Smooth Mortgage Process: Do’s and Don’ts

Mortgages Do's and Dont's

A home purchase is undoubtedly a major life decision, it is a place where we put down roots and make countless memories that last a lifetime!
With mortgage rates sitting at record lows across Canada, buyers have been itching to purchase a property. As per the current trend you can lock in a five-year fixed rate for as low as 1.35%. And despite the challenges – inflated home prices and limited inventory — there’s a considerable chance that mortgage activity will continue to stay strong in 2021. Canada’s monetary policy has however committed to keeping the policy interest rate at the effective lower level until economic slack is absorbed and inflation target is achieved. However, the rate could be poised to surge later this year.
So, ready with your deposit, need to apply for a mortgage? What could possibly go wrong? Well, quite a lot. Make sure not to get caught out.
The mortgage process can be a headache, one has to jump through hoops, make note of key dates and lots of tiresome work. Getting your application rejected after all the hassle can be tragic!
Luckily, we have got you a list of Dos and Don’ts to get you through the mortgage process and help you avoid some of the more common pitfalls along the way.

  1. Get Pre-Approval
    Getting a pre-approval will help you find out your affordability. So that you don’t have to go out of your budget. This can help you make a competitive offer with a pre-approval letter since the lender has verified income and assets.
    2.Keep Documents Ready
    Mortgage lenders like to see the documentation for various aspects like income, employment verification, and your current debts or obligations. The process can go smoothly if you have good records of all the documents – bank statements, tax return documents etc.
  2. Continue your Payments
    Purchasing a new home is exciting and thrilling. In this excitement, we sometimes tend to forget about our other payments like monthly bills – rent, utilities etc. It is important to note lenders check your payment history while evaluating your mortgage application. To avoid missed payments that can hinder your chances of reliability and maintain consistent payments that showcase reliability.
    1.Don’t Shift Financial Situation
    While securing a mortgage loan, it is crucial to “freeze-frame” your financial situation as steady income without changes can help the process go smoother. From application submission through closing day, don’t shift your financial situation, change your job as it can impact the opportunity for loan approval.
    2.Don’t make major purchases
    Focus on saving and not spending your money. You may need funds for payments such as a money deposit, a down payment, or closing costs. Strictly avoid making any large purchases, such as a new car, furniture etc as this can affect your credit.
    3.Don’t Switch/Close Accounts
    Switching bank accounts can definitely hinder the mortgage process. You will traditionally be required to submit the bank statements of 3-6 months, for showcasing your financial history. Changing/ closing accounts can make it increasingly more difficult to get documentation when you’re no longer a customer.

Remember the saying: Patience is virtue while getting through your mortgage process. As not every mortgage journey is plain sailing. It’s good to be prepared for a few bumps in the road. Keep resilient and try to stick to the above-mentioned things you should do and things you should completely avoid to strengthen your chances of getting a mortgage and make your application the success story you’re hoping for!

How To Get Out Of A Foreclosure Mortgage?

Irrefutably, even the thought of Foreclosure or mortgage can be irksome, dreadful and traumatic as it is an awful process that can make a homeowner even lose possession of his home.

But what leads to this stressful situation?

When the borrower dawdles monthly mortgage payments and if the missed payments continue for a long period of time then the lender gets compelled to initiate the process of Foreclosure.

Foreclosure is the legal process initiated by your lender to take possession of your home and then ultimately sell it to recover the pending amount that you owed them.

Unfortunately, many Canadians find themselves either in the process of giving up titles or in foreclosure every year. As in an attempt to be a homeowner, they take way too much debt which becomes challenging for them to handle which often takes them to a gloomy, ugly and dreary path towards foreclosure.

We can understand unanticipated situations like job loss, severe health ailment, death of a dear one can at times lead to missed mortgage payments so what to do in such a situation?

It is vital to manage and control the issue of foreclosure immediately as delay can lead to the worst effects. The earlier you attempt to get out of it, the better it is.

Initially, try to improve your financial health, by being regular in mortgage payments, improving your credit score, not taking further credit but if you have failed to do so and your foreclosure has been initiated try and speak to financial consultants like MMC to explore options, solutions and strategies that can help you extend your timespan for repayment.

Luckily, there are a few things that can help you avoid foreclosure.

Though standardised banks, lenders will choose not to lend you if you have arrear or pending dues on your current mortgage or are undergoing foreclosure but Private lenders can surely help you get out of the foreclosure.

Getting out of foreclosure generally comprises of three steps, read on to explore this;

1.New Mortgage to Stop Foreclosure.

The first step includes taking a new mortgage from a private lender to pay off the mortgage dues, taxes, legal costs, arrears and other costs. As borrowers have the right to redeem home equity until the home is sold and closes.

2.Refinance with a traditional bank/lender

The next step is refinancing with a traditional bank or lender. As this can help to get back to normal. Most of the time this step comprises repairing the credit score and history.

3.Speak to Mortgage Specialist

It is very essential to discuss your situation with a financial consultant or expert who can help to derive options to consolidate your debt both mortgage and consumer into a new mortgage or even options of mortgage modification to extend some time for repayment. (Short -term relief). Always work towards a resolution with your mortgage specialist.

Remember it is always better to do something to stop the process than giving up and doing nothing!

Foreclosure is certainly not a joyful experience. Home loss can be emotionally crushing and devastating and can leave a massive dent in your financial situation and your credit score and history. Call MMC today as we can help you stay in your home and help you avoid foreclosure!