When you want to buy a new home and need a mortgage, the first thing is finding the right lender who will offer the best terms and service for the entire lifespan of the loan. You need to shop around evaluating loan interests, terms, payment requirements, closing costs, property insurance, and fees and compare different private lenders.
Shopping around for private lenders in BC Canada may feel like a daunting task, especially if you are a first-time homebuyer. But worry not. Here is a guide to help find the best one.
Know your credit score
When shopping for a private mortgage lender, keep in mind that lenders look at your credit score and financial history before anything else. Take your time to go through your finances and fix them if need be. That means checking your credit score and reports.
Having healthy credit gives you more mortgage options to choose from, because it shows lenders that you can be trusted and will provide you with favorable rates. But lenders will still consider your debt to income ratio, which is essential in determining how much you can borrow.
Review your mortgage options
A critical thing to finding a suitable private lender is to speak their language and understand the various mortgage options available for you. You can research online to find out about the different types of mortgages and separate facts from fiction.
Many private mortgage lenders provide conventional loans with as little as a 3% down payment, while some government-backed-up loans require no down payment. Keep in mind that many lenders may charge higher interest rates and require mortgage insurance for down payments of less than 20%.
Compare loan rates and conditions from different lenders
It is not a wise idea to settle for the first private lender you come across. If you want to get the best B-lender rates in Canada, you have to shop around. Not shopping around could leave money on the table. Compare mortgage interest rates, payment terms, closing costs, down payments, mortgage insurance, and other fees from different lenders.
Try to find a private lender who communicates the way you prefer. Do not feel rushed into choosing a private lender who does not align with your financial needs and budget.
Get a mortgage pre-approval.
Apply for a mortgage pre-approval with several lenders. It is the best way to get accurate loan pricing because the lender will go through your credit score and finances beforehand.
Depending on the lender, you may have to produce different documents, including your ID, social security number, two years of tax returns, residential address, bank statements for a specified period, employment and income history, and a list of all revolving debt payments.
Remember that a mortgage pre-approval doesn’t mean you are cleared because lenders can recheck your credit report, income history, and assets any time of the process. If you face pre-approval barriers such as lower credit scores or inconsistent income, you can ask private lenders before applying if they can work with you. Some private lenders even offer a home equity loan for bad credit. You only have to seek clarification beforehand.
Understand the terms of engagement
When you qualify for a mortgage, ensure you read and understand the agreement terms before signing the deal.