre-qualification" sets parameters for your property hunt. However, this is not a promise from a lender for approval.


Approval

Once the supplied statements reach the right place for approval, the lender will ask for some important documents including the following:
  • Proof of income
  • Expenses
  • Total debt (secured and unsecured)
  • Credit history (very important)
  • Bank statements
It is important to work with a licensed mortgage agent. A licensed professional will be able to advise you on important documents and guide you through other formalities.


Income Standards

Make sure you calculate the amount that you can afford. This is easy via using income standards and income stability guidelines applied by licensed lenders. When calculating the income amount, you are actually calculating the actual taxable income. Stability of income is exact computation of prospects for regular service/employment and stable growth of career. The amount of salary you draw on a monthly basis will determine the following:
  • The amount you can borrow from the lender
  • The period for which you can borrow
In case, you earn on a commission basis and bonuses for your income or have a business of your own, you must submit more documents. The criteria will get stringent. You require providing average income proof and documents of past many years. The amount you pay in order to support your family will be deducted from income while determining the eligibility.


Down Payment

It is important to provide at least 5 percent of the total amount as down payment during the purchase of a home. If you are new to Canada, 35 percent should be provided as down payment.


Closing

You should pay closing costs. This will add about 2.5 percent of total purchase price.

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