Learn and Grow

Mortgage Preapproval

Buying a home is one of the biggest steps to take. And, finding the right mortgage to match is an equally important step. Jo from Jovia explains the preapproval process in figuring out how much money is needed to buy a home. (Believe it or not, the preapproval process at Jovia Financial Credit Union can take less than 15 minutes to complete.) Learn more about what Jo refers to as the “real estate rodeo.”


Get to know the homebuying process

Buying a house is an exciting step, but it also has many steps that can make the journey home feel a lot longer than it should be. That’s why we’ve created this series of articles to help you navigate the home buying process like a real estate pro.

Have questions about mortgages? We've got answers!

There are many different types of mortgages, Jovia offers a wide variety of mortgage options. They vary by several features, including interest rate, fees, whether the interest rate is fixed or variable, and more! Some mortgages even have special names, like “balloon mortgages” or “jumbo loans.”

Mortgages are granted to qualifying home buyers, and Jovia can help make that happen! Whether one qualifies for a mortgage depends largely on their personal and financial characteristics. Typical home buyers who qualify for a mortgage have an established credit history with a “fair” or better credit score, a debt-to-income ratio of less than 45%, and a history of stable and reliable income.

A loan is any type of agreement in which the lender advances a sum of money in exchange for a promise to repay the principal and any interest on the loan. A mortgage is a special kind of loan that is secured with real estate or personal property. In other words, a failure to repay a mortgage can result in the lender taking possession of the real property.

The lender (mortgagee) advances the borrower (mortgagor) a fixed sum of money which the borrower agrees to repay, along with interest, over a fixed period. A failure by the borrower to repay the principal and interest of the loan according to the terms of the agreement can result in the lender “repossessing” the real property securing the loan.

There is no single “best” type of mortgage. As with any loan, borrowers should choose a mortgage that suits their financial and personal circumstances best. Some of the factors a borrower will wish to consider before taking out a mortgage include the interest rate, the repayment period, whether the interest rate is fixed or variable, and the existence of any fees or penalties built into the agreement.

There are many different types of loans used in mortgage agreements and which one is best depends on your personal and financial circumstances. Generally, as your credit score increases, and your credit history becomes longer and more attractive, lenders become more willing to offer more advantageous terms and conditions. This is because you pose less risk of default to the lender.

Yes, it is possible to buy a house without a mortgage. If one had the financial resources, one could purchase a home outright without taking any sort of loan whatsoever. One could also finance the purchase of a home using a loan that is not a type of mortgage. This latter scenario would be unlikely, however, given that the terms of the loan would probably be less advantageous to the borrower than a typical mortgage.

When you mortgage your home, that piece of property becomes security for your mortgage loan. It is typically registered with a government registry (so there is a record of the mortgage accessible by interested parties). Failure to abide by the mortgage agreement and to repay the principal and interest owing on the loan can result in the lender repossessing the house.

Typically, the home buyer finds a house “on the market” (one that has been listed for sale by a real estate broker, or independently) and makes an offer for purchase. That offer is usually contingent on the buyer qualifying for a mortgage. If the offer is accepted, the buyer applies to a lender for a mortgage. If the buyer qualifies, money is transferred to the home seller and the title to the home passes to the buyer. The home acts as security for the mortgage until it is paid back by the home buyer.

A 30-year mortgage works exactly like any other mortgage, except it will be paid off completely in 30 years, if you make every payment as scheduled. Many 30-year mortgages can be paid off earlier than the length of the full pay-off period, but these loans may involve fees levied on the borrower for early payment. Here at Jovia we do not charge prepayment fees.

When a mortgage is paid off, the real property to which it is attached ceases to act as security for the loan. In layman’s terms, the house belongs to the former mortgagor (borrower) “free and clear.” If there is a promissory note, trust deed, or other document attesting to the home’s status as security for the mortgage, it will be cancelled and returned to the homeowner.

Many mortgages allow borrowers to repay part or all of a mortgage early. Every time you make a payment, it gets split between your principal and your interest. Mortgages also sometimes allow for refinancing or renegotiation of the amortization period, which could effectively reduce the time it would take to pay the entirety of the mortgage. If you wish to pay off your mortgage early, that depends heavily on your individual circumstances, and when the time comes, we will be here to help you every step of the way!