First Time Home Buyers: 10 Tips You Need To Know

When you’re buying and financing your first home, usually it’s the big stuff like income, downpayment and credit that can cause the most anxiety. As a result, the small stuff can sometimes get overlooked. Avoid having to go back and forth with your lender by being prepared for the mortgage process and checking out these 10 tips should help your home purchase go as smoothly as possible.

1. Provide the explanation upfront

Provide the explanation upfront if you think there may be any blemishes on your credit report. This information is useful when structuring your application for submission to a lender and it will speed up the approval process. This tip can apply to other areas of the mortgage application too, like income and downpayment source. Your mortgage professional will be able to separate the “nice to knows” from the “need to knows”.

2. Label everything

When sending in any kind of documents, make sure you clearly label what is what. This will reduce review time for both your mortgage professional and the lender when the documents are received and avoid any misunderstandings that could cause unnecessary delays.

3. Make sure your name is on everything

The documents you send to the lender must confirm you are the owner, especially when it comes to downpayment confirmation. For funds from your own resources, ensure your name is somehow connected to the account number showing on the statement. Your income documents will likely have your name on there already, though pay attention to the other documents you send in to ensure they can quickly be reviewed and accepted.

4. Commit to an account

This specifically applies to downpayment funds coming from your own resources.  Your lender will request a transaction history  (usually the most recent 60-90 days) of your downpayment funds in order to ensure they have accumulated over time. If there are any unusual, large deposits ($1000+, depending on the lender), you will be required to provide a paper trail for those funds as well. Try to reduce the amount of transferring between accounts in order to reduce the amount of paperwork you will be required to provide to show the source of your downpayment funds.

5. Read the fine print

Before you sign any documents, starting with the mortgage commitment and ending with the final documents at the lawyers office, be sure you read the fine print. It’s better to understand the details now than be blindsided later. The lengthier blurbs are where the meat is, such as pre-payment privileges, payout penalties, document requirements and payments dates. As each lenders approval documents are different, don’t hesitate to take the time to review all aspects of your financing with your chosen professionals.

6. Don’t change your financial profile before funding

One of the most important items contained in the fine print is if you change your financial profile significantly, your mortgage approval could be withdrawn. On that note, try not to make any changes to your credit or employment before your mortgage is funded. At the very least contact the mortgage professional you have been working with prior to making the change and ask where you stand with your approval if you do decide to proceed with a significant change.

7. Know your closing costs

Often, the closing costs associated with the mortgage don’t end once your mortgage has funded. In addition to the property tax adjustment and other lawyer related costs, an interest adjustment payment may be due depending on which lender you are with. This means you may have to make a small payment before your first actual full mortgage payment comes out. The amount is dependent on what day your mortgage has been funded on.

Your mortgage professional can provide an estimate of your closing costs, which would include any interest adjustments if applicable. Be prepared by having access to at least 1.5-2% of your purchase price to cover closing costs and this is in addition to your downpayment, which includes the original deposit you may have made at the time the offer was written.

8. Be prepared for your 1st mortgage payment

Your closing date and payment frequency selection will determine the due date of your first mortgage payment. Payment frequencies can include; monthly, bi-weekly, semi-monthly and weekly. There are also accelerated versions of a few of these which are perfect if you want to reduce your mortgage principal faster. When signing documents at the lawyers, review all the document details to ensure the lender has the right payment account, payment frequency and confirm you’re aware of the first payment due date and amount.

9. Double check one last time

When it comes to mortgage financing, make sure you have confirmed all of the important details. These include correct term, amortization, interest rate, proper legal name spelling…I could go on. If there are changes that need to be made, ensure you receive the corrected documents and they are kept somewhere for the term of your mortgage. It’s best to have the most accurate documents on file to ensure everything was set up properly, or in case you need to have something changed post-possession of your new home.

10. Find professionals you want to work with

Talk to your friends, read the reviews, and do some preliminary interviews to find the professionals you feel most comfortable with. The best way to avoid stress during the home-buying process is to work with experienced professionals who take the time to ensure you’re comfortable with the commitment you’re making, including answering all of your questions in an easy to understand manner. Your chosen professional should be dedicated to your success, they should ask you pointed questions to find out which home and mortgage solutions best suit your lifestyle and financing needs.

Do you need a mortgage? Contact Jackie at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @Mortgagegirlca.