Connect with us

Headlines

5 Tips To Increase Your Chances Of Getting A Mortgage Approved

Editor

Published

on

If you’re planning to buy a home, you’ll probably need to get a mortgage. Comparing mortgage rates is a good first step, but applying and getting approved for a mortgage is the most important part of the process. While it may seem difficult and daunting, with the right preparation, getting a mortgage approval can be a relatively smooth process. 

There are a lot of factors that can affect your mortgage approval and the final amount you’ll be allowed to borrow. While there aren’t any shortcuts to getting a guaranteed mortgage approval, these five tips below can increase your chances of getting your mortgage approved.

1. Check (and improve) your credit score

Your credit score is a number between 300 and 900 that indicates your overall credit-worthiness. Whenever you make a late payment, apply for credit, or default on a loan, credit reporting agencies will note it on your credit history and lower your credit score. A higher score shows that you’ve been committed to making loan repayments in the past and are therefore less likely to default. This indicates to mortgage lenders that you’re more likely to pay back your loan on time and makes them more willing to lend you money.

Here are the typical ranges for credit scores in Canada:

  • Below 599: Poor credit
  • 600 to 679: Fair credit
  • Above 680: Very good credit

If you have poor credit, mortgage lenders will assume that you’re less likely to make repayments on time, which makes lending to you riskier. Most major banks won’t take that risk and thus, won’t approve you for a mortgage if your credit score is under 600. Instead, you may need to use a “B lender” or even a private lender, which will charge you a higher mortgage rate to compensate for the extra risk.

In order to have access to better mortgage lenders and lower rates, you should try to improve your credit score before you apply for a mortgage. Here are a few steps you can take:

  • Check your credit score, so you can measure your progress. There are online tools that will let you do this for free.
  • Pay your bills on time and in full, especially for credit cards and loans.
  • Try to use less than 30% of your overall credit limit.
  • Don’t apply for more credit than you need. Lots of applications for credit can hurt your credit score.
  • Keep your oldest credit card active, even if you don’t use it. Having a long credit history is good for your credit score.

2. Pay down your existing debt

Lenders will look at your debt-to-income ratio when deciding whether to lend to you. They’ll want to know that your income can cover your mortgage payments, even after paying off your existing debt. That means existing debt can impact how much you’re able to borrow.

The first part of this ratio is your income, which you’ll want to keep as high and as stable as possible. Being in a full-time job for a long time is ideal. Aside from increasing your income, paying off your existing debt is the best way to maximize your mortgage affordability. This includes car loans, student loans, credit cards, and any other credit line with regular payments. By paying as much of your debt off as you can, you’ll have a higher income-to-debt ratio when you apply for a mortgage.

More detail on debt ratios: Your mortgage provider will use two different kinds of debt ratios to determine how much you can afford to borrow, your Gross Debt Service Ratio (GDS) and your Total Debt Service Ratio (TDS). The general guideline from the Canada Mortgage and Housing Corporation (CMHC) is to have a GDS of less than 35 per cent and a TDS of less than 42 per cent. Your GDS is the percentage of your monthly income that pays for your housing costs under your new mortgage. Your TDS is similar to your GDS in that it factors in your housing costs, but it also includes your other debts such as car payments and credit card loans.

The takeaway is that with a higher income and lower existing debt you’ll be able to apply for a larger mortgage. If you can’t easily increase your income, then paying off as much of your existing debt as possible will help improve your debt service ratio.

Continue Reading

Headlines

‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

Editor

Published

on

By

The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place. HomeYou’ve been selected.Only $1.49/week for your first 4 months.Special offer just for you. Unlimited access.

Continue Reading

Headlines

10 Tips For First-Time Home Buyers

Editor

Published

on

By

Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

Continue Reading

Headlines

A Simplified Guide for Toronto First-Time Home Buyers

Editor

Published

on

By

Toronto is the largest city in Canada, the fourth largest city in North America, which makes it an exciting place to live in.

But as with other major cities, finding the perfect place to move to can get tricky. If you’re planning on buying a home for the first time in this city, it is indeed a big decision and there are things you should know in advance.

Don’t worry, this guide will help explain the basics of what you as a buyer should know when you decide to buy a home. It will make you feel like a true expert during the buying process.

Decide what type of home you are looking for

There is no right answer to what makes a good home. It all depends on your preferences and needs as the resident. It is, therefore, a good idea to determine as early as possible which features of a home are important to you. If you are buying a home and moving in with someone, it can be a good idea for both of you to make a list and compare.

Toronto is a city that offers different styles of living accommodations and its neighborhoods are quite versatile and diverse, same as the people living there who come from all parts of the world.

The most common forms of housing and real estate opportunities in this city include bungalows, two-storey houses, split-level homes, and the very popular Toronto condos. Due to the high property values, the city boasts of construction of many condominiums as they are a more cost-efficient choice and provide a plethora of benefits.

When you decide on the type of home you want to buy, it is good to do some research and learn the biggest differences between them.

What to think of when choosing homes in Toronto

There are certain things you need to consider when choosing your home in this city. 

Being close to the things you need to visit every day makes life a lot easier. Pay attention to the proximity to shops, preschools, schools, and your job. In addition, access to good public transportation is crucial. Being able to move around the city easily and the opportunity to commute is important to many.

Know that having a balcony can significantly increase the value of your home and improve your well-being. Being able to move easily in the area is something that many people underestimate, but can be very convenient, and this is why you should see if there are good cycles and walking paths. 

And finally, make sure that the house is well designed which is a quality that does not disappear with the age of the house or with renovations. 

Set your budget

Before you start the search for your new home, you must know how expensive of a home you can buy. It is preferable to know in what price range to look for. The budget is usually decided based on your mortgage and how large are the monthly costs you can handle.

A mortgage is always about a balance between risk and income for the bank. The higher the risk for the bank to lend to a particular home, the more expensive the mortgage will be. When it comes to the bank’s reasoning when applying for a loan, it is in principle always a question of whether you as a borrower will be able to repay the mortgage.

The bank also takes into account your financial history. If you are a person who has managed your finances well, the chance increases that you will get your mortgage approved. If, on the other hand, you have a bad reputation with banks, it is weighed in as an aggravating circumstance.

Continue Reading

Chat

Trending