The search is over. You’ve finally found the property of your dreams and you’re ready to make an offer. Congratulations! While purchasing a home or cottage is definitely an exciting time, it does also come with some associated stress. You have likely heard a story or two about the things that can go very wrong when it comes to getting a mortgage.
To avoid your own mortgage horror story, it’s best to keep a clear head and not get too swept up in the emotion and excitement of finding the perfect property. Here are a few things that you can do in order to avoid (or at least reduce!) mortgage-related headaches.
Know where you stand when it comes to your credit
Knowing exactly what your credit rating is can help avoid any unexpected surprises. If your credit score is a little less than stellar, it may mean that you’ll be offered an interest rate that is higher than you anticipated, or your application may be denied. Some people are surprised to learn that an unpaid cell phone bill from 6 years ago is still showing on their credit history, and damaging their rating. Also, there are occasional errors in a credit file that you’ll have to resolve. Anyone is eligible to obtain a free copy of their credit file once per year, but only by mail. If you want your credit score in a hurry, you’ll have to pay a fee. There are two national credit bureaus in Canada where you can inquire online or by phone: Equifax Canada and TransUnion Canada.
If you know that you will be in the market for a new home or property in the near future, you need to plan ahead and find out what your credit score is – ahead of applying for a mortgage. If it’s not as good as you would like, don’t despair; it just means you need to spend a bit of time on improving your credit score.
Don’t downplay your down payment – or other purchase-related fees
In addition to knowing your credit score, it’s also important to save for your down payment. The amount you are able to put towards your down payment naturally has a direct impact on your mortgage amount, and the amount of interest you will pay overtime as you repay your mortgage. Also, the more you put down, the less you may have to pay for mortgage insurance. Lenders require mortgage insurance for all loans they give to anyone who has less than 20% of the purchase price for a down payment. This extra insurance cost, along with additional home purchase fees such as: appraisals, legal fees, land transfer taxes, and moving costs often come as a major surprise, especially to first time home buyers. Be sure to find out all the costs involved; ask lots of questions, do some investigating, and most importantly, talk to a professional.
Shop around, then come and see me
Finding the best mortgage and the best mortgage rate requires shopping around and doing your research. The extra time you spend will pay off in the end, and you’ll have peace of mind knowing you obtained the best mortgage deal, for you, and your financial situation.
One of the perks of working with a mortgage broker is that brokers actually do the ‘shopping around’ for you. Mortgage brokers develop strong relationships with various lenders, meaning you’ll have access to those connections and the best rates that can be negotiated. Your broker will work with you to explain every step of the process, so you aren’t left wondering what the next step is. Mortgage brokers can also work with you and their network of lenders to advocate for your mortgage approval – if you meet the criteria. In some instances, people who were previously denied a mortgage will use a mortgage broker and be approved by the very same lender.
When it comes to your mortgage, planning ahead, doing your research, and making careful decisions will help you to avoid any of your own mortgage mistakes. I’m here to help make home ownership dreams come true – and part of that process is informing my clients of the pitfalls to avoid. As an experienced, professional mortgage broker, I can help you avoid common mortgage blunders and get you on track to owning that home. To learn more about how I can help – and what services I offer, contact me at 705-315-0516 to set up an appointment.