Mortgage Quotes? It isn’t that Easy.

by Steve Clark on February 5, 2012

Mortgages are not something we have a tendency to spend lots of time thinking about, unless you want one. So it is logical that there is a scarcity of data surrounding mortgages and mortgage rates and more important mortgage quotes.

In today’s world of instant information, reports and real time video, one would just naturally say that all that you need to do is jump on-line and there’s your rate, right? Well perhaps. Those with ideal credit, solid income, no debt and all the required paperwork can actually get a reasonably correct idea of what interest rate they may pay on their mortgage. However , it is still a guess and not to be taken as a quote. It just isn’t that easy.

Imagine quoting a renovation or construction job, or a service or even quoting your own product. Without knowing exactly what you are estimating on, it’s not going to be completely correct, is it? You need details such as how large the job is, what are the materials needed, and even if the product the customer is asking for is the right product for their requirements.

The same is true for a mortgage quote. Mortgages are as unique as the folks that hold them and no 2 are completely alike because no two people have the same circumstances. A good mortgage broker or agent knows this and though it is awfully enticing to discuss his new low rates, he customarily moves the discussion to you and your individual situation.

The particular rate of interest that any individual will pay, is determined ultimately by how high a risk you present to a lender. The bigger the risk, the bigger the rate. The only real way for a lender to evaluate that risk is to check the info offered by the mortgage broker. This means that before he can give you a quote he must do his job and assemble all of the applicable info. They include, identification, earnings verification, and a credit history.


Details like name, address, and so on. Are critical, but apart from knowing how to get in touch with you, they also identify you when the bank is making a search on your credit and financial history. There are heaps of Bill Smiths out there but only one with your S.I.N. Number living at your address, with your picture on his driver’s licence. Proper identification is essential.

Earnings Verification

Then it’s necessary to prove your revenue or ability to pay. The easiest way is to provide your last pay stub, an employment letter and last 2 years of T4 slips and Notice of Assessments, (NOA). Here's where some people have a challenge especially if they are disorganized or behind on their filing. If your NOA is missing in action, one can be procured from the CRA website, after a bit of work. (Getting your NOA is a method and isn't immediate. It will take at least 3 weeks to get the particular information, so plan appropriately.) There are banks who will have a look at undeclared revenue for self employed individuals, but at a cost and a different rate than what is posted.

Credit Report

The next bits of information for an accurate quote are contained in your credit score and are possibly the most important information a bank will make his determination with. The credit score is way more than a score, although the score is the foundation for most decisions. There is much more detail in a credit history that lenders look at. Details such as your present and past work, the amount of investigations made, and the people you owe. There is information such as how high your limit was and how good your payment history has been on each account. It awards an “R” factor from R1 to R9. R1 means that you do not have any payments later than 30 days and is regarded as the best. An R9 anywhere on the report spells difficulty and there are very few lenders who will accept anyone with R9s. It lays out the balances due any collections, judgements and debt written off by creditors. The credit report is a crucial tool that banks evaluate borrowers with. Know your credit and check it constantly, over 70% of all credit reports contain errors which will effect your capability to borrow.

Mortgage Calculators

If you are wondering what kind of mortgage you are able to afford or the rate you can get there are many mortgage calculators on-line that are available for you to “play” with numbers to see the end result. There are early payment penalty calculators also , so that you can get an outline notion of the penalties you may face for breaking your home loan before maturity. All are created to help you get a basic idea of the payment involved in owning. A home.

Remember, till a home-loan broker or agent has done all the work we have written about here, you haven't received a quote and if you're serious about getting one be prepared for some detailed consultations and research.

Steve Clark is a Home-loan Broker with Northwood Mortgages. He keeps his clients up to date with the most recent mortgage stories by posting on his web site

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