houses

What to Do with a Rejected Mortgage Loan Application

When you apply for a mortgage loan, there’s no guarantee that it will be accepted. So, you need to prepare in case your mortgage loan application gets denied. And with this guide, you can hopefully figure out what your next steps would be if your application was rejected. 

Identify the Reason for the Rejection

If your application is rejected, the lender will send a letter explaining why. They may give you an estimate of how long you have to fix the situation before your application will be considered again. In some cases, your mortgage loan application may be denied due to an irregularity in your credit report. If that’s the case, your credit report will be ordered to identify the problem.

If there is a problem, such as an unpaid bill or loan, or past due tax payment, you will be given a chance to make it right. If there are errors on your credit report, you should contact the service that provided it to identify the problem and make corrections.

Even if your application gets denied, you can still check your credit report for errors.

Apply for a Different Loan

If your mortgage application is denied, you may be able to find another solution. If you’ve already got another loan in progress, you may be able to refinance it to get a better interest rate. Or you may be able to find a less expensive home that you can still afford.

If you’re trying to get a new mortgage loan, you can take the time to get your finances in order and reapply. If you have an irregularity on your credit report, you can choose to wait until you get your credit report back and try to make the necessary corrections.

If you’re applying for a fixed-rate loan, you can reapply once your credit score and other financial numbers are back in a range the lender is satisfied with.

Take Action to Get Your Finances in Order

If your application is rejected because your finances aren’t in order, you’ll have to work on them before you reapply. You might be asked to pay down your debt, address bill or loan payments you’re currently ignoring, or get your savings account up to a certain level.

This will require you to work on your finances and make the necessary changes.

If you have a hard time paying your current bills, you may want to consider working with a credit counsellor. If you have unpaid bills, you can use a service like National Debt Relief to negotiate and consolidate your bills into one to make it easier to pay. If you have high-interest rate credit cards, you can work with a card consolidation company to get better rates and make it easier to pay off your debt.

A small change to your finances can make a big difference to your credit. And it can help you get a mortgage loan that you can afford.

Final Thoughts

As you can see, there are many reasons why your mortgage loan application could be rejected. But it’s not the end of the road. You just need to identify the problem and address it. You can work on your finances, wait for your credit report to be corrected, or search for a different home loan. If you can make the necessary changes, you could end up with a mortgage that you can afford.​

Finance your home now with the help of Ottawa Mortgage Services. We are a mortgage agent in Ottawa that provides services for first-time homebuyers, self-employed individuals, and commercial clients. We are actively involved in the mortgage industry and have a great deal of experience preparing mortgages, dealing with lenders and negotiating all aspects of mortgage underwriting. Apply now!

neighborhood

How to Know if Your Credit Score is Enough to Buy a Home

Every time you apply for credit, whether it’s a home loan, a credit card or even an apartment lease, the lender checks your credit score. This score is based on your personal credit history and determines how risky you are as a borrower. Higher scores give you better chances of getting the best interest rates and mortgages. 

Think of your credit score as your personal credit report’s grade. Today, let’s take a closer look at credit scores. How do you know if your credit is enough to buy a home?

Here’s what you need to know:

What is a Low Credit Score?

Credit scores can range from 300 to 850. It’s the most commonly used credit score in the U.S. Typically. You can only get a reasonable interest rate if you have at least a 700 credit score when applying for a mortgage.

However, this number is not absolute. A few lenders are willing to work with borrowers with a lower credit score because they have a high income and large down payment.

Furthermore, some lenders may be willing to give you a loan even with a credit score under 620. But that’s generally considered a subprime loan and typically comes with significantly higher interest rates.

How are Credit Scores Work?

Usually, people with good credit scores are likely to pay their bills on time and are less likely to default on their mortgage loans. Mortgage lenders use credit scores as a measure of your creditworthiness. They want to know if you can pay back the loan and if you’re likely to default.

Your credit score is based on your historical payment history and represents your loan repayment likelihood. If you have a good score, the lender may be willing to lend you more money at a lower rate. If you have a bad score, you’re more likely to get a high-interest rate.

How to Improve Your Credit Score

The credit score is largely based on your payment history. Therefore, if you have a low score, take steps to improve it by paying your bills on time. The credit bureaus will likely improve your score if it shows that you have been paying your bills on time. The goal is to have a FICO score of around 750 or higher in most cases.

What is the Best Credit Score for a Mortgage?

Credit scores range from 300 to 850. If you’re applying for a mortgage, you’re aiming for at least a score of 740. However, this number is not absolute. There will be lenders willing to work with borrowers with a lower credit score because they have a high income and large down payment.

Additionally, if you have less than perfect credit, you may be able to buy a home if you have a cosigner.

Conclusion

Improve your credit score. The higher your credit score, the better your chances of getting the best interest rates and mortgages. Lenders will also be more likely to approve your mortgage loan if you have a decent credit score. If you are ready to buy a home, we can help you find the best mortgage rates and the best home loans for your financial situation.

If you are looking for mortgage services in your area, we can help you. Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, and commercial clients. It also helps with refinancing, pre-approvals, and debt consolidation. Contact us today to learn more or get started. Apply online now!

Mortgage

Mortgage Prequalification vs Pre-Approval: What’s the Difference?

The home buying journey can seem quite simple, but it is important to understand the process and the terminology used along the way. By becoming more familiar with the mortgage home-buying process, you can purchase the home of your dreams, using the correct terminology and getting the best interest rates and mortgage rates possible. 

With that in mind, there are two terms you need to clarify before moving forward with your home buying journey: pre-qualification and pre-approval. 

Prequalification and pre-approval are letters provided by mortgage lenders and financial institutions to show that your mortgage application is being reviewed and evaluated by the mortgage lender. Unfortunately, many home buyers often interchange the two. 

Mortgage Prequalification vs Pre-Approval: What’s the Difference?

What is Prequalification?

Prequalification is the phase of the mortgage process where the home buyer submits to the lender documents that are required for the mortgage lender to conduct a preliminary review of the home buyer’s credit history, income, employment and assets. 

During this phase, the home buyer does not provide documents regarding the property that they intend to purchase. The borrower simply tells the lender how much they are wishing to borrow, and how they plan to use the funds. 

The lender then evaluates the borrower’s income, debt, and credit information and provides an estimate of how much they would be able to borrow based on their financial situation.

In general, homebuyers should know how much they can afford to borrow before they wish to purchase a property. A mortgage prequalification determines how much the lender thinks they can lend. 

The prequalification really is only an opinion of the lender and is not a final decision of the amount the lender will allow.

What is Pre-Approval?

Pre-approval is the phase of the home buying process where the home lender actually evaluates the borrower’s credit, income, and financial information to determine if the borrower qualifies for a specific loan, the loan amount, and the interest rate. 

The lender will then provide to the borrower a conditional commitment letter (“pre-approval”) that states the amount that the borrower can borrow and the interest rate for the loan. 

As part of the pre-approval process, the borrower must submit to the lender any documents regarding the property that they desire to purchase, and the lender then conducts a more thorough review of the buyer’s financial situation. 

The lender will examine the appraisal of the property, and verify that the buyer’s income and assets are sufficient to pay for the purchase, and still meet the debt-to-income ratio requirements.

Why You Need Both Prequalification and Pre-Approval

During the home buying process, pre-qualification and pre-approval are both very important because they can provide the following benefits:

Pre-Qualification

  • Helps determine if you can afford to buy a property or not;
  • Establishes a price range for homes that you can afford;
  • Identifies properties that you can afford;
  • Gives you a sense of how much home you can afford;
  • Helps you find homes that are within your buying budget;
  • Helps you find a lender that meets your needs and requirements;

Pre-Approval

  • Helps you evaluate and negotiate with the seller;
  • Provides you with a benchmark for interest rates;
  • Establishes a preliminary agreement between the seller and buyer;
  • Helps a seller determine if you are a serious buyer.

The Bottom Line: Know the Difference Between the Prequalification and Pre-Approval in the Mortgage Process

Both pre-qualification and pre-approval are important stages of the mortgage process. Pre-qualification can be described as a pre-opinion, where the lender helps you understand how much money you can borrow. Pre-approval is confirmation, where the lender verifies your ability to borrow the amount of money that you desire.

By understanding the difference between these two terms, and what to expect from each phase, you can be well on your way to purchasing the home of your dreams.

How Can We Help You?

Finding and buying a home can be tricky, especially when you put your finances into the picture. Fortunately, with the help of Ottawa Mortgage Services, buying your home for the first time won’t be such a pain. 

Our expert mortgage agent in Ottawa Mortgage Services helps first-time homebuyers discover the different possibilities in home buying, get pre-approval letters, obtain assistance for refinancing, offer debt consolidation, and more. Looking for a mortgage? Apply for one today!

debt

Options You Can Take to Consolidate Your Debt in Canada

When you are paying off a lot of debts, it can quickly get overwhelming. When you consolidate your debt, you can make things more manageable by getting rid of multiple debts and having just one loan to think about instead. This can be very helpful when you need fewer things to keep track of and want to streamline the recurring date of your repayments.

So, let’s talk about the various options you have for debt consolidation in Canada.

Mortgage Refinancing

One option is to refinance your home. A mortgage refinance is basically like paying off your debt but with cheaper interest rates and extending the overall loan duration.

The process can be a little tricky as you will be required to pay a fee every month and pay for a new appraisal for your home to make sure that the value is still high. Plus, you will only be able to get money against the equity that your home has.

Of course, you can find the lowest refinance rates in Ottawa so that you don’t need to pay out too much in fees.

Debt Consolidation Loans

If you are looking for a longer-term way to pay off your debt, you can apply for a consolidation loan to pay off your debt. The main draw for this option is being able to pay off your loan in much smaller payments over a longer duration of time.

The best debt consolidation loans have reasonable interest rates and allow you to pay your debts off more quickly. This is because you don’t have multiple lenders and interest rates to think about and can simply pay off one larger sum.

Overdrafts

You can ask your bank to provide an overdraft or line of credit. This entails getting a bank loan for a set period that gives you a limit of spending. Whatever you spend, you pay back with interest.

It’s helpful if you need a quick source of cash flow and have to pay off various loans. However, it can be a high-cost option with interest rates, and it’s not as easy to find a lender that will give a fully secure line these days.

Debt Settlement

Debt settlement is a viable option but is not always a possible choice. Should you succeed with a settlement, you should be able to negotiate a payment plan with your lenders and reduce the total amount you owe.

You give a certain amount as repayment and then have the rest of the balance waived or reduced. This is mostly dependent on whether or not your lenders agree and if you have some money to pay them back partially.

Bankruptcy

Filing for bankruptcy is generally a last resort, but it can be an option if there are no other means to consolidate your debt. When you file for bankruptcy, you will no longer be legally required to pay off your existing debts. It’s basically a clean slate.

Final Thoughts

While there are other options out there like credit cards and management programs, they may not be as helpful to your situation if you are already swamped. Plus, using credit cards and the like can end up doing more harm than good when you miss payments. In the end, it’s up to you to recognize which method will work best for your situation.

Looking for private lenders in Ottawa? Look no further than Ottawa Mortgage Services. We specialize in debt consolidation, pre-approvals, and refinancing. Get in touch with us today!

Refinancing Your Mortgage

5 Considerations to Make When Refinancing Your Mortgage

Mortgage refinancing can be such a great option in Canada, as there’s the possibility of saving a considerable amount every year on your mortgage payments via one big payment each month if you play your cards right. Many homeowners take advantage of this opportunity once their mortgage terms are over and the opportunity to do so arises.

However, there are some important considerations you’ll have to make when thinking of refinancing your mortgage. It’s best to ask yourself and a mortgage service many questions to clarify how you should approach refinancing your mortgage.

Here are some key considerations to note for your mortgage refinancing.

1) Credit Score

Credit scores can make a huge difference in getting approval for mortgage refinances. If you have a low credit score, it will potentially be more difficult to get a mortgage refinancing deal that you’ll be happy with.

Lenders will study your credit report and history to see if you’re eligible for a mortgage refinance. Each lender will have their own ways of gauging and confirming an applicant’s eligibility. It’s best to determine what the ideal score is and work your way towards that.

2) Home Equity

If you have a lot of equity in your home, you are a more desirable candidate for a mortgage refinance deal. However, if your situation is the opposite, you should probably think of other ways to save money that’ll allow you to shoulder refinancing.

Some Canadian homeowners like to downsize their home or add a suite to it to increase their home equity. You can try to refinance the mortgage with another lender but take their potential approval into consideration.

3) Interest Rates

Interest rates play a large role in obtaining a mortgage refinance. Generally, the lower the rate, the better it is for you. If the rates are too high when you want to get into refinancing, then you should hold off or strike a bargain.

Remember that there will be multiple interest rates that you would need to assess. Your current payments, the new expenses you’ll be making, and how long it will take you to pay off your mortgage are all key factors when it comes to refinancing your mortgage.

4) Refinancing Rates

Speaking of rates, you’ll also want to soberly assess the refinancing rates. If you want to decrease your monthly payments, then you’ll need to assess if the prices are reasonable enough for you to handle.

Ultimately, the goal is to get a mortgage to refinance with a better rate than your current mortgage, and then you’ll save money on your final deal. Refinancing rates are often lower than your actual mortgage rates when dealing with the right lender.

5) Mortgage Options

There are plenty of mortgage options to choose from when it comes to refinancing. You’ll want to be especially careful and consider all of them, as there’s a lot that’s at stake – your money, your home, and your credit.

The main mortgage options to consider are breaking your mortgage into shorter terms or turning it into one big monthly payment. The latter is more common in mortgage refinancing, as it’s the best option to make one huge payment that saves you the most money.

Conclusion

If you’re thinking of refinancing your mortgage in Canada, then you should think of what you stand to gain and lose. By doing an assessment and discussion, you get to consider what would be the most beneficial for you.

Looking for the best refinance rates in Ottawa? Ottawa Mortgage Services provides mortgage agent services to residents and commercial clients who need refinancing, debt consolidation and more. Contact us today!