Getting the right mortgage loan – What steps to take

According to the Mortgage Housing Corporation, one must be ready before taking out a mortgage loan so that one doesn’t have to face a forced foreclosure on his house. The mortgage loan is a secured loan that has your home as collateral and anyone who fails to repay the mortgage loan will have to go through a foreclosure where he will lose his homeownership rights.  Are you aware of some of the important checks done by the mortgage lender before lending you a loan amount? If answered no, here are some points that you should consider.

• Check your credit score: This is the reason why everyone is required checking out every important point before approaching a mortgage lender there.The most important thing that is checked by the mortgage lender is your credit score so that he gets a clear idea of how you’ve managed your debt payments in the past. If you approach the lender with a poor credit score, your lender will be sure that you’ve missed your mortgage payments and this is the reason behind the poor score. If you claim to be a risky borrower who may default on the payments, you can be sure about being subject to high interest rates on the mortgage loan.

• Check your savings account: You should have enough savings in your savings account so that you’re not subject to sky-high rates on the home loan. When you take out a mortgage loan, the Canada mortgage lender will certainly check your net worth to check if you can make the monthly payments on time after meeting all the other debt obligations. Therefore, you may try boosting your monthly income and augmenting your savings account so as to grab a lower rate on the mortgage loan.

• Check the amount you can pay down: When you take out a home mortgage loan, you have to pay down at least 20% of the loan amount and for that you need to save a huge amount of money. If you don’t pay down a huge amount, you have to make sure that you pay the PMIs or the Private Mortgage Insurance premiums. This will unnecessarily increase the monthly mortgage installments. Therefore, you should boost your savings rate so that you can pay down the exact amount and take out the loan at an affordable rate.

Therefore, when you’re a resident of Canada, you have to make sure that you don’t take any step that will lead to taking out a wrong mortgage loan. Follow the tips mentioned above so as to seal the deal on the best loan in the market. Manage your money at the same time so that you don’t default on the payments and hurt your credit score.