Preparing for Mortgage Success - 4 Tips
4 Tips to Preparing for Mortgage Success
The Mortgage world has certainly changed since the COVID-19 pandemic hit, and if you are planning to purchase a home then you definitely want to position yourself for the best chance of success. Here are 4 tips to maximize your chances of success.
1. Check Your Credit
The banks and default insurers carefully assess your credit when deciding if they will lend you the money for your home. There are 2 credit reporting agencies in Canada and both will be looked at before approval. There are also different credit reports, the one you receive from your credit monitoring company may not be the one the bank sees. Having your credit looked at 6 months before you plan to buy a home is a good idea! If there is a debt reporting badly, this gives you the time to have it corrected or to get it paid. Collection agencies for example, often do not report when a debt has been paid and it can be on the report long after you have taken care of.
2. Gather the Paperwork
Having a look at your application ahead of time also gives us the time needed to find documents you may have long since filed. An example, in a separate agreement, you may have been separated for years, but the bank will still want to confirm no support payments are payable from you.
3. 5% is No Longer Enough
Gone are the days where the banks will lend to just anyone. There were about 700,000 mortgage deferrals in Canada last year. This has led them to now require the down payment, closing costs and some extra savings in case of a job loss or illness. Allow some extra savings time in your plan if necessary.
4. Document Your Down Payment
As a part of the Anti-Terrorism and Money Laundering Act, we must ensure that all sources of funds for the down payment are legal. Any deposit above $500 must be documented. Sale of an asset, gift, cash deposit, these are all very acceptable but we need to verify them. To save yourself some frustration, dedicate a single account to the down payment. Transferring funds in and out of multiple accounts means you will have to show all those accounts when you go to purchase.
And there you have it, 4 tips to maximize your chance at mortgage success!
If you are starting the process of buying your first home and you're needing guidance or help understanding the process, feel free to contact us with any other questions you may have; we would love to help make your dreams a reality!