Before Applying for a Mortgage

Preparing your mortgage application in advance of a purchase will help you know how much you can afford and be more organized when your offer is accepted. Whether you are looking for a home now or in the future, knowing how to prepare your best financial self will offer advantages in the process. Here are four common things to know before applying for a mortgage:

Credit
Ensure your credit is on point! Your accounts should be in good standing. If there are credit bruises, let's discuss an action plan to help bring your accounts where they need to be.
Down Payment and Closing Costs
Save your own down payment and closing costs, if possible. Alternatively, those funds could be gifted or borrowed, depending on the application. However, having your own funds of course increases the application's chances of approval. Contact me to discuss questions on your down payment if you don't have means for saving yourself. Down payment starts at 5% and can increase from there depending on the application, and typical closing costs usually are 2.5% of the purchase price, give or take.
Stress Test
Your other debts and the debt of the mortgage will have to pass a "stress test". This means your mortgage will have to qualify at a higher rate than you're actually paying, to make sure there is a buffer in your affordability. It helps if your other debts are in line with your income. For example, large vehicle payments and other unsecured debt can use up monthly cashflow very quickly. Reviewing your other debt with the help of a Mortgage Broker can be instrumental in helping you move forward.
Documents
Several documents will be requested when applying for a mortgage. Ensure that your documents are available and ready to be submitted. This can include T4s, pay stub, bank statements, employment letter, government issued photo ID, and more.

I'm here to help you get ready for your mortgage application and provide you information on all of the steps along the way. Get in touch with your questions!
Sarah Nixon-Miller, Mortgage Broker
sarahnm@mortgagegroup.com