How do I obtain a mortgage?

Now that you have a better overview of how much your condominium will actually cost and what your mortgage options are, the next step is for you to actually obtain the mortgage.

Financing is where most deals can encounter complications. One of the best strategies to ensure you get the condominium you want is by applying and getting pre-approved for a loan prior to your condominium search.

The loan application process is simple:

• Contact a mortgage broker you would like to work
• Review you loan options
• Fill out the loan application and corresponding paperwork
• Submit application with the a non-refundable application fee

The broker or lender will review your information and check your credit. Once you choose the property you want to purchase the lending institution will hire an appraiser to value the property and ensure it is worth the price of the loan.

Should you be rejected for your first loan application – don’t become overly concerned. There are several situations when a lender finds it to risky to extend a loan. Remember, as there are several types of lending institutions –if one rejects you simply move on to the next. Consult with your Ripco Real Estate agent who will help you find a lender that specializes in granting loans to individuals with special circumstances.

Following are the most common situations why loans are rejected and recommendations on how to overcome them

• Accumulating More Debt: Some buyers will make large purchases, such as a car or boat, after being approved for a loan and the lender learns about the purchase. As lenders consider new large purchases an obstacle in making mortgage payments, they may cancel the loan. If you’re considering making a large purchase around closing time, it is highly recommended that you wait until after the close.
• Problems with Credit: There are dozens of credit problems that may cause a lender to reject a loan. The common denominator they all work from is a credit report. Your credit report is a concise record of all of your debts, accounts, and payment habits. If you were late making a credit card payment a couple of years ago, it will probably appear on your credit report. If you defaulted on a loan or filed for bankruptcy, it will definitely appear on your credit report.
  
  Because your credit report is so critical to being approved for a loan you should be aware of what is on your report. Before applying for a loan, request a complimentary copy of your report from each of the 3 major credit agencies and review it. If you find information which is inaccurate you can and should contest it directly with the credit reporting agency. If this process is ongoing while you’re applying for a loan, explain the situation to your lender and provide your lender with the same documentation you are submitting to the agency.
• Employed Less Than Two Years: Lenders by nature are low risk and only want to give mortgage to people they believe can pay the loan back. Lenders require a stable income and prefer someone who has worked at the same company for at least two years - It shows consistency and financial security. Be prepared with an answer if this question comes up. Lenders generally do not object if you changed companies for a higher salary.
• Job Loss: If your lender rejected your loan application because you recently lost your job, you’ll want to focus on getting a new job before you resubmit your application. At that point, consult with your agent. Depending on the circumstances, you may want to resubmit your loan to a different lender or wait several months until you have found another job. Also, if your spouse’s or domestic partner’s income is enough to support the mortgage, you may want to have them apply for the loan instead.
• Self-Employed: To a lender self-employment falls under the two-year rule, they want to see an established and consistent income level. If you’ve recently started a home-based business, you may want to wait before you apply for a mortgage. If your income is largely based on commissions, you may encounter some difficulty securing a home loan.
• Unapproved Building or New Development: This is a rejection totally beyond your control. Remember, when a lender grants you a loan, they are investing in the property just as you are. The lender wants a secure investment. Lending institutions have a set of guidelines that dictate whether a property is a good investment (i.e. 70% occupancy rate).

How can I get copies of my credit reports?

Your credit report is a vital part of the loan decision process, it is important to make sure it's accurate before you apply for a loan. Contact your bank for more information on obtaining an accurate credit report.