A home purchase is undoubtedly a major life decision, it is a place where we put down roots and make countless memories that last a lifetime!
With mortgage rates sitting at record lows across Canada, buyers have been itching to purchase a property. As per the current trend you can lock in a five-year fixed rate for as low as 1.35%. And despite the challenges – inflated home prices and limited inventory — there’s a considerable chance that mortgage activity will continue to stay strong in 2021. Canada’s monetary policy has however committed to keeping the policy interest rate at the effective lower level until economic slack is absorbed and inflation target is achieved. However, the rate could be poised to surge later this year.
So, ready with your deposit, need to apply for a mortgage? What could possibly go wrong? Well, quite a lot. Make sure not to get caught out.
The mortgage process can be a headache, one has to jump through hoops, make note of key dates and lots of tiresome work. Getting your application rejected after all the hassle can be tragic!
Luckily, we have got you a list of Dos and Don’ts to get you through the mortgage process and help you avoid some of the more common pitfalls along the way.
- Get Pre-Approval
Getting a pre-approval will help you find out your affordability. So that you don’t have to go out of your budget. This can help you make a competitive offer with a pre-approval letter since the lender has verified income and assets.
2.Keep Documents Ready
Mortgage lenders like to see the documentation for various aspects like income, employment verification, and your current debts or obligations. The process can go smoothly if you have good records of all the documents – bank statements, tax return documents etc.
- Continue your Payments
Purchasing a new home is exciting and thrilling. In this excitement, we sometimes tend to forget about our other payments like monthly bills – rent, utilities etc. It is important to note lenders check your payment history while evaluating your mortgage application. To avoid missed payments that can hinder your chances of reliability and maintain consistent payments that showcase reliability.
1.Don’t Shift Financial Situation
While securing a mortgage loan, it is crucial to “freeze-frame” your financial situation as steady income without changes can help the process go smoother. From application submission through closing day, don’t shift your financial situation, change your job as it can impact the opportunity for loan approval.
2.Don’t make major purchases
Focus on saving and not spending your money. You may need funds for payments such as a money deposit, a down payment, or closing costs. Strictly avoid making any large purchases, such as a new car, furniture etc as this can affect your credit.
3.Don’t Switch/Close Accounts
Switching bank accounts can definitely hinder the mortgage process. You will traditionally be required to submit the bank statements of 3-6 months, for showcasing your financial history. Changing/ closing accounts can make it increasingly more difficult to get documentation when you’re no longer a customer.
Remember the saying: Patience is virtue while getting through your mortgage process. As not every mortgage journey is plain sailing. It’s good to be prepared for a few bumps in the road. Keep resilient and try to stick to the above-mentioned things you should do and things you should completely avoid to strengthen your chances of getting a mortgage and make your application the success story you’re hoping for!