Chas Zemluk Thoughts, Opinions & Information: The Gist on Qualifying for A Mortgage!

First Time Home Buyers

"The Gist on Qualifying for a Mortgage"

Hey everyone! Many people do not realise what it takes to purchase their first home and sometimes do not even realise their options. Josh Higgelke, who I work closely with many of my clients, of Axiom Mortgage Solutions has written a SPECIAL article for us! Please feel free to give myself or Josh a call with any further questions about qualifying for a mortgage and maybe you will be surprised as to what you can be approved for!! Remember: It Never Hurts To Ask!

Chas

C: 403-354-3777

E: czemluk@cirrealty.ca

W: www.calgaryhomeswithchas.com

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Buying your first home can be a very exciting / rewarding experience and many, many people strive to achieve the pride of ownership that comes with owning your home. Most people are very excited about paying off their own mortgage and building their equity instead of lining the pockets of their landlord. Unfortunately, even though, for many Canadians buying your first home is something that is ranked very high on the “to do” list, many first time buyers become discouraged and they find that the mortgage qualifying process can be a bit overwhelming… It doesn’t have to be.

There are many different banks and lending institutions that would be happy to provide you with your first mortgage and here is a summary, with a few tips, of what they are looking for. I like to use the acronym (I.C.E.) which stands for Income, Credit, and Equity.

1. I –Income: When buying your first home the mortgage lender(s) will like to see that you have a good job and that you make money to cover your mortgage payments. Typically, unless you have past experience in the same industry, they will want to see that you are not on probation and they will ask you to provide them with:

a. A job letter from your employer that states you start date, position, and income / wage.

b. Your most recent pay stub that shows your current year to date.

c. They may also ask to see your past 2 years T4’s or your tax returns if we are using any overtime income.

2. C – Credit: Your credit bureau is very important when applying for your mortgage as it shows the lender(s) your track record and ability to pay back money that you have borrowed. Typically the lender(s) will like to see a credit score of 620, or greater, but they might be willing to work with a slower credit score if you can come up with a larger down payment. Here are some tips for maintaining / building your credit score:

a. Pull your own credit bureau and make sure that everything on your bureau is accurate. Unfortunately, even the credit bureau companies make mistakes and, as consumers, we have to stay on top of the credit companies as they might have reported something that could have a negative impact on your credit score. Please visit www.equifax.ca and request a copy of “your Equifax Credit Report.”

b. Keep your credit card balances below 75% of your allowable limit

c. Do not have too many creditors “pull” your credit in a short period of time

d. Pay your minimum payments on time. if you can’t make a payment, call the creditor and make payment arrangements with them.

3. E – Equity (Down Payment): in an ideal scenario the lender(s) would like to see that you have saved your 5% down payment but there are other solutions if you cannot come up with the 5% down payment on your own.

a. Gifted down payment – the lender(s) will allow you to use a gifted down payment from a family member and they will request a signed gift letter from the family member.

b. Borrowed down payment – the lender(s) will allow you to borrow the down payment from a line of credit or loan as long as you can cover the monthly costs on top of your mortgage costs.

c. “Zero down” – There a still few lenders that offer a “zero down” mortgage but you will have to have strong job tenure and good credit. This is a great product for those of us who have trouble saving up for the down payment.

There are many different mortgage products available for the first time home buyer and there are many solutions that can be offered to overcome hurdles along the way. I strongly recommend that anyone who is interested in purchasing their first home to please get in contact with a professional mortgage broker. A mortgage broker will work hard to get you the very best mortgage to suite your needs and they will do everything that they can to ensure the mortgage qualifying process is a smooth and seamless as possible.