A Beginner’s Guide To Getting A Mortgage

Buying a house, particularly for the first time, can be daunting. The decisions you make along the way could save you or cost you thousands of dollars. Most people who buy a home do so with a mortgage. A mortgage is a necessity if you can’t pay the full cost of a home out of pocket. There are some cases where it makes sense to have a mortgage on your home even though you have the money to pay it off. For example, investors sometimes mortgage properties to free up funds for other investments.

For the past twenty-two years, I’ve been assisting clients through the mortgage process, and to ensure you have all the required information if you’re in the process of applying for one, I have formulated a Beginner’s Guide to getting a mortgage. By following this guide, as a first-time homebuyer, you will learn about the key factors that lenders look for when assessing a mortgage application and how to prepare for it.

Getting Started

Hire a professional: You will need to get the help of a long-time licensed professional. The real estate market can prove to be quite difficult, especially if you have little knowledge of what the market is like and how the trends continue to shift. Just like you would consult a doctor for any pains or feelings of discomfort you have, consulting a mortgage agent will help you discover the best value home for your budget. These specialists will be able to tell you information about loans, the best loan to value ratios, and other things about the real estate market.

Prepare your documents: When you’re buying a home, gathering the paperwork for your mortgage before you apply is a good idea. Tracking down documents can take time, but doing it before you need them could help you get to the closing table faster. Keep your income documents together, such as two years of income tax, T4’s, and Notice of Assessment, in one safe place. Make sure you also get a copy of your bank statements for the last ninety days to show your downpayment.

Next Steps

Document your income: Lenders want to analyze their ability to repay the mortgage over time. Mortgage lenders will typically use the income documentation based on the average of the two most recent years as your definitive income. Income from part-time or full-time jobs can only be used if you have received it for a certain period of time, usually twelve months. Any income that you do not document, like tips or any other side jobs, cannot be used. That income can be the difference between lowering your debt-to-income ratio under lender limits and looking at alternative programs.

Ensure your credit score is high: This is arguably the one pillar that you yourself have the most direct control over. You do not need to work eighty-hour workweeks to push the score higher, and you do not need to focus on saving every penny. It is 100% within your control to have strong and stellar credit. What you can do is keep at least three active trade lines with limits (not balances) greater than $2,500.00, never ever miss a minimum payment, do not run the balance past 75% of the total available credit, and most importantly, NEVER exceed the credit limit.

Have the downpayment ready: Equity is your cash for a downpayment or the remaining value in your home when we subtract the target mortgage amount from the value. Although you can technically still purchase with zero downpayment, if you are not able to show documented income to support the mortgage request, then the downpayment requirement jumps to 20%, 25%, 35%, or 50% depending on the lender, your credit score, and the overall scenario.

Advice From The Pros

Focus on your goal: Focus on your goal of buying a house. That would mean no large purchases. Reduce the balances for things like credit cards and other debts. Obtain a letter from your workplace stating when you started, what job you do, and how much you are paid per hour. Even if you are thinking of changing jobs, don’t do that until you have your house. Remember that buying a house and getting a mortgage are the most important and costly steps you will make in your life. Discipline yourself and focus on this goal of getting the mortgage and buying your dream house!

If you are looking for a mortgage agent in Leamington, Ontario, then reach out to me at Vic Lehan & Associates. My goal is to match you with the right mortgage for your situation. Since no two mortgages are the same, I’ll search through the many companies we have to get the job done right for you. And we don’t just have one or two companies to work with either. My experience, knowledge, and after-closing service have encouraged clients to refer me to their family and friends for their mortgages. I offer services like first-time homebuyer mortgages, mortgage refinances, mortgage renewals, bruised/bad credit mortgages, private mortgages, commercial mortgages, and New to Canada mortgages to clients across Leamington, Kingsville, Harrow, Essex, Wheatley, Windsor, and all across Ontario. To learn more about the services I offer, please click here. To get in touch with me, please click here.