So you want to purchase a home, and stop renting. Great choice, and therefore you want a house, but you need a mortgage. You must first find out how much you can borrow from a lender. As a Mortgage Broker, I can answer this question for you, but I’ll need some information from you first. I’ll require your current employment status, bills, savings, credit score etc. But to prepare yourself prior to speaking with me, there are worthwhile things that you can do to best prepare yourself for the home buying process.

Here are some helpful pointers and tips to get you ready.

Income declaration:

If you earn your income via commission, lenders will want to see a 2 year average income for commission/bonus income to use it at all. Make sure to file your Taxes each year and keep your Notice of Assessment at T1’s. Your NOA will be mailed to you by the CRA, and you can retrieve your T1 from your accountant or online tax service (Simpletax, Turbo tax, etc.)

Down Payment:

You’ll need a minimum 5% of the purchase price for the down payment, and 1.5% of purchase price to cover closing costs. This CAN be gifted from an immediate family member. If you put 20% down, some lenders will only request $1,000 instead of 1.5% of the purchase price.

For Ex.

$600,000 home = $30,000 minimum Down Payment, plus $9,000 for Closing costs

Co-signer or Co Borrower:

A co-signer can be a parent/guardian that is willing to go on the mortgage contract with you in order to borrow more funds. If you have poor credit, a Guarantor can go on the mortgage in order for you to be approved.

Budgeting – Its quite obvious that you will have to start saving money. Use www.mint.com to keep track of your finances.

3% of all unsecured debt has to be used as payment – even though reality payment is lower. $10K on a credit card = $300.00 payment and nearly $75,000 less mortgage buying power!!!

Saving in RRSPs :

Save on Income Tax for filing next spring, lock it away!

You are able to use up to $25,000 each TAX FREE as a First Time Home Buyer on a qualifying home value. Once you know what you can save per month, we can make it automatic (like a bill payment) OR you can save organically and then deposit every month or two into your RRSP account.

Check your Credit Score:

Equifax Customer Inquiries 1-800-465-7166

Pull your own credit bureau. Identify any errors or issues and fix now. You can call me when you get it, we can review and I can provide some tips on how to improve if need be!

Pay all bills on time, more than minimum payments!

Super tip: Use less than 50% of available limit on cards – Going over 65% of limit reduces your score – EVEN if you are NOT over limit! Pay on time and pay down debt a bit over next few months….then call to increase your limits! This will lower your % of credit utilization immediately for free and be a plus to your credit score.