28 Oct

5 Tips To Getting A Mortgage

General

Posted by: Tina Murray

Buying a house is a milestone that many people work towards in their life. Depending on where you live it can be a real challenge, as housing prices are on the rise (especially in larger markets).

Despite the fact that it can sometimes be a challenge, it is definitely possible. As a mortgage broker I have helped many people who thought buying a house was out of their reach.

Here are my tip five tips for setting yourself up for success when applying for a mortgage.

Save for your down payment

This may sound obvious but you would be surprised how many people step into my office who haven’t saved for a down payment.  Depending on which way you go, a down payment will be anywhere from five to 20 per cent of the total cost of the house and this doesn’t include legal fees and closing costs. Those usually sit at about 1.5 per cent of the cost of the home. Five per cent of a $300,000 house is $15,000. If you include the legal fees and closing costs your down payment will be close to $20,000. Not an amount that most people can just pull out of thin air.

Buying a house takes planning.  Set up a savings plan so that once you decide you are ready to break into the housing market, you have the funds set aside.  P.S.  There are other options, we can talk…

Look after your credit

If you want to qualify for a mortgage, having good credit is key. Make sure you are paying all your bills on time. This includes anything from your credit card to your cell phone.  If there are any late payments or arrears in your history this will definitely show up on your credit score and will be taken into consideration when a lender looks at your file. If you have had trouble with your credit in the past, let’s talk about how to ensure you are back to where your credit would look favourable to lenders.

Don’t change careers

While a change in workplace or job is fine, I do not recommend changing your career path right before you try to qualify for a mortgage.  Lenders will want to see provable income and if you are in the middle of changing careers that will be difficult to do. There is nothing wrong with wanting to do something different, but if you want to buy a house make that a priority and wait to shake up your career until after you are in your new home.

Don’t make any large purchases

If you want to qualify for a mortgage the less debt you have the better. I do not recommend going out and buying a new $50,000 vehicle right before you apply for a mortgage.  Lenders look at the ratios between your debt and your income and the better that looks on paper the more likely you are to qualify for the mortgage you need. Save the large ticket items (cars, boats, RVs) for another time when you aren’t planning on buying what will most likely be largest (and most important) purchase of your life.

 

Have a realistic budget

This last one isn’t directly related to qualifying for a mortgage but I think it is important to talk about anyway. When you are thinking about purchasing a new home, I recommend people figure out what they can realistically afford.  In some cases lenders will qualify you for a mortgage that looks doable on paper but realistically it may leave you with very little leftover for other life expenses. Figure out how much you are comfortable spending on a monthly basis for your mortgage and housing costs and base your housing expectations on that.

Remember, your house is only one part of your life and it is important to have enough money to pay your mortgage comfortably while also saving for things like retirement and your children’s education and HOLIDAYS!!!!  * Disclaimer, I LOVE Vacationing.  I NEVER recommend people become house poor because of a house they can’t realistically keep up with.

There you have it. My five tips for qualifying for a mortgage. If you have more questions or would like to start the process of applying for a one, please feel free to contact me. I would love to be a part of getting you into your new home.

 

27 Oct

House buying after separation or divorce.

General

Posted by: Tina Murray

One of the key steps in the divorce process is finding a new place to live. Once you and your partner have decided to split you will probably be wanting to find your own place sooner rather than later.

If you are already a homeowner, you might be thinking about trying to stay in the housing market and buying something new. While this is a great idea in principle, there is a very important document you need to have on hand before going out in search of a new home. A separation agreement.

As a mortgage agent I can’t stress the importance of a finalized separation agreement enough. Without one it will be very difficult for you to get a mortgage for a new home. The separation agreement will outline things like what is being done with the matrimonial home, child support and alimony. All these will directly affect your ability to qualify for a mortgage, regardless of whether you go with one of the “big 5” banks or another mortgage company.

Matrimonial home

If you already own a home with your ex, the separation agreement will outline whether the house is going to be sold or whether it is going to be transferred to your partner. This is important because most lenders will want to see that either the sale of the house or the transfer of the property is done before the closing date on a new home.

Child support and alimony

Child support payments and alimony are two other items that a lender will want to see outlined in a separation agreement. This is because they can either be counted as income or debt, depending on which side of the coin you are sitting on. Sometimes income from child support or alimony is key to being able to qualify for a mortgage and a lender will want to see that on paper. If you are the one paying alimony or child support this debt is also important information for lenders as they review your file. In the end it all comes down to balancing your income with your debts and in a divorce scenario with children, this almost always includes child support and/or alimony.

Don’t put the cart before the horse

It may be tempting to start looking for houses as soon as you and your partner decide to split, but I always advise people to take a step back and make sure your separation agreement is finalized BEFORE you start shopping around. Without that document you will have no way of knowing what type of mortgage you qualify for, and prequalifying for a mortgage is key. If you start seeing houses before you have figured out your budget, you will risk finding your dream house and realizing later that you can’t afford it.

There is no doubt about it. Going through a divorce is difficult and figuring out new living arrangements can be stressful. I definitely recommend talking to me at the beginning of the process so I can guide you through what I will need to help you buy the home.  Having a finalized separation agreement is almost always necessary to complete the purchase but I can help you from the start.