Renewing Your Mortgage
Generally it is a good idea to start shopping for a new term between four and six months before your current mortgage term expires. Many lenders send out your renewal letter very close to the time that your term expires and this does not give you ample time to arrange for a mortgage term through a different lender. This means that you need to be tracking your own mortgage term timeframe and know when it is time to start shopping for a good mortgage renewal rate.
Since your term is ending, this is a great time to shop the market or redo your mortgage without a penalty! If you have been wanting to switch your mortgage from fixed to variable-rate, or vice-versa, or want to move to a different lender or try for a lower rate, Atlas Mortgage Group can help! With access to over 30 lenders, we can compare mortgage rates and products and help you make the switch.
A down payment is the amount of money you need to put down on your new property. The ideal down payment for purchasing a home is 20%, however you can purchase a property with as low as 5%. It is important to note that any potential buyer with less than a 20% down payment MUST purchase default insurance on the mortgage. If your down payment is coming from funds of your own, then a history on all funds must be submitted with your mortgage application. If your down payment, or a portion of your down payment is a gift from a family member, a signed gift letter is required.
One of the key factors lenders consider when assessing whether or not you are a good candidate for a mortgage loan, is your credit score. Your credit score is a measure of your financial health, and shows lenders their level of risk if they lend you money. Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower, especially if you are putting under 20% down. If you are struggling with credit score issues, there is also the option of going with a B lender. If you're unsure of your credit score, reach out to Atlas Mortgage Group to discuss your options.
The affordability of your mortgage is dependent on two ratios: Gross Debt Service (GDS): Your GDS is the amount the home will cost you on a monthly basis. It includes your mortgage payment, heat, property taxes, and condo fees if applicable. The total GDS should not exceed 39% of your gross monthly income. Total Debt Service (TDS): Your TDS is the combination of both GDS and any other debts you have including: loans, lines of credit, credit cards etc. The total TDS should not exceed 44% of your gross monthly income.