How to qualify for a mortgage?

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Owning a home is a dream for many and it is one of the most secure investments when it comes to the home where you permanently live. Despite some economists predicting the real estate market crash, home prices have demonstrated to go up throughout the years with corrections along the way.    Home prices have spiked in many countries making difficult to qualify for a mortgage however we will show you some financial strategies to help you qualify for a mortgage:

Strategies to help you qualify for a mortgage:

First: Increase your credit score:

How to increase your credit score? 

Credit score is one of the three most critical aspects that a lender reviews when approving a mortgage along with the stability of employment and the type of property to be mortgaged. Most Lenders’ products have minimum credit score requirements that must be met by the Borrower.  Therefore it makes sense to increase your credit score to be able to qualify for better mortgage rates and terms on your mortgage.    

How can you increase your credit score? In order to increase your credit score follow this steps:

  1. Pay your bills on time:  Missing or late payments will have a negative effect on your credit score.
  2. Amount owned: Maintain balances below 30% of credit limits.
  3. Credit history: Get a credit card if you don’t have one to establish credit history.  The longer you have a credit line the higher the credit score. In the case that you need to close a credit account close the most recent one.
  4. Avoid credit inquiries: Multiple inquiries can lower a credit score.
  5. Have a mix of credit products: The best credit combination is a store credit card and a major credit card and avoid having multiple credit cards, too many credit cards and loans  lower an individual’s credit score.
  6. Use credit instead of cash: Using credit responsibly is one of the fastest ways to increase a credit score, therefore if you avoid credit cards you won’t be able to show your credit patterns, however remember to pay your minimum monthly amount on time.

Note: In case of bankruptcy remember that it will show in your credit report for 6 years in Equifax and 7 years in Transunion.  In case of credit counselling remember that it will show in your credit report for 3 years in Equifax and 2 years in Transunion.

7. Monitor your credit score regularly: By monitoring your credit score you can make sure it is correct and reflects your current situation. You can use a free service such as Mogo that not only gives you tips on how to improve your score but let’s you monitor your score for free. Sign up by clicking the banner below:

Second: Compare mortgage rates and lenders products.

When it comes to loan rates, every decimal point matters. How to save thousands on loan interests? Simply, by comparing different lenders that match your specific loan profile you can save thousands of dollars. You see, a borrower qualify for a loan depending on his/her own credit characteristics such as credit score and level of income and at the same time lenders offer different loan products based on those characteristics. Not all mortgages are the same, some offer more flexibility for repayment than others, other offer liquidity options such as lines of credit, other mortgages have fixed rates, etc… There are many options for each borrower however it is virtually impossible for an individual to compare all the lender possibilities at once. However with today’s technology there are great services out there where people can save thousands on interests and skip negotiating with different lenders and still find loans that match their profile getting the best loan according to their needs at the lowest interest rate. Try to use a service such as Breezeful an online mortgage broker that helps you get the best mortgage by searching over 30 lenders to get you the most competitive rate. Breezeful,  a more transparent, faster, and cost-effective option to a bank.  Mortgage shopping made easy. Click the banner to learn more:

Join thousands of Canadians who are already saving money in their mortgages with the right financial advice. Try also Homewise the easiest way to get the best mortgage online through a 5 minute application. You will get help with your purchase, pre-approval, refinance and mortgage switch. Click to learn more.

Third: Understand how much you can afford when purchasing a new property.

If you need to sell your house before buying a new property find out first how much is your current home worth. Start the buying and selling process, by understanding how much your home is worth. A realtor can provide you with property comparables, however the most accurate way to find the approximate market value of your home is though a service such as Properly. We believe it is the most innovative way to sell your house. Sell your house without even showing it. Click he banner to learn more.

What if you can’t qualify for a loan because you don’t have stable income?

Some lenders in addition to offer competitive loan rates offer products targeted to Gig workers. Apply for a quick loan directly using the following links:

Forth: Calculate the down payment required to buy your house and how you can save to accumulate this down payment.

Mortgage Loan Calculator
Enter a "0" (zero) for one unknown value above.

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At this point you might be wondering how are you going to save the money needed for your down payment. We can help you explore what is the best investment vehicle to achieve your savings goal according to your level of risk. If you find that you would like additional help in revising your projections we can test your initial assumptions and help you build a personal financial plan. Feel free to book an online meeting with us:

-alternatively you may contact the author. Call 289-856-8397 or send an e-mail to learn@moneylesson.org

This article is an expression of the author’s personal opinions. The Company will not be held liable in any way for the opinions expressed herein.  

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