30 Jan

A CONVERSATION ABOUT MORTGAGE PRE-APPROVALS

General

Posted by: Brad Lockey

A Conversation About Mortgage Pre-approvals

Thinking of buying a property, but don’t know where to start? Well… that’s where a mortgage pre-approval comes in. Start here. Just like you wouldn’t go into a restaurant without having enough money to buy your meal, you shouldn’t start shopping for a home without an understanding of how much you can afford. So let’s have a conversation about a mortgage pre-approvals so you can get this house hunting party started.

Although a pre-approval is the best way to get started, we have to be honest about what a pre-approval is and what it’s not.

NOT MAGIC. NOT BINDING.

Let’s start at the beginning and dissect the word pre-approval. Pre means before, in advance of, or prior to, and in this case means before the approval. A pre-approval is not an approval, let me say that again (in italics) for emphasis, a pre-approval is not the same as an approval. It’s not a guarantee of financing, it’s not magic, and unfortunately, it’s not binding. There are a number of factors that come into play after the pre-approval is in place that can derail your dreams of homeownership.

  • – as an approval requires a property to be scrutinized, and a pre-approval doesn’t look at any property, it can’t be guaranteed;
  • – as your employment status can change after a pre-approval, all employment documents have to be verified as part of the approval process;
  • – a secondary credit report can be pulled by the lender or insurer after the pre-approval is in place, if there are discrepancies, they could decide not to proceed with financing;
  • – mortgage rules can change and sometimes come into effect with no grandfathering;

SO WHAT GOOD IS A PRE-APPROVAL THEN…

A pre-approval is simply a formalized gathering of your ducks, and putting them in a row. It won’t guarantee you will get the mortgage, but it will certainly uncover any major obstacles that might be in your way. Consider a pre-approval a pre-screening, where we take a look at your employment, credit history, and your downpayment, and figure out the maximum mortgage amount you can qualify for. We will also have a look at all the mortgage options available to you on the market, so you can decide in advance what product meets your financing needs.

Obstacles, like what? Well, the truth is, you only know what you know, said in another way, you don’t know what you don’t know. Did you know that they figure about 10-20% of credit reports have some kind of error on them. By taking a look at your credit report as part of the pre-approval process (instead of when you have already found the house of your dreams), you have time to fix any errors before hand. This might not sound like that big of a deal, but it could be the difference between getting financing or not.

A pre-approval usually comes with a rate-hold, this is a good thing. Rates are like gas prices, they fluctuate and go up and down from time to time. As part of taking a preliminary look at your mortgage application, lenders will typically offer a rate hold for 90-120 days on a specific mortgage term. This means that if you find a property to buy in the allotted time, even if rates have gone up in the mean time, you will get the rate that was guaranteed. What happens if rates go down, well… you get the lower rate. It’s a win-win.

IT’S A PROCESS

Buying a home is a process, a process that has a lot of steps that come into play. A pre-approval is one of the first steps you take. A pre-approval allows you to collect all of your documentation ahead of time, handle any obstacles that may come up, have a look at your mortgage options, secure a rate hold, and will give you piece of mind as to the next steps in the process. Regardless if this is your first time buying a house or your twentieth, a pre-approval is the best place to start. Even if it doesn’t guarantee you will get the mortgage in the end.

So if you are thinking about buying a home, let’s get started, as we would love to help you secure a pre-approval. And if for some reason you are faced with some obstacles, we will help you get on track.
Contact a Dominion Lending Centres mortgage professional today!

27 Jan

UPGRADING YOUR HOME: REFINANCE PLUS IMPROVEMENTS MORTGAGE OPTION

General

Posted by: Brad Lockey

Purchase Plus Improvements

When it comes to mortgages and renovations it is important that you have your financing in place before you take the sledgehammer out of the garage! Lenders do not like coming into play half way through a renovation. Planning is essential to ensure you will have enough funds to cover the renovation costs.

Did you know there are mortgage products available that may help you with the costs of renovations above the 80% loan-to-value refinancing rule. The Refinance Plus Improvements Mortgage is a great way to incorporate the costs of improvements into your mortgage.

Here’s a list of typical Refinance Plus Improvements Guidelines:

1. The improvement funds above the 80% loan-to-value mark for the current as-is market value of your home will be held back by the lender until your renovations are complete.

2. Lending value is based on an Appraisal that states the As-Is Complete Value

3. You will need quotes upfront for the proposed improvements

4. You may need additional funds to pay deposits to contractors

5. Do not start demolitions before an Appraisal is done

6. Funds available are typically limited to 20% of the current appraised value up to $40,000 (ask a mortgage broker about other mortgage options if you require more funds)

7. Renovations typically will need to be complete within 90 days from the date the mortgage completes

8. You must meet the lenders credit and debt servicing requirements

Stay on Budget and on Time by Following these 5 Simple Steps:

1. Finalize the design before you start!

2. Contact Suppliers to make sure that they have the materials you have chosen in stock or that they can be delivered quickly

3. Obtain quotes from 2 or more reputable contractors

4. Apply and secure any permits that are required before your mortgage completion date

5. Give your contractor a deadline to ensure you don’t go over the allotted time to complete the improvements

Start the renovation planning by contacting your Dominion Lending Centres mortgage professional first!

25 Jan

CONSTRUCTION MORTGAGE PART 2: THE BUDGET, THE LOAN AND THE KEY POINTS YOU NEED TO KNOW

General

Posted by: Brad Lockey

Construction Mortgage Part 1 - Serviced vs Unserviced Lots

The first of our Construction Mortgage Blogs covered the basics of what you would need to know for this complicated mortgage type. In this second part, we will cover three key areas: The budget, the loan, and key take-away points.

1. The Budget

The budget is the most important piece of information that the lender wants to see. It should include “hard” and “soft” costs. There is usually “reserve” money set aside to ensure there is enough money in the anticipated event of over budget costs. The “reserve” money is usually 10%-25% cash flow based on the budget for the project. This is on top of the down payment.

This table denotes common soft and hard costs that should be included in the budget:

table01

 

2. The Loan

How the loan is Calculated

Lenders will lend up to a maximum amount determined by the guidelines of the individual lender. For example, based on the lender loaning up to 75% of the total cost (with 25% down):

Land purchase price (as is) Total soft and hard costs Total Cost (as complete)

$200,000 $400,000 $600,000 x 75% = $450,000 available to loan

Keep in mind, the lender will also consider the appraised value of the finished product. In this example, the completed appraised value of the home would have to be at least $600,000 to qualify for the amount available to loan. The appraised value is determined before the project begins.

As well, the client will have to come up with the initial $150,000 to be able to finance the total cost of $600,000. A down payment of $150,000 plus the loan amount of $450,000 = the total cost of $600,000.

Construction loans are released in draws (guidelines are based on the lender). NOTE – between Draws, there is an appraisal/progress report that is ordered by the lender. This is at the client’s cost. These reports are usually around $200 per report, depending on the appraiser.

Draw 1 – Foundation Draw The initial draw is usually based on the preliminary fees. Remember from the example in the previous page that the loan amount is $450,000. Foundation Draw – building the foundation Land purchase ($200,000 – down payment of $150,000) = $50,000 Interest Reserve ($30,000 or 9 months’ interest of the loan) = $30,000 Lender Fee (usually 1% plus any broker fees) = $15,000 Legal Fees = $3,000 Total first draw is $95,000 which leaves $355,000 for construction costs.

Draw 2 – Construction begins! Lock Up Draw – Framing is done and doors and windows can be “locked up”. Whatever amount of money was budgeted for the initial framing component of the project.

Draw 3 – Drywall Draw – You get your drywall up. Whatever amount of money was budgeted for the initial framing component of the project.

Draw 4 – Completion Draw: The Lender sends in an Appraiser to do a progress report to verify that the budget has been followed and build is complete. At this point, the lender will contact you to finalize a new mortgage (a “normal” mortgage) that will be based on the appraised value of the home. Once your building project is completed, we will be able to assist you in moving your construction mortgage to a traditional mortgage, utilizing the discounted rates that we have access to.

The lender may also require a project timeline. Typically, the lender allows a timeline of 6 – 12 months, depending on the lender.

3. What you should know?

  • Construction loans are usually fully opened and can be repaid at any time.
  • Interest is charged only on amounts drawn. There are no “unused funds”
  • Once construction is complete and project completion has been verified by the lender, the construction mortgage is “moved over” to a normal mortgage.
  • A lender will always take into consideration the marketability of a property. They will look at not only the location based on demographic but also the location based on geography. For instance, a lot that is in a secluded area where no sales of lots have occurred in the last five years and mostly consisting of rock face may not be a property that they are willing to lend on.
  • Depending on the lender, you may have a time-frame within which you need to complete construction (typically between 6 and 12 months).
  • Although we’ve described 4 draws, the lender can advance additional draws if needed (i.e. there is a time crunch to pay a vendor and you don’t have enough cash to cover the cost. Or there is unexpected expenses that have come up and you have to dip into your contingency fund (usually a 10% reserve determined by the cost to build).

Problems you can Encounter

  • You may go over budget and have to dip into the “reserve” fund as needed
  • You may have issues with project management not going smoothly. For instance, trades not showing up to do scheduled work.
  • Liens can be put on title throughout the construction project timeline which will delay funding for the next draw. Liens will have to be removed before new draws are released.

Delays in construction and depleted funds can wreak create havoc in a project. Make sure you are working with professionals that have experience and know how to troubleshoot when needed

Final Thoughts…

Construction mortgages are complicated. It is in your best interest to have a mortgage professional guide you in the step by step process of a construction mortgage. At Dominion Lending Centres, we have the expertise to show you how to set up your construction mortgage to fit your needs. We make sure that the costs that will cross your path will be taken into account and that you will borrow the required funds to build your dream home. Give us a call to discuss your options in building the house of your dreams!

23 Jan

CONSTRUCTION MORTGAGE PART 1: SERVICED vs UNSERVICED LOTS

General

Posted by: Brad Lockey

Construction Mortgage Part 1 - Serviced vs Unserviced Lots


On several occasions we have had people ask us at Dominion Lending Centres about construction mortgages. Every lender has their own guidelines and rules when it comes to construction mortgages. That’s because there are many details involved in the process of construction, let alone the mortgage that actually funds it! Below is part 1 of 2 of what a construction mortgage entails and what you need to know when tackling this complex mortgage.

Construction Mortgages almost always start with raw land

Raw land usually comes in 2 forms: service lots and un-serviced lots*

Serviced Lots are defined as having:

Portable water-water that is safe enough for drinking and food preparation
Septic/sewer services-city connected sewers or a septic field
Access-a driveway, as rough or refined as it is
Hydro-connected to power
Natural gas (if applicable)
Need 25% to 35% down

Un-serviced Lots are defined as having:

Portable to be available water-needs
Septic/sewer services: not-applicable
Access-(other) or not typical such as water access
Hydro-not applicable
Natural gas – not-applicable
No Agricultural Land Reserve**
Need 35% to 50% down

*guidelines depend on the lender
**land that is reserved for agricultural activity (ie. Farms)

Rates and terms of purchasing raw land

Serviced Lots usually have:

Maximum Mortgage Amount, depending on the lender
Maximum Mortgage Amortization, depending on the lender
Rates are usually a little higher than discounted rates (ie best discounted fixed rate plus 1%), but not always
Fees – usually a lender/broker fee, but not always
Terms – usually 1 thru 5 years

Un-Serviced Lots are defined as having

Maximum Mortgage Amount, depending on the lender
Maximum Mortgage Amortization, lesser maximum amortization compared to serviced lots
Rates are usually a little higher than discounted rates and higher than serviced lots (ie best discounted fixed rate plus 2%), but not always
Fees – usually a lender/broker fee and usually higher than serviced lots, but not always
Terms – usually 1 thru 5 years

How do you qualify?

You need to complete a mortgage application
You need to provide credit bureaus and income documents showing that you qualify for the amount of money you wish to borrow.
You need to provide a detailed construction budget.
You need to provide a title search (through your mortgage broker or lawyer)
You need to submit a copy of the purchase agreement, including all addendums and amendments.
Builder information and resume (if requested) and project contract
Full set of legible construction drawings scaled to legal size paper or smaller
HPO registration (Home Owner Protection forms or registration of new home)
You base the amount to be borrowed on the appraisal based on a completed project

You may need to also provide….

Copy of all construction contracts
Corporate financial statements (if applicable)
You need to submit a detailed summary of the deal, including how you are expecting to move out of the higher interest rate construction mortgage into a “normal” mortgage, depending on the lender
Copy of purchase agreement for the land purchase

These are the first steps to setting up and understanding a construction mortgage. There are unique traits to this type of mortgage as with any other mortgage. Remember, you should always consider calling a mortgage broker to help walk you through this complex process!

Stay tuned for Part 2 in which will cover the budget, the loan, and key take points.

23 Jan

SUMMARY OF THE NEW MORTGAGE MARKET

General

Posted by: Brad Lockey

 

Summary of the New Mortgage Market
There have been a lot of changes in the mortgage market over the past few months so many Canadian’s plans regarding homeownership may have shifted quite a bit from last year.

First, new qualification rules came to pass in October where even though actual contract rates are sitting at about 2.79% all Canadians have to now qualify at the Bank of Canada Benchmark rate of 4.64% to prove payments can still be met when rates go up in the future. That has taken about 20% of people’s purchase power out of the equation.

The second round of rules were implemented at the end of November with the government requiring banks to carry more of the cost or lending having to do with how they utilize mortgage insurance and the level of capital they have to have on reserve. This means it is more costly for banks to lend so they are passing some of that cost to Canadians.

We now have a tiered rate pricing system based on whether you are “insurable” and meet new insurer requirement to qualify at 4.64% with a maximum 25-year amortization (CMHC, Genworth, Canada Guaranty are the 3 insurers in Canada) or are “uninsurable” where you may have more than 20% down but can’t qualify at the Benchmark rate or need an amortization longer than 25-years to qualify or are self-employed so can’t meet traditional income qualification requirements. Canadians who are uninsurable will be charged a premium to their rate of anywhere from 15-40bps. So your rate would go from 2.79% to 2.94% at the very least.

Then in BC there was the announcement of the BC HOME Partnership Program (BCHPP) in January. We have finally had some clarification on how this works but the benefits are not as grand as the BC Government would like them to appear.

The BCHPP is a tool to assist First Time Homebuyers supplement their down payment by the government matching what they have saved up to 5% of the purchase price. While this may help some clients bring more money to the table we have to factor a payment on that “loan” into the debt-servicing mix so they will actually qualify for less by way of a mortgage. They have more down payment but can not get as high a mortgage so it’s very close to a wash.

Lastly, as of mid-January, CMHC announced they are increasing mortgage insurance premiums on March 17th. Genworth and Canada Guaranty are likely to follow. The insurance premiums are based on a percentage of the mortgage amount requested and how much you have to put down. For people with 5% down the premium will go from 3.60% to 4.00% and if you want to take advantage of the BCHPP program the premium will go from 3.85% up to 4.5%

What does this all mean? Overall it is more costly and more confusing to get a mortgage today than we have seen in many years. With the complexity of the new mortgage market, now more than ever buyers need someone with extensive knowledge to help them sort through their options – such as your local Dominion Lending Centres mortgage professional.

If we can be of assistance to you or someone you know, please do not hesitate to contact us.

19 Jan

4 STEPS TO A FINANCIALLY FIT YOU IN 2017!

General

Posted by: Brad Lockey

 

3 Steps to a Financially Fit You in 2017!

Well, you have likely noticed that it is time for resolutions according to the plethora of fitness equipment and organizational plastic bins on sale in every flyer you open. It seems fitting that we take a 4 step approach to positioning yourself for financial fitness in 2017 as well.

So first of all, I am going to go ahead and assume you are human. Yes? If so then please know that you are not slacker! Almost every person I have met has something in their financial world they have been meaning to get to but have not so forget the past and let’s move onward and upwards!

Step 1 – Write down your goals. Study after study proves that actually writing out what it is you want causes the synapses in your brain to reconnect to work towards the goal even when you are not thinking about it.

Step 2 – Just do it! Seems I heard that somewhere before but anyways. It is now time to actually get everything in place.

* Will – Call around and get some quotes on having your will prepared with all the necessary paperwork by a reputable lawyer.

* Financial/Insurance Planner – People who work with a qualified financial planner do much better overall than those who wing it. Meet with a few of them and learn what you need to know so that your pennies turn into a comfortable future

* Accountant – The onslaught of cheap software makes it very easy to think you can do it all yourself when it comes to your taxes but a qualified accountant is essential in my opinion. They can literally save you thousands on your tax bill. That’s your money so you should keep it.

* Mortgage Professional – Your home is your largest asset and your largest debt obligation. Have your mortgage reviewed by a Dominion Lending Centres mortgage professional to make sure you are in the best mortgage product for your situation now and to meet your goals later.

You will have noticed a theme here. You don’t need to know about the law or investments or insurance or taxes or mortgages. All you have to do is find yourself a TEAM to protect your interests.

Step 3 – Time to automate-

Set up to meet your goals automatically. A regular withdrawal for your savings and other expenses is far less painful and way more likely to actually occur than if you have to sit down each month and choose to transfer the funds. If your goal is to pay down your mortgage, why not choose to increase your payments slightly rather than worrying about a lump sum later on. Bite sized is far easier.

If you are trying to keep a budget, there is an amazing app called mint.com. It is from the makers of Turbo Tax – you input all your credit/debit card info, your goals as far as savings or debt reduction, and a budget for each part of your life. Each purchase you make is automatically inputted into the correct category. You can see where you are spending and exactly how much and you will even get text notifications when you are close to your budget in a particular area.

Step 4 – Annual Review Day

So you have done the work and so now all you have to do is take 1 day a year off to review. Meet with all of your team to ensure you are where you need to be. Can you increase your mortgage? Is your will reflecting your new spouse or baby? Do you have enough insurance to protect yourself against disability or critical illness? Spoiler alert! We are all going to need life insurance, disability is the number one case of foreclosure and even out solid health care system does not cover all expenses so critical illness insurance can save your savings.

And there you have it, financial fitness in 4 steps! Your future self will thank you. As they say, the best time to plant a tree was 20 years ago, the second best is today.

17 Jan

Why So Many Mortgage Documents?

General

Posted by: Brad Lockey

Why So Many Mortgage Documents?

Documents, documents and more documents.  Yes that’s right you will need to provide your Dominion Lending Centres mortgage broker with as many documents that we request upfront as possible. Why? Because the more supporting documentation you have available will help us as brokers to find you your best mortgage options. If you don’t have everything on hand e-mail a PDF of what you have and start digging up the rest as soon as possible.
 
Why so many documents you ask? While the lending market isn’t what it used to be, it is now much more strict and complex then a few years ago. Lenders are asking for WAY more documentation before they will lend you money. Yes, there have been instances of mortgage fraud that likely led to more scrutinized lending and Government regulations that lenders have to abide by are always changing. Mortgage lenders need to protect their investors and help ensure our Canadian housing market remains strong.
 
It may seem like a pain, but ask yourself this: if you had a large amount of money would you lend it out to somebody without proof they have income stability and/or the means to pay it back? Pretty sure your answer is no (at least mine is).
 
Below is a list of typical documents lender and mortgage insurers request. If you would like a tailored list please contact your DLC Mortgage Professional to discuss your application.
 
Income – lenders are looking for proof of income stability
 
Self-employed Income
 
* 2 years of Income Tax Returns, Business Financials, CRA Notice of Assessments. Often it’s best to have your accountant e-mail them to us so no pages are missing.
 
Rental income
 
* Lease agreements
 
* T1-General tax returns with the Statement of Real Estate Activities. If you don’t claim your rental income let us know as this may affect how your mortgage is approved.
 
* Proof of the rental income being deposited on a regular basis into your bank account.
 
Guaranteed Employment Income
 
* A couple of recent pay stubs
 
* A job letter confirming your position, guaranteed pay and hours, if you are seasonal, contract or any specific information that relates to your income stability. Lenders will call your employer to verify the letter and ask for more information as possible. (Sample Job Letter)
 
* Most recent 2 Years of CRA Notice of Assessments
 
* Most recent 2 Years T1-Generals
 
Commission, Overtime, Seasonal, Contact or Bonus Income
 
* A couple of recent pay stubs
 
* Job letter
 
* 2 years of T1-General Income tax returns
 
* 2 years of CRA Notice of Assessments
 
Liabilities – We will see most of your consumer credit accounts on your credit report, however we may require some additional paperwork
 
* Current mortgage statements
 
* Property tax statements and proof of payment
 
* Child Support Payments proof via court orders and bank statements
 
* Alimony via Separation Agreements
 
* Proof your income tax has been paid. This is the most important item to pay because the Government has more power than the lenders. If you are wanting to refinance your mortgage to pay CRA contact us to discuss your options.
 
* Proof debts have been paid. If a zero balance is required, you must show the account at a zero balance or the current balance and the proof of payment.
 
Down Payment & Closing Costs
 
* The last 90 days of savings history. Any larger deposits have to be sourced.
 
* Gift Letter (some lenders have prescribed forms)
 
* Statement showing gift deposited into your account
 
* Property sale contracts and mortgage statements
 
About Documentation from Financial Institute
 
* Must have account ownership proof. For example: e-statements are the best as they typically have your name, account number and the providers details already on the statement
 
* Screenshots work if the providers logo/name are clearly shown on them as well as the account holders name. If the account number only shows then you will have to provide an additional document from the provider with both your account number and name.
 
* If you are having your account history printed at a Teller please have the Teller stamp the paperwork
 
Documentation varies by applicant and lender. Be prepared by contacting your mortgage professional today for your tailored documents list.
13 Jan

NOW IS THE TIME TO GET PRE-APPROVED FOR YOUR MORTGAGE!

General

Posted by: Brad Lockey

Now Is the Time To Get Pre-approved For Your Mortgage!

 

So 2016 was an exciting year in the mortgage world! The problem is that we mortgage professionals really hate it when things get exciting in our world. Between the economy and the federally mandated mortgage rule changes and their ensuing fallout, it is now more important than ever to get a solid pre-approval in place. I am not just speaking to first time home owners either! Before you list your current home or refinance your mortgage or consider buying a rental, you need to make sure that you qualify under the new mortgage rules.

The biggest change by far was the increase to the mortgage qualifying rate. Basically, no matter which term you are selecting you will have to qualify at the Bank of Canada posted rate which is currently 4.64%. The mortgage rate you are given will be considerably less than this and will be based on whichever term you choose. The rationale is that there is no way rates were going to stay at 2.39% and all of a sudden a lot of people could be hit with a significant mortgage payment increases which could mean increased foreclosures. When you remember that our federal government is actually financially backing those mortgages through the mortgage insurers, they had a vested interest in keeping the housing market secure.

So the things you need to know:

1. Rates have climbed since the rule changes were announced, so if a new home is in your future get a rate hold in place so you are protected against further increases. Most are good for 120 days.

2. Make sure they are checking your credit and not just seeing how much you are qualified for based on your income. Can you imagine selling your home only to be told that you do not qualify for the financing on the next because of something on your credit bureau? It has happened, I assure you.

3. Given the variety of ways in which we all get paid, you also need to make sure your pre-approval is solid given your situation. For example, the mortgage lenders require a 2 year history on all variable income. That means if your income is commission, bonuses, overtime or shift differential then you will need a 2 year history of it before it can be used for the mortgage qualification.

4. Porting is an area which is slightly misunderstood. You will have to qualify for the mortgage under the new rules even if you are just moving the mortgage from A to B. Please refer back to the previous horror story of the people who had sold and then could not buy a new home.

5. Ironically, the changes now mean that if you are refinancing your home, there is a possibility that you will have a higher mortgage rate than someone putting 5% down. This is because the 5% down mortgage is insured while yours with the significant amount of equity is not making it a higher risk for the bank. If you are considering a refi you may want to do it sooner rather than later given the rate increases.

6. Rental properties have been heavily hit by the changes. Our economy means that fewer lenders are willing to consider these mortgages to start with and those that still are have upped the ante. Some have increased the minimum down to 35% from 20%. Others require a very strong net worth in liquid assets. If you have multiple properties make sure they are reporting on your taxes.

So that’s about that. A solid pre-approval from a qualified mortgage professional is a very good peace of mind strategy for both the new home buyer and those veteran buyers. When you’re ready to talk of if you need more information, the mortgage professionals at Dominion Lending Centres are here!

11 Jan

5 Common Mistakes To Avoid When Shopping For a Mortgage

General

Posted by: Brad Lockey

5 Common Mistakes To Avoid When Shopping For a Mortgage

Avoid these 5 common mistakes, and you will have no problem getting your mortgage faster, more efficiently, and with a clear understanding of the process:

1. Thinking banks are the first and best place to go for a mortgage

Mortgage brokers can often beat the bank rates by using different lending institutions. The bank is limited to one lender, but if you use a mortgage broker, they have the option to shop for you with multiple lenders to find you the best product.

2. Not knowing your credit score

Your credit score is a HUGE factor in your mortgage application. The first thing lenders look at is your history and your score—then from there they build your file.

You should know where you stand because so much of your lending availability is tied to your credit score. In mere minutes, a mortgage broker can help you obtain a copy of your credit report, and go through it to ensure the information is correct.

3. Shopping with too many lenders

When you shop from institution to institution you will have your credit score pulled multiple times. Lenders typically frown upon this and it may interfere with your mortgage application. If you go to a mortgage broker though, your score is pulled ONE time only.

4. Not keeping your taxes up-to-date

Plain and simple: If you are self employed or the mortgage application is requiring a 2 year  income average to qualify (utilizing overtime wages and/or bonuses) and you haven’t filed your taxes and kept them up to date, you cannot get a mortgage. Lenders will ask for your notice of assessment if your tax filings are not up to date, and you will not get your mortgage until they are filed properly and a Notice of Adjustment from the latest year it is received.

5. Not understanding that the real estate market you qualify in TODAY will adjust in the future.

Rates may be at an all time low right now, but new rules, government regulation, and changes when you are up for renewal can change the circumstances. You must be able to carry your mortgage payment at a higher rate or with new laws imposed.

Remember, securing a mortgage isn’t always about getting the best deal. It’s about getting a home you want and establishing yourself as a homeowner. That means not overextending yourself and taking your qualifying amount to the maximum. Leave some breathing room because no one knows what the future may hold!

But one thing’s for sure – you should contact a mortgage professional at Dominion Lending Centres!