Finally making up your mind to get a home can be quite a loaded decision, especially since the home buying process can be rather complex. For a number of people exploring the housing market for the first time, it can be a completely foreign experience with a vocabulary that you may not totally grasp.
One aspect of home buying that you should learn a little bit more about is the mortgage loans that you’re going to borrow. Taking out this lump sum of money will help you acquire a home that you can call your own.
There are a variety of terminologies within this borrowing stage that you need to know about, such as the mortgage pre-qualification, pre-approval, and more. Continue reading to learn more about what these terms mean to be more informed about the process.
Mortgage pre-qualification is the first thing you would have to obtain in the home-buying process. This is commonly confused with mortgage pre-approvals, but a pre-qualification is a quicker process that doesn’t take into account your credit rating.
Instead, consider it as a quick simulation of discussing the mortgage loan you’re going to take out. A mortgage agent can help you discuss and gain a better understanding of the current mortgage rates and options that you will face in the future.
A mortgage pre-approval is usually one of the lengthier periods of borrowing a loan, as it involves a more in-depth look at your financial situation and capabilities. Expect to have specific documentation required as proof of your identity, income and assets. It can take a couple of days as there is a verification process.
Once you are granted mortgage pre-approval in the future, it will usually remain as is for about 60 to 120 days. Be sure to clarify the terms with them to know how long you have to find a home. Extensions can be negotiated, but documentation may require a resubmission, though it will be subject to your financial situation’s stability.
Mortgage Rate Guarantee
A mortgage rate guarantee is what buyers may get during pre-approval, though they aren’t given by every service. Most homeowners may like this more, though, as there’s a period of protection from increased rates when the market shifts.
The protection’s length of time can depend on a mortgage agent’s disclosure and negotiation with you. This should typically be accompanied by a conditional commitment during the mortgage pre-approval so that you get a sense of the expected total loan amount.
Mortgage Rate Holds
A mortgage rate hold is similar to a rate guarantee that it locks in the mortgage rates, but this is specific to fixed mortgage loans, unlike variable ones that may fluctuate and depend on the market more. This can be beneficial if you seek to get constantly lower mortgage rates.
Keep in mind that acquiring a mortgage rate hold can be slightly different depending on who you’re dealing with. Some may aim to lock in a variety of different mortgage rates, while others will monitor the market to maximize your rate hold. Work with a reliable mortgage agent.
By reading this guide, you should have a better understanding of what different aspects of the mortgage borrowing process will entail. Be sure to stay on your toes and keep up with the speed of the market so that you can get your dream home soon.
Looking for mortgage services in Ottawa? Ottawa Mortgage Services offers mortgage agent services for first-time homebuyers, self-employed individuals and commercial clients. Get in touch with us now!