Real estate mortgage is a confusing and lengthy topic, hence first-time wholesale home buyers in Gastown feel bombarded and ask too many questions, but it doesn’t work that way. When it comes to mortgages, it is not about the asking too many questions, but asking the right and useful set of questions that will remove the wheat from the chaff. Listed below are some of the main questions to ask for, if you are interested in learning more about the process of getting a loan. Without further ado, let’s have a look at them.
- Pre-approval and pre-qualification: Pre-qualification is the elementary step of seeking out the perfect loan by retrieving few credentials like financial status, debt, income and assets. People who seek a pre-qualification will be made privy to a sum they could expect to borrow, but it goes off the point. The total numbers thrown out at pre-qualification are far from what’s said, and are more like a ballpark figure, but not a specific number! Because of their simplicity, pre-qualifications can be done over the phone or online, the basic idea of pre-qualification is to facilitate discussions on how to proceed. Only those prospective buyers that have a proposal of how much funds they are working with will be able to plan for their impending purchase and only at this point one might weigh up individual loans and mortgage options that best suit their requirements. If you are interested in being aware of the precise financial background entitles you to, it is recommended that you go beyond the simple pre-qualification process. More explicitly, it’s the pre-approval process that takes the pre-qualification process one step ahead. Upon providing more details about the financial past you are said to have an insight into how much money you will be able to borrow, down to the dollar, while still having a better idea of interest rate obligations. Unlike the pre-qualification process, those that are pre-approved are said to take delivery of a provisional assurance in writing for a specific loan amount.
- Private mortgage insurance: PMI is an effort made on behalf of lenders to protect from defaults and it is tasked with protecting the lender’s financial interest, when a borrower falls into foreclosure. In simple, banks lose money when homeowners become delinquent and private mortgage insurance is a cost lenders tax on “risky” borrowers to offset potential future losses. In order to make up for the potential for default, banks will charge borrowers what has turn out to be known as private mortgage insurance when they put a smaller amount than twenty percent down. In view of the fact that lower down payments typically overlap with larger monthly payments, homeowners that can’t come up with the said percentage are more likely to default; such people are more of a risk to banks.
- Closing costs and how much does it cost: Appraisal fees, title insurance fees, attorney fees, pre-paid taxes, insurance, and escrow fees are some of the most common closing costs. Closing costs shows a discrepancy between every purchase and property. If truth be told, not every wholesale home buyers in Gastown will be loaded with the same amount and it depends on the state of affairs and it can be somewhere between 2 to 4 percent of the loan amount.