Our do’s and don’ts fall into three categories: personal finances, professional help and important decisions.
Personal Finances
Do: Organize and Prioritize Your Finances
With any large purchase, like buying or selling a home, there is a lot of scrutinies involved. This comes from lenders, real estate agents and even employers in some cases. But, more on that later. For now, we must focus on the person with the biggest stake in the game and the best reasons to pay attention, namely you.
Income/Expenses
Start by tracking your finances. Use budgeting wherever possible to understand exactly where your money goes. This includes keeping fantastic records, but it also means keeping key documents close at hand, like:
- T4s
- Tax returns
- W-2s
- Income information
- Receipts for large purchases
This is also the time to ask for a raise or put in overtime and develop a stringent savings plan. The more money you can put towards the down payment, the more you will be approved for and the smoother the whole process will run.
Credit
Keep your credit in check. Make sure you get a credit report and find ways to raise your score. It’s important to make a plan and stick to it, as lenders want to see healthy and regular activity. This can mean paying down debt, but it should also mean flagging any suspicious transactions in the last six months.
Don’t: Fiddle With Your Finances
Before applying for a mortgage is not the time to mess with your finances. Banks love consistency, and will traditionally ask for three to six months of account statements. So be sure to keep large purchases, credit card cancels and account changes for either before or after the mortgage application process is complete.
Professional Help
Do: Maintain Professional Relations
It’s important to maintain professional relations with both lenders and real estate agents during the mortgage application process. These professional services make it easier to understand the home buying process by offering current information and support.
Lenders
Communication is essential throughout the homebuying process. This means listening to sound advice from financial professionals, but it also means keeping a keen ear out for places where you need more information. Now, let’s discuss pre-approvals.
Pre-approvals are a lender’s way of telling you how much they will lend you before actually making a purchase. You will want one before going house shopping. Make sure you find the right mortgage broker to represent you by looking for someone you feel comfortable with asking questions.
Realtors
While you will have to wait for the pre-approval to go through before contacting us, 2% Realty will be on your side when it comes to finding the perfect home for your needs. Using a real estate agent gives you exclusive access to different home listings and also helps simplify the homebuying process. Learn more on our website.
Don’t: Go it Alone
Don’t forget that your understanding of the process is the most important aspect. But that doesn’t mean you need to isolate yourself. Take it one day at a time and don’t overwhelm yourself with too much information at once. Seek the advice of friends and family wherever possible and rely on experts who you can trust. Along with that trust also comes responsibility, however.
Lenders
Don’t be slow to respond to your mortgage team. Some decisions must be made quickly, so your availability can be a critical part of the equation. You should also err on the side of too much when it comes to offering information to your lender. This is just part of the reason good record-keeping is essential. Only ask for an amount you can afford, and keep your expectations realistic.
Realtors
Start looking for your realtor early. You want them to be looking for your dream home for as long as possible to get the best deal on the market, and you can get some of the initial legwork out of the way.
Important Decisions
Do: Keep a Routine
Did you know that lenders usually ask mortgage applicants for a job history that includes the previous two years (24 months) of work? This means that your employment history should be consistent and look stable for the majority of that period. Continue making rent or mortgage payments on time as well.
Don’t: Make Major Lifestyle Changes
As you might expect, the stability of your finances, employment and lifestyle mean that you will have to live a moderate lifestyle leading up to your property purchase. This means you shouldn’t change your job, invest in an expensive new hobby or get a divorce in the immediate period before applying for a mortgage.