Common mistakes that people make when they apply for a mortgage

By Irma Sebastiano September 26 2018 Comments

Shopping for a home can be an amazing experience, it is both extremely exciting and exhilarating to become a homeowner. The process however can be exceptionally daunting especially for first time home buyers, so it’s easy to overlook a few things in your excitement to get started. Here are a few common mistakes people make before they apply… and some tips on how you can avoid them.


1. They don’t know understand their own finances

You should really know the basics -how much money you make, how much debt you have and what your monthly and yearly expenses look like before you start this process. Knowing your own personal finances and where your money is going every month will help you significantly in determining what you can afford comfortably.

2. They don’t know their credit score

You need to know what lenders are going to see when they run your credit check. In Canada there are two reporting credit bureaus that keep track of this. Equifax and Trans Union. It is important to get your results from each of them as they sometimes slightly different information on them. It is also good to make sure there aren’t any mistakes, and if there are you can contact the companies directly to resolve them. There are a number of companies that offer free credit checks and monitoring on behalf of both Equifax and Trans Union so this information is easily and readily available.

3. Not getting a pre-approval

A pre-approval goes through the process of analysing your financial situation and lets you know exactly how much someone is willing to lend you. This will help eliminate needless window shopping and disappointment when you realize your dream home is out of your price range. Once you know how much you can spend, you should determine if that is how much you want to spend based on your own personal goals. Just because you are approved for a certain amount does not mean you want to spend that.

4. They don’t shop around

So many people assume that all lenders are created equal and have the same rates, and lending criteria when the reality is that this couldn’t be further from the truth. For example, banks are federally regulated and must apply a financial stress test that was introduced at the beginning of 2018 which reduces how much of a mortgage some people can qualify for. Credit Unions, along with private and alternative lenders which fall under provincial legislation are not bound by the same restrictions.

5. Not working with a mortgage broker

A mortgage broker knows the ins and outs of lending criteria and will have the connections needed to help match you with a lender that is right for your situation. A mortgage broker will ensure that you have all the information that the lender needs to make a decision as quickly as possible and a broker can shop around to different lenders to help get you the best possible terms and interest rate.

If you are ready to apply for a mortgage, I can help you avoid these and other mistakes. Give me a call today to get started.

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4725 Dorchester Road, Unit B4, ON. L2E 0A8 irmasebastiano@rmabroker.ca 1 - (905) 321-9396
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