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Mortgage Shopping

Q -  I'm just beginning to think about becoming a homeowner.  I have no idea what I need to qualify for a mortgage. I live in Canada. Can you help me?

A - Job stability is at the top of a lender's list.  If you are earning a regular income, the chances of you qualifying for a mortgage are pretty good.  The question then becomes how much deposit do you have and how large a monthly payment can you afford.

Because every one's situation is different, it is best to go to your bank or a mortgage broker to see what kinds of mortgages are available that meet your specific situation.  I generally recommend a mortgage broker for basic home mortgages because they can shop around for you at various banks and other lending institutions to get you the best interest rate.

You can also go to your bank but they will just provide you with their product.  What they have may or may not fit your circumstances.  Also, banks often just give you their posted rate even though they have  better rates available.  The fact that you have been their customer for years doesn't seem to have an impact. You really have to ask them for a better rate and/or tell them what rate you can get elsewhere.  Often, the rate elsewhere - through a mortgage broker - is better.  If you want to deal with your bank, you have to do your homework and learn how to negotiate.  Part of doing your homework means shopping around for mortgage rates.

In the meantime, here is a link to Canada Mortgage and Housing Corporation (CMHC) which will provide you with a good overview of mortgage requirements.  And, here is another link to a mortgage calculator that will enable you to play with some number scenarios.

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