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Applying to Mortgage Lenders in Waterloo

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Strict qualifications from banks and other major financial institutions have caused people to search for other types of mortgage lenders in Waterloo. People looking to purchase a home while re-establishing their credit have been forced to look elsewhere when securing a mortgage. Private lenders have stepped in to fill the void left by the larger financial institutions, helping people with recovering credit secure mortgages and become homeowners. For those of you who are buying a home for the first time, the process of applying for a mortgage can be very long and confusing. There is a lot to know, from interest rates, the types of terms, and how the payment schedule will affect your current or future lifestyle.  Getting approved for a mortgage is about proving you are worthy of credit. Here are some things first time homebuyers may not know about the process of securing a mortgage.

You Must Have a Steady & Provable Income

The logic behind this is simple. The more money you earn and the more consistently you are earning, the more you can afford. The most important thing for people to remember is that their income needs to be provable, which can be a cause for concern for the self-employed. Many freelancers don’t make over the threshold necessary to claim their income, which can make it a problem when it comes to proving their income. There are two basic methods of proving your income. The first method is called declared income, which is usually averaged over your past two income tax years. This method is considered provable. The second method is called stated income, which is the reasonable income to be expected based on the type and size of your business. This method usually only applies after you have been self-employed for a certain period of time.

Your Credit History Matters

Many first time homebuyers are surprised to find out the extent to which their credit history is reviewed. Without sufficient credit history, it is difficult to be approved by a bank or large financial institution. Perhaps you just recently started using a credit card or line of credit, but over time, lenders will use your repayment history and available credit to determine whether or not you are a suitable candidate for a loan. If you have bad credit, you may not be approved, or may be asked to pay a higher interest rate. It is possible to re-establish your credit, even if you have filed for bankruptcy in the past. Usually, people will have to be discharged from bankruptcy for at least two years to be considered. There are, however, private lenders who have stepped in to help higher risk clients secure mortgages.
A mortgage represents risk for both the lender and the homebuyer. The lender uses your credit score and income to gauge the likelihood that you will be able to repay the loan, while the homebuyer will have to adjust their lifestyle in order to make their mortgage payments on time during the term of the mortgage. For those people with bad credit, there are mortgage lenders in Waterloo willing to help. Contact a mortgage specialist today to review your current financial standing and determine the amount of credit you may be eligible for. 


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