Buying your first home can sometimes feel overwhelming, especially with all the paperwork needed. As an Oakville mortgage broker, I give clients a checklist to follow that will hopefully make things a bit simpler.
Check Your Credit
Before you do anything, you need to check your credit score through Equifax. There are others that advertise offering credit scores however all lenders use Equifax. A lot hinges on this and can make or break your chances at getting the mortgage (and home) you want. Your credit score is what lenders will use to determine your borrowing amount as well as your interest rates. The lower your score, the higher your rates, and vice versa.
Get hold of your credit report and really go over it in detail. You want to look for any errors that need to be corrected for a start. If you do find errors, such as an account that you know was paid off but still shows on your report, you will need to contact the credit bureau. You can also see what it is that may be impacting your score and then take steps to clean it up. The better your score before you go looking for a mortgage, the better your chances.
Review Your Finances
This is another step to take before you even begin to start house hunting. You need to know what you can realistically afford. Otherwise, you could be in for a lot of disappointment if you go for a home that you just can’t afford payments on. Take time to go over all of your incoming and outgoing funds. Make sure you add mortgage and home buying costs in as well because that can cost a few thousand. You can find many free tools for calculating your mortgage budget online that will help.
Get Your Paper Work In Order
The mortgage application process requires certain paperwork, such as pay stubs, income tax slips T4’s etc. and proof of other debts. Having all of this ready before you go for your mortgage will make things go more smoothly. Make sure you have at least 3 months worth of pay stubs, T4 and NOA, and banking. You can always give one of our Oakville mortgage brokers a call to see what other paperwork may be needed. It’s better to have too much paperwork than not enough.
Save For That Down Payment
To avoid mortgage insurance premiums, you will need to pay at least 20% towards a down payment based on the homes’ value. The earlier you start to save up for this the better. When it comes time to get that loan you’ll be saving yourself thousands over the course of your mortgage life. You can make down payments that are under 20% but this means mortgage insurance payments.
No Major Purchase or Changes
Another mistake I see buyers make is to make major purchases or life changes during the mortgage process.
Changing jobs, taking out a loan or a new line of credit when you are in the middle of this process could result in you being denied the mortgage, even if it was originally pre-approved. It will affect your credit rating and can put a halt to the process, causing you to lose out on getting that home you wanted.
Use a Mortgage Broker
I see this happening all too often. Taking the first mortgage offer that you get through your bank won’t do you any favours. You need to find the mortgage package and the best interest rates available to you. This is why it’s a good idea to use a mortgage broker. Lenders will only offer you so much, but a broker has access to dozens of lenders and mortgage packages that are more ideal for your circumstances.
Getting pre-approved gives you that extra buying power when it comes to purchasing your home. A pre-approval lets you know how much you qualify for and shows both sellers and real estate agents that you are serious and committed to buying a home. In most cases, a seller will choose a buyer who has been pre-approved over one who hasn’t.
It’s important to do your homework before you start the mortgage application process. Having a good head start can make a huge difference with the mortgage process and the home you can afford in the long run. If you need more advice on how to get your credit in order, give our Oakville mortgage brokers a call today!