Many people dont even consider buying a home because they believe they cant afford it. In fact most people continue to rent and pay for someone elses mortgage. Homeownership is more affordable than people think in fact in most situations it is more affordable. Some factors to consider would be that rent increases over time but a fixed term mortgage does not, mortgage payments remain more stable over time.
So lets think about it, by owning instead of renting your wealth will increase as you gain more home equity. It makes more sense to stop renting and start buying. Now dont get me wrong, buying a house is a big committment. The house must be kept in good condition, renovations, repairs and insurance expenses all add up. But if we think of it as an investment into increasing our net worth we see the value of owning over renting. Another reason people are stuck renting is that the banks have turned them down.
How can I qualify for a mortgage when my bank has turned me down?
The answer is very simple, banks are very strict in their underwriting and require you to have A credit in order to qualify for a mortgage. Which means that you have credit that is perfect with no room for mistakes. Is that realistic? So most of the time if your credit is even a little less than perfect you will hear that you cant qualify for a mortgage.
Lets take a look at some alternative options to getting a mortgage...
Mortgage Brokers have the ability to shop the market for you, they submit your application to various institutions instead of just one. This makes the qualifying process faster, easier and you get a better rate. A mortgage professional will look at your application and decide where you would fit best, keeping the rate low while meeting your objectives. Unlike banks your applications dont get turned down automatically because you have had a few late payments. A Broker manually considers your application and places it accordingly. But it doesn't stop there... a broker will always present you with your options and they can go back and try with another lending institution if your application doesn't fit their criteria. There are so many more options when you explore this avenue, most brokers have access to private lenders which makes your options even more diverse.
What about fees? Mortgage Brokers generally dont charge any upfront fees unless your specific situation requires a committment fee.
Why do most people go to there own bank?
Because most people are not aware that there are other options available to them. Getting turned down by a bank is frustrating and time consuming, you would wonder why they didn't go to a Mortgage Broker in the first place. I will let you decide, do the research and make sure you feel confortable with your Mortgage agent after all an agent only gets paid when they have closed the deal for you. The BANK pays them. A bank lender is paid on salary or hourly so you can see how there would be little incentive to go above and beyond if your situation does not qualify for a conventional mortgage.
My recommendation would be to explore your options and do a little research, you will be glad you did. A difference in rate could mean a savings of $5000/year or more. That could mean extra money for redecorating or a even a long deserved vacation...
Rachelle Czartorynskyj www.mortgagesourcecanada.com