Congratulations! You’ve reached yet another milestone in your quest for lifelong success—you’ve decided to buy your first home. But before you actually sign the paperwork and move into your dream abode, you have one more important consideration looming in front of you: your first mortgage.
When you hear the word “mortgage,” you likely think of bills, expenses, and tight budgets. You also think of mounds of paperwork. And while mortgages are rarely that unpleasant in reality, they can prove quite complicated.
Luckily, you have many resources to help you. Below, you’ll find an outline of a few basic things you should know before you jump into a mortgage. Your lender can help you with the rest. If you don’t have a Mortgage Broker I can assist you in finding one that fits your needs.
HOW TO GET APPROVED FOR A MORTGAGE
Before a lender will approve you, you have to meet a certain set of criteria. These criteria include:
- A good credit score. Ideally, you should have a credit score of 720 or higher, but some lenders may approve a mortgage even if your score lies in the 600s. Luckily there are plenty of ways to improve your score before you apply for a mortgage loan.
- Enough money for a down payment. You have to put, on average, 5-20% of the loan’s cost down before your lender will give it to you. A few rare lenders may ask for a smaller down payment.
- Enough money for closing costs usually 2-4% of the purchase price
- Enough money to live after the down payment. Your lender doesn’t want you to skip meals for two weeks just to afford a mortgage. You look like you can’t reliably make payments if your finances are that tight.
- Full time employment. You should have a great employer and two years of solid tax returns to get approved. If you are commsions based like myself you may have to provide some more paperwork for proof of income.
You’ll also need a number of documents and information, including:
- Social Insurance number
- Birth date
- Residence and employment history for 24-36 months
- Pay stubs for the last 60 days
- letter of employment
- T4 forms from the last two years/Notice of assesments
- Bank statements for the last two months
- Purchase agreement documentation
- MLS Listing of the home you plan to purchase