When we talk about buying Calgary real estate, regardless if it is a brand new one or a pre-owned type, there is a big chance that you will be acquiring the property through a home mortgage. The key to a successful mortgage application lies in understanding how it really works. First, a mortgage involves a two-stage process that begins with a fact-finding that aims to determine how much loan and which type of mortgage you can truly afford. The second stage involves the lender conducting a deeper level of background check to ensure that you are financially capable of paying your mortgage or not.
In the first stage, you can expect your chosen lender to inquire on key details to determine the type of mortgage that will best suit you. They will also try to map out your current financial situation for them to determine the maximum amount of money they are willing to lend you. In this stage, you can also expect them to lay down all of the details pertaining to the fees and other charges of the mortgage.Your lender or agent should be able to help you out with questions regarding the Calgary real estate market.
The second stage, on the other hand, is where the actual application of your mortgage begins. A comprehensive fact-find will be conducted by the lender, which will be followed by an affordability assessment that determines how much you can afford. In this aspect, you need to provide key details like your current income and expenditures, among others.
Moreover, you can expect to be questioned regarding your finances, as well as your plans for the future that may have an impact on your finances. In the event that you pass their qualifications and your application is approved, you will be given a binding offer, as well as a mortgage illustration document. This document or set of documents contains all the terms and conditions surrounding the mortgage.
You will also be given seven days as a “reflection period” where you are expected to review and contemplate on the details of the mortgage. If you are already determined to push through, you can opt to waive this period and proceed with the mortgage.
Other Important Details to Consider
There are some other important details that you need to be aware of, and one of which involves the down payment. Since you are required to give a down payment, it is imperative to note that the bigger the down payment you give, the lower your monthly mortgage payments will be.
Twenty percent is the standard down payment rate that people usually go for. But if you can aim for a much higher amount like 40 percent, or somewhere close to that number, the better it will be for you in the long run.