Mistake #1: Thinking banks are the first and best place to go for a mortgage.
Mortgage brokers can often beat bank rates by using different lending institutions. The biggest and most common misconception is you must go to a bank to get a mortgage. But, if you need a mortgage, go to a mortgage broker who will shop many lenders to find you the best product.
Mistake #2: Not knowing your credit score.
Your credit score is such a huge factor– and will continue to be with lenders. Your application is strongly based on your credit score. The first thing lenders look at is your history and your score. And from there, they build your file.
You must know where you stand because so much of your lending availability is based on your credit score. In just a few minutes your mortgage broker can help you obtain a copy of your credit report and go through it with you to verify the information is true and correct.
Mistake #3: Shopping with too many lenders.
When you shop on your own from institution to institution, every time somebody goes to qualify you or look into your file, your credit score is pulled. If you go to a mortgage broker, your score is only pulled one time.
Mistake #4: Not keeping your taxes up-to-date.
If you haven’t filed your taxes and kept them up-to-date, you can’t get a mortgage. You can have a whole mortgage in place, but when the lenders call for your notice of assessment (if your tax filings are not up to date), you will not get a mortgage until they’re filed and you’ve received the Notice of Adjustment for the latest year.
The Forgotten Mistake You Must Consider When Getting Pre-Approved For a Mortgage
Understand the real estate market you qualify in today will adjust in the future.
In April 2010, the Canada Mortgage and Housing Corporation changed the rules about how to qualify people. Before April 19, people could qualify on a mortgage for a variable rate (prime minus 0.3% was the average).
So people were qualifying for mortgages at a temporary rate of only 1.95% on a 3-year term, which was normally about 3.5%.
That’s a great interest rate. But you must consider what will happen in five years when mortgage rates go up and your payments go up.
The mortgage rates we’ve seen in the last year are the lowest in history. But in five years, mortgage rates will likely be back in the “threes.” And then, if you go to renew your mortgage, you must be able to carry that mortgage payment at a higher interest rate.
Today, if you have a mortgage for anything less than a 5-year term, new CMHC rules state you must qualify at the posted rate.
Keep in mind, what goes up, comes down and what goes down always comes up. So know your personal budget and limitations for payments – and think ahead.
If you’re a newlywed and buy a home, what if you have a baby in the next five years? That’s a big portion of your personal income that you’ll need to redirect.
Securing a mortgage isn’t always about getting the best deal – it’s more about getting a home you want and establishing yourself as a homeowner. That means not overextending yourself and taking your qualifying amount to the maximum. Leave yourself some breathing room because nobody knows for sure what the future holds.
To get the best council in arranging your mortgage, call GLM Mortgage Group. We always return our calls within 90 minutes.
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