There are many things to consider when securing the best mortgage but these are the top 5 things you should know to get you the best mortgage.
If there are instances that you are not eligible because of some credit concerns, you should not worry. You can still plan for it in the future. It is probable that in just a few months, you can buy a home if you consider the following tips:
1.Do not make any purchases for the next couple of months other than necessities.
Especially a vehicle or anything with a monthly obligation. This is by far the biggest mistake we see home buyers make. Mortgage lenders look at your monthly obligation not necessarily the amount of debt you hold. For instance you could owe $5,000 on your truck still but if the payments are still $700 a month that is what we need to use to qualify. Holding balances on credit cards and lines of credit is also not a great idea. Your minimum payment might be $25 a month on a $5,000 balance however, lenders will use 3% of the balance as your payment. That would mean a $5,000 balance would carry a payment of $150 a month in the eyes of the lender. Instead, prepare money for your down payment and reducing your debt load to increase your chances of approval.
2.Check your own credit at Equifax.ca to check your score and look for inaccuracies.
When purchasing a home with less than 20% down the minimum score requirement is 600 however, just because your credit score is at 600 or over slightly does not guarantee you an approval. The lender will review your credit history overall. Are there recent late payments? Collections? Credit cards that are over limit?Past bankruptcies or consumer proposal? Do you have more than two trade lines (credit cards, loans, lines of credit etc.)? Have you had them for more than 2 years? A number of things will go into the overall decision but whatever you can do beforehand to correct these problems will make sure that you will get approved. A mortgage broker can help guide you through this process and assist you in making corrections to your bureau.
3. Buy a home that suits your budget not your dreams.
The last thing you want is to have a mortgage payment that makes you house poor. A home is a great thing to have but if you cannot furnish it, or do anything else it will quickly become a burden you wish you did not have. You have to ensure that you are able to pay for your debt load consistently, so before choosing the type of house you want, consider your income first. If you are having a baby in the near future, what will your reduced income look like? Are you planning a career change or other variables that may affect your income. A good way to get the house you want but on a budget that suits you is using program such as "Purchase Plus Improvement". This will allow you to purchase that lower end home but build in renovation costs into your mortgage to update the kitchen and bathrooms, finish the basement, new floors, paint etc.
4. Have your down payment in place and organized.
In order to purchase a home you will require at least a 5% down payment which can be from your own savings, RRSP's, gifted from an immediate family member, grants or even in some cases borrowed if you qualify. The key is having all the money in one account for at least 90 days. This will make documentation and the approval process much simpler. Don't have a down payment? Reach out to us to see some other strategies that may work for you.
5. Don't get caught up in the rate.
Interest rates are important but they are far from the most important thing in a mortgage. In fact just because you have a low rate does not mean that mortgage is the cheapest or best suited. Some low rate mortgages come with various restrictions which could include a much larger penalty to break the mortgage, sales restrictions and limitations on making lump sum payments or increasing payments. You really want a broker that understands your situation and your goals to find the best deal for you. Best rate needs to be combined with best mortgage.
Therefore, if you are planning to apply for a mortgage, be sure to remember these five important things in order to end up successfully with the best mortgage there is.
Want to get pre-qualified? Simply complete this questionnaire at http://bit.ly/tfmortgageapp