Common Mistakes People Make When Qualifying For A Mortgage
While the home-buying journey is filled with several exciting steps, applying for a mortgage is an overwhelming one. The stress and confusion of applying for a mortgage causes many to commit mistakes that prevent them from qualifying for a mortgage of their choice. To help you avoid some basic errors that you might live to regret, Anita Mortgage Team has put together a list of the most common mistakes people make when qualifying for a mortgage.
1. Assuming their qualification for the mortgage
Customers think they can qualify for a mortgage for the home they want to purchase. In reality, they end up not getting qualifying for the mortgage they need to buy the property they want. This can be both frustrating and disappointing. Frustrating for the realtor who has spent hours reviewing and showing them properties that are outside their price range. Disappointing for the client because when they start looking at higher-priced properties, they will never be satisfied with a lower-priced property.
2. Getting an online pre-approval
An online approval system does not take into account the documentation that the lender will require to confirm the income. Just because a person makes a certain amount of money at the end of the month does not mean they can prove this income according to the regulations required by the department of finance.
3. Calculating their income incorrectly
People often assume their bonus, commission, or overtime income is included in their eligible income when qualifying for a mortgage. If you are paid a base salary plus commissions, over-time income, or bonus income, you need to be able to prove this income is sustainable. Lenders will want to use an average of your taxable income from the last two years. To do this, you will have to show your previous two years’ tax returns and a recent year to date pay stub, proving that you are on track to make this income again this year.
4. Not appraising your income accurately as a business owner
Self-employed borrowers who believe their company is making a lot of money often assume that they can qualify for a mortgage without any issues. The biggest problem is that many self-employed borrowers show that they make minimal income on paper in an effort to reduce the income taxes they are required to pay the CRA. Clients don’t understand that in the prime lending space, lenders will only allow them to use an average of their taxable income - the income showing on Line 150 of their personal notice of assessment when qualifying for a mortgage. There are alternative lender options when it comes to qualifying for a mortgage with less income. They should review these options with a mortgage professional. They may be better off paying a higher interest rate with an alternative lender instead of increasing their taxable income to qualify for the lowest interest rate with a prime lender.
To avoid these and other mistakes, reach out to the experts at Anita Mortgage Team.
With over a decade of experience in the mortgage industry, we are passionate and persistent at providing the best services to our clients. At Anita Mortgage Team, we assist our customers in finding the best mortgage products that will complement their needs. We offer several mortgage services including purchase mortgage, mortgage refinance, mortgage renewal, and home equity loans to clients across Airdrie, Calgary, Chestermere, Crossfield, Carstairs, Cochrane, Langdon, Beiseker, Olds, Okotoks, Didsbury, Irricana, and Indus in Alberta.