Top 5 Mortgage Application Tips

As a prospective homeowner, it’s crucial to do your homework to maximize your real estate investment. By following these top mortgage application tips, you’ll be one step closer to turning your dream home into a reality.

1. Get Your Credit Report Done

Before you start applying for a mortgage, proactively obtain a copy of your credit report. Thoroughly check for errors and address any discrepancies, as there could potentially be some. Since your ability to secure a favourable mortgage rate largely depends on the information in your credit report, it’s essential to ensure all the information is absolutely accurate. While there are a number of companies that provide free credit reports, Equifax has always been top-tier and up-to-date.

2. Have All Of Your Documents Ready

Prepare all of the necessary documents required in advance. This will save you time and ensure a smooth application process. Depending on the type of mortgage and your employment situation, various documents may be required. Having everything you may need ready can streamline the process and prevent unnecessary delays. Examples of common documents that a lender might request are: proof of income (either paystubs or an employment letter) and recent tax returns or NOA (Notice of Assessments).

Preparing to buy a home in Ottawa? Explore these other blogs for more advice.

3. Get Your Preapproval Through A Lender

Obtaining pre-approval for a mortgage helps you understand how much you can borrow before starting the house-hunting process. This crucial step influences your decision on the upper price limit of your home purchase and provides realistic boundaries, helping you avoid the disappointment of falling in love with a home that’s out of your budget. While an online mortgage calculator is good, it does not take into account your debt so it’s important to actually speak to a lender during this step.

4. Consider Your Long Term Goals

Plan your mortgage in accordance with your long-term, future goals. While plans may change, the end goal should always be to reduce financial risks. Think about how long you plan to stay in the house, whether you should save for a larger down payment, and how much risk you’re willing to take. Long-term planning can save you from financial stress down the road. While most people tend to lean towards longer-term mortgage periods (ie 5 years), your situation might be different and a 2 or 3-year term might make more sense.

5. Understand the Different Types of Mortgages Available

Familiarize yourself with the different mortgage options available, including fixed-rate, variable-rate, and hybrid mortgages. Each has its pros and cons, so having a solid understanding of each will help you make a more informed decision. Choosing the right type of mortgage can significantly impact your financial well-being over the life of the loan. If you are looking for further guidance here, your mortgage representative will be able to walk you through all of the different options so don’t be afraid to ask.

Buying a home for the first time? Read these blogs for more rookie buyer advice!

- 3 First Time Home Buyer Tips
- From Renting to Home Ownership

Bonus Tip #1: Do Your Research Before Starting The Process

Being well-informed prior to applying for a mortgage is crucial. Understanding the options and procedures involved in buying real estate will be hugely beneficial to your plans and finances. Your mortgage is a long-term commitment, and like all significant decisions, it needs to be researched and well thought out in advance. Most lenders and real estate websites have excellent information for you to review during this phase of the process.

Bonus Tip #2: Shop Around for Rates

Compare mortgage rates from different lenders, including banks, credit unions, and mortgage brokers. Even a small difference in rates can save you thousands of dollars over the term of your mortgage so taking the time to shop around can result in substantial savings.

Bonus Tip #3: Work With A Reputable & Experienced Lender

While rates matter, it is also crucial to work with someone that is knowledgeable and reputable in your area. Make sure you ask questions from the lenders or mortgage brokers you are considering including how long they have been in the business and also check their online reviews.

While the above information might sound daunting, it doesn’t need to be. Our team works with some of the best people in the city, lenders that we utilize personally and we have referred hundreds of times to our valued clients. Reach out to us today to get started!