Frequently Asked Questions About Obtaining A Mortgage

If you dream of purchasing a cozy new home for you and your family to happily grow old in, it’s essential to secure a perfect mortgage for your circumstances. To identify the ideal mortgage, you must work with a mortgage agent that has connections with a suitable lender, allowing you to secure the best rate and terms for your unique needs. However, when it comes to mortgages, there are many questions you have but often find it tricky to get all the answers you seek. Therefore, TLC FINANCIAL wants to arm you with the most accurate information to help you understand the process. To do this, we’ve answered some of the most frequently asked questions about obtaining a mortgage.

1. Will pulling my credit report hurt my credit score?
It’s amazing how many people believe that pulling their credit more than once in a given timeframe will bruise their credit score. But it’s not as simple as that. Dynamic credit report systems like Equifax and TransUnion allow you to shop around for different products and recognize if you are searching for a mortgage, credit card, line of credit, or personal loan.

So, if you’re shopping for a mortgage, the reporting system will allow you to obtain a reasonable amount of credit checks within a twenty-one-day span. For example, if you do three or four checks in this period, it will lump the credit checks, and it will not hurt your credit score. I believe that the theory of your credit score being negatively affected if you pull it more than once in a short period was started by banks to prevent consumers from getting their credit checked by other institutions.

2. Can I purchase a home after my bankruptcy or consumer proposal gets discharged?
Contrary to popular belief, you don’t have to wait for six years for your bankruptcy to get removed from your credit bureau or for three years after your consumer proposal gets removed. 

As soon as your bankruptcy is discharged or your consumer proposal is finished, you can purchase a home with a twenty percent down payment. Besides, if you take the proper steps, you can buy a home with as little as five to seven percent of the purchase price three years after completing the bankruptcy or consumer proposal.

3. Can I refinance my home with a bankruptcy consumer proposal?
If you have a bankruptcy, you can still refinance up to eighty-five percent of the home’s value.

Also, if you have a consumer proposal, you can pay it off with a mortgage in some cases as well.

4. I’m self-employed, so can I obtain mortgage financing if the bank has declined me?
Yes, you can! An experienced mortgage broker will be able to offer you access to many lenders and banks that will work with your income and unique circumstances in mind.

5. Do mortgage brokers charge brokerage fees all the time?
Mortgage brokers don’t charge fees on deals that can get approved at the banks. It’s a great advantage to the borrower, as you get FREE professional advice from an expert. Keep in mind, most brokerage fees occur when there is a private mortgage loan in place.

6. What is a pre-qualification vs. a pre-approval?
A pre-qualification is an estimation of how much you can borrow based on the income you provide. There is no credit check and no verification of your income. In comparison, a pre-approval takes a further step towards verifying your information by performing a credit check for income confirmation. Once this is done, you will also get a rate hold for four months. If the rate changes, you will get the best rate available at that time which will help you determine what your monthly payment would be.

7. Should I hire a mortgage broker?
Always remember that a reliable mortgage broker works for you and not the bank. Therefore, you will obtain professional advice that is unbiased. Also, on approved credit, you don’t pay for your mortgage broker’s service as they get compensated by the financial institution. Another benefit is that mortgage brokers offer products from various financial institutions, while banks only promote in-house instruments.

8. Adjustable-rate vs. fixed rate, which product should I choose?
An adjustable or variable rate mortgage is based on the bank prime rate. In most cases, when the variable rate changes, the monthly payment will adjust to accommodate the interest rate change during the mortgage term. If your budget can’t accommodate the fluctuations in mortgage payments, I recommend you go with a fixed-rate mortgage. With a fixed-rate mortgage, your interest rate stays the same throughout the mortgage term, so your mortgage payments remain constant.

If you have any more questions about obtaining a mortgage, get in touch with me at TLC FINANCIAL. I’ve been working as a full-time mortgage broker in Mississauga for the past eighteen years. During this time, I’ve undergone continuous training and dealt with big banks and lenders, which has given me the expertise to handle any mortgage situation. In addition, I double up as an insurance agent, so my services incorporate mortgage, insurance, and financial planning. In regards to mortgages, I also offer debt refinancing, consolidation loans, self-employed financing, and commercial financing. I serve clients across Mississauga, Oshawa, Bradford, Hamilton, Brantford, Oakville, and the Greater Toronto Area.

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