The Homebuying Process
If you’re in the early stages of planning to buy either your first home or your next home, having the right people on your side is your first step, and you have come to the right place! Even if you have purchased a home before, the home buying process can be intimidating, and at ETown Mortgage Team, we will guide you, and make the process stress free.
What is your credit like?
Having an established credit history is extremembly important when applying for a mortgage. For your credit to be considered established, you should have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for at least two years. Too much debt can also impact your credit and limit your borrowing options.
Great established credit history means you make your payments on time, every time. Think of it this way: Why would a lender want to lend you money if you don’t have a history of timely repayment on the loans you already have?
We know that mistakes can happen and payments might get missed. At ETown Mortgage Team we are happy to advise you on how to improve your credit profile to make your mortgage application look better to a lender. This is not always a quick fix, but it is worthwhile to make the effort as this will literally open the door to home ownership.
How will your income affect your mortgage application?
When providing you with a mortgage, lenders are trusting you with a lot of money. They'll want to feel really good about your ability to pay that money back, over an agreed period of time, with interest.
The more stable your employment, the stronger your mortgage application. Ideally, you will want to be employed in a permanent position or have your income averaged over a period of two years. If you’re self-employed, expect to provide a minimum of 2 year income history via income tax filings to substantiate your income.
How much downpayment do you have saved?
If you're borrowing money to buy a home, you’re going to have to bring some money to the table. The source of your downpayment is an important part of your mortgage application and the best downpayment comes from your own savings that can be supported by documents proving a 90-day history in your bank account, TFSA or RRSP or other investments. Other down payment sources, such as a gift from a family member or proceeds from another property sale, are also acceptable. At ETown Morgage Team, we would be happy to discuss your down payment options in detail with you.
You will require a minimum of 5% of the purchase price for your downpayment, and in addition to your down payment, you should also have saved approximately 1.5% of the purchase price for closing costs (legal fees).
How much can you afford?
Here’s the thing. What you can afford on paper and what you can afford in real life are often very different amounts. The amount you actually qualify to borrow for a home purchase is based on many factors, and it is never too early in the home buying process to seek professional advice. At Etown Mortgage Team, our services come at no cost to you; it would be our pleasure to help you to get a plan in place.
Working with an independent local mortgage professional will allow you to assess your credit-worthiness, provide insight on how a lender will view your income, help you plan for a down payment, and nail down exactly how much you can afford to borrow. And if you need help putting together a plan to improve your financial situation, we can do that too. If you’d like to discuss your financial situation and put together a plan to secure mortgage financing, please get in touch with us at ETown Mortgage Team.