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•Step 6 – What Does a Lender Consider When Looking at Your Mortgage Application?

 

Documents Needed to Get a Mortgage

You will need the following documents to secure your mortgage:

A Job Letter from your current place of employment.  It will have to state when you started at the company, your position, if you are paid hourly, your hourly rate, if you are paid by salary the amount monthly, how many hours you are guaranteed, your year to date income and that you are not on probation.  Let the person that writes you the letter know that the bank will be calling to verify all of the information is factual.  They will not answer any questions to anyone if you have not let them know it is alright.  It is part of the Privacy Act.

 

Your 2 most current paystubs with a year to date balance on them.

 

If you do not get regular hours, if you get overtime, if your pay stub does not state your year to date income, or you are self employed:  We will need 2 years of NOA (tax notice of assessment).

 

Down Payment Confirmation

The lender will require that you prove the source of your down payment. You’ll have to send in bank statements, statements showing RRSPs, stocks, etc. You must show a three-month history of your accounts. If there are any large lump-sum deposits, you’re likely to be asked to show where the deposit originated. For mortgages where your down payment is less than 20% of the purchase price, you’ll also be asked to demonstrate that you have access to 1.5% of the purchase price in your bank account. You must be able to show this through a credit card, line of credit, gift from family or savings in case closing costs run higher than expected.

  

3 months history of the bank account from which you are getting your down payment.  It will have to have your name and account number on it.  If you are getting the money from different accounts, we will need 3 months from each account.

  

If you are getting the money as a gift, you will have to get the gift letter signed by the person who is giving you the gift.  The amount on the gift letter must be the same as the amount you put in the bank.  There must be a money trail to prove where all the down payment comes from.

 

Sometimes, they will need a copy of the strata documents, if you are buying a condo.  I will advise you if we need these documents.

 

Sometimes, an appraisal is needed, usually in the case of a foreclosure or a refinance.

 

Credit History

Your credit score must show that you pay your bills on time. If not, you may still be approved, but the interest rate may be higher than expected. Your Mortgage Broker will provide the credit check.

 

Contract of Purchase and Sale

This is a copy of the accepted offer of the home you intend to purchase and a copy of the MLS listing sheet.

  

This is a list of the more standard items.  Each case is different, so don’t be surprised if they ask for some more information.  They are just trying to make sure all the information they have is complete.  DO NOT WORRY, we will work together to get your mortgage approved quickly and as smoothly as possible.

   

 

Down Payment Options

The main reason many renters feel they can’t afford to purchase a home has to do with saving for a down payment.

 

Many lenders will allow for a gifted or borrowed down payment.

 

Using your RRSP Money 

You can use your money from your RRSP's, if you are a first time buyer.  You can withdraw up to $25,000 from your RRSP account.  It is like an interest-free loan to yourself.  You do have to re-pay the money.  It is repaid over a 15 year period in equal payments per year.  Should you have a year that you do not repay the money to the account, you will add the amount due that year to your income. 

 

They must be in the RRSP account for a minimum of 90 Days.  You can not remove them until the 91st day, so be sure when you write an offer you do not close on the purchase before you can get the money from your RRSP account.

 

You must live in the home as your principal residence for one year from the completion date.

 

A contract of Purchase and Sale must be entered into before the funds can be withdrawn from the RRSP.

 

You may be able use your RRSP if you are not a first time buyer, but you will have to pay income tax on the amount that you have withdrawn and you will have to check with your bank to make sure you can withdraw the monies.

 

  • 7 – Special Financing Programs

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