9 Tips on Applying for a Second Mortgage

Mortgage Tips Deneika Fletcher 8 Oct

9 Tips on Applying for a Second Mortgage

People usually apply for a second mortgage or home equity loan when they need money for debt consolidation, to pay large expenses or for home remodelling and home improvement. Second mortgages are generally categorized as fixed interest rate home equity instalment loans (HELOANS) and adjustable mortgage rate home equity lines of credit (HELOCs). Which you choose depends on your needs, but the application and approval process is similar for both.

These nine tips will help your loan process be as hitch-free as possible:

1. Compare options like mortgage refinancing and other loan options to determine if a second mortgage is the best choice.

2. Make sure you can tell lender what the purpose of the loan is. Your answer will help determine whether or not you are approved.

3. Check your credit report for errors and get your FICO scores (www.myfico.com/free-credit-score-range-estimator/) because lenders will review your FICO score to determine your loan rates. Check “How to Improve Your Credit Score” for more information on cleaning up your credit.

4. Compare several home equity loan options.  Discuss the loan programs with your broker or lender and find the best loan for your situation. Getting a good interest rates isn’t a bad idea either.

6. Faxing documentation from the checklist will expedite the loan process more than mailing it.

5. When applying for a loan, you will get a mortgage checklist from your lender containing the list of paperwork you need to close the loan, including:

  • Legal description of your property (you can find this on your original purchase agreement or your property tax statement)
  • Recent  appraisal.
  • Last two years’ T-4’s, tax returns and current pay stub, or two years’ tax returns if self-employed. 
  • Proof of income from alimony, child support, disability payments, lawsuit settlement, inheritance or other income source.
  • Copies of your last 3-6 bank statements.
  • List of all open credit accounts (account numbers, payment amounts, and balances).
  • Your current mortgage statement.
  • Homeowners insurance information (name, account number and phone number of agent).

7. Fill out your loan application thoroughly, or it may delay approval and loan closing.

8. Beware of bad loans. Federally regulated financial institutions (FRFI) warns that you may be signing into trouble if the lender encourages you to falsify your application to get the loan, urges you to borrow more than you need, pushes you into unrealistic payment terms, shows up at closing with a different loan product than you agreed to, asks you to sign blank forms, or denies you copies of documents you signed.

9. Has your mortgage application been rejected by a lender? Ask why it was rejected to find out what you need to do to secure mortgage loan approval in the future.  Sometimes paying down some credit cards can increase your credit score just enough to qualify.

Ph: 416-817-7757   Fax: 416-352-7490

Em:  Deneika@lendmorefinancial.ca

Em:  DeneikaFletcher@dominionlending.ca

WEB: DeneikaFletcher.com

7 Aspects Of Home Mortgage Refinance

General Deneika Fletcher 21 Sep

Everything you ever wanted to know about home mortgage refinance is right here

They say nothing is certain but death and taxes. And if you own a home, or plan to, then you can probably add mortgage to that list! Most homes around the world are bought on mortgage today. More now than ever before. Not only that, but just as common is the process of a home mortgage refinance.

Mortgage explained

A mortgage is where a loan is issued by a financial institute to a person who is buying a property. The property in question itself remains as collateral. Here, the principal sum is the original amount of the loan that was issued, with an additional annual interest rate imposed on this sum. The mortgage is most commonly paid every month. While mortgage has made it possible for people to become home owners, those who are unfortunately unable to clear the loan often lose the home to the lender. When the lending institute acquires the property in such a process it is referred to as foreclosure or repossession and the lender has the right to sell it to someone else.

Home mortgage refinance explained

When someone refinances the mortgage this signifies that the owner has received a secured second loan on the asset, in this case the home although it was already a collateral in the existing loan (the original mortgage). There are several things you must keep in mind when planning a home mortgage refinance. Let’s look into some of them now.

1. A home mortgage refinance can be a debt consolidation process of sorts, since it allows you to get a secured loan so that you may be able to use it to pay off other smaller and existing loans that you already have.

2. Advantages of a home mortgage refinance become especially clear when it is compared to existing loans. For example, although this is a new loan on its own, it could offer a lower interest rate but also help you to pay off other smaller loans with a greater interest rate. It could also be paid off in a longer duration of time as opposed to your other existing loans.

3. A home mortgage refinance helps the borrower to decrease the risk factor as far as the interest rates are concerned. While most debts will likely be at a variable interest rate, a home mortgage refinance can often offer a fixed rate option.

4. Usually a lender offering home mortgage refinance requires the borrower to pay upfront a certain percentage of the total loan being availed. Each point refers to a single percent of the total loan amount and the interest you are required to pay will most likely be lower if you have paid more points in the initial phase.

5. Keep in mind that the lender who offers the lowest interest rate might not necessarily be the best mortgage refinance option. You have to also make sure that you are not overpaying on the lending fees or the closing costs.

6. Another thing about the interest rates is this; when you are paying a fixed rate you know just how much you will have to shell out every month so that you can better prepare for it. On an adjustable rate, however, there is no guarantee on the amount you have to pay periodically although the rates can be generally lower than a fixed one.

7. Get your home mortgage refinance documents handy and maintain a good credit score. Your credit history goes a long way in getting approved for any kind of loan.

Ph: 416-817-7757   Fax: 416-352-7490

Em:  Deneika@lendmorefinancial.ca

Em:  DeneikaFletcher@dominionlending.ca

WEB: DeneikaFletcher.com