Credit / Debts / Documents / Downpayment / Income / New to Canada / Purchase / Qualifying

4 Important questions to ask before applying for a mortgage

A mortgage professional can guide you along the road to financing approval, but it’s up to the borrower to provide directions on the way. What I mean by that is a mortgage professional cannot make the decisions for you, we’re not the ones making the payments. On that note, I believe an educated borrower is a happy borrower. I will always do my best to provide a borrower with as much information as they need in order to make any home financing decisions.

Before you start the process of mortgage shopping, here are 4 important questions to ask yourself, and your significant other if you have one. Your mortgage professional can then walk you through the rest of the process, providing as much information as you need to make an educated decision.

Are you really ready to buy?

While renting might seem like you’re building equity for your landlord instead of yourself, it can make sense if you don’t plan on staying in one city for long, or if you hate the thought of being responsible for all the costs related to the maintenance and repairs on your own home. However, if you’ve found a place you like, and you’re ready to commit, then mortgage financing should be on your radar.

Getting sick of paying rent sounds like a really great reason to buy a place, but there is more to home ownership than just a monthly payment, don’t be surprised with the costs by being prepared.

Do you know your budget?

Have you tracked your spending over a few of months?

Do you know where all your money is going and how much you have left over each month to put into a savings fund?

If you have any debt, have you budgeted for a repayment plan?

How much flexibility is in your budget?

Have you considered what will happen to your budget if your income level changes? i.e. injury, job loss, or pregnancy?

If you have not asked yourself the above questions, do it before you apply. Your mortgage professional can tell you the maximum amount you qualify for, but it is up to the borrower to determine what they can truly afford.

How are you going to make your mortgage payments?

Getting approved for home financing comes along with conditions, including where the lender confirms the income used to qualify. Because of this, it is important to know how your annual earnings will be looked at. You don’t want to put in an offer on a home and then find out you don’t make enough ‘on paper’ to qualify for it. How income is qualified and documented is a whole other post. What is important is to have the information at your disposal so that your mortgage professional can accurately assess your income and confirm the financing is affordable.

How is your credit?

Credit repayment is an important factor of the mortgage application process. It will determine your minimum downpayment amount, if a co-signer is required, and most importantly it will affect how low of an interest rate you can get. A borrower has good credit if there are at least 2 years of positive repayment history reporting, and a score above 650. There are of course exceptions to this, but knowing your credit history and score will allow you to shop for the best deal without having to fill out a full application each time.

The above 4 questions are just a few of the details you will be asked about when going through the mortgage application process. Don’t be intimidated by the road ahead, an experienced mortgage professional will help you get to your destination as quickly and safely as possible.

3 thoughts on “4 Important questions to ask before applying for a mortgage

  1. Pingback: Why asking “dumb” questions is quite smart! |

  2. Pingback: A mortgage borrower’s guide to the 5 C’s of Credit |

  3. Pingback: Thinking of buying a property, but don’t know where to start? |

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