A Beginner’s Guide To Establishing The Required Income For A Mortgage
Are you struggling to get a mortgage to finance your dream house? There are several factors lenders need to consider before deciding to lend to you. For institutional lenders to qualify you for a mortgage, the primary requirements are provable income and good credit.
Unfortunately, if you’re unaware of how much income and credit you need to maintain, applying for a mortgage can quickly turn into a massive challenge. To help you understand what level of income you will need to maintain mortgage payments and daily expenses, Mortgage Agent Andre Ouimet has put together a Beginner’s Guide to establishing the required income for a mortgage. In this guide, I will teach you how to identify what you can afford and explain different factors that will affect your income and eligibility for a mortgage.
Determine how much you can borrow: A person should be establishing how much they need to borrow for the purpose they are borrowing. They should not be seeking the maximum they can borrow if they do not need to borrow that amount. While it is a good idea for a borrower to establish how much they can afford to carry, this will be established by the lender. The borrower should be establishing how much they need to borrow, not the maximum they can borrow.
Verify your monthly payments: Another requirement you need to consider is your monthly mortgage installment amount. With a mortgage calculator, you can establish how much you will need to pay back at the interest rate offered by a lender for the amount requested. This is also something that a lender will establish, based on the lender’s interest rate, the amortization of the mortgage and the amount being borrowed. The lender will establish what rate they will offer only after they have reviewed the information submitted by the borrower through the mortgage agent.
Ensure your credit score is high: Your credit score and history are also essential to verify whether you’re a viable borrower. To ensure your credit meets the lender’s requirements, your current credit score and history must be in good standing for you and anyone else applying for the mortgage when you are seeking a low rate from a bank or credit union. Mortgage agents and/or lenders can also explain how you can establish a high credit score.
Maintain cash for other expenses: Besides your down payment, you also need to reserve cash to cover legal expenses and any additional costs required to close the mortgage you need. Without this money, you may either be forced to apply for a lower mortgage amount or make up the shortage from other sources. Mortgage agents can explain how you maintain cash for other expenses through establishing provable income.
Advice From The Pros
Understand How lenders calculate your financial capacity: Mortgage lenders usually calculate your ability to carry a mortgage by making sure that a portion of your provable income is left available to cover your daily living costs. That way, you don’t incur financial problems or become a risky borrower.
Don’t over-borrow: When applying for a mortgage, try to qualify only for the amount you require. Avoid over-borrowing to prevent your mortgage from turning into a burden. To achieve this, you need to establish how much you can afford when buying or refinancing.
Identify your property expenses: Make sure that you are aware of what the annual property taxes are and any other carrying costs, such as utilities and condominium fees. At the same time, ensure that the home does not require major or minor renovations that will affect your budget and your ability to repay your mortgage.
Hire a mortgage broker: The best way to avoid problems with your mortgage is to enlist the services of a third-party mortgage professional. As these experts are not obligated to a lender, they will provide you with unbiased advice. With their assistance, you can also determine what you can afford and what amount of down payment and monthly payments you need for a larger mortgage when you are "buying up" to a larger home.
If you’re looking for a mortgage agent in Toronto, ON, reach out to Andre Ouimet. As an experienced professional, my goal is to identify your needs and exceed your expectations. I specialize in solving a variety of financial problems, from debt management to credit score repair. I am ready to take on the challenges your financial situation poses and will spend as much time with you as a need to help you solve your financial problems.