3 things you want to know before shopping for your mortgage
Make sure you have a good profile
The right profile is built on the basis of several elements. During your first meeting with your advisor or broker, you will be asked important questions to determine whether or not you are ready to apply for prequalification.
Do you have a job? What is your annual income? What is your marital status? Do you have debts? These questions are usually the most decisive during the first meeting.
- Your employment is a guarantee for the financial institution that undertakes to finance your purchase. A stable job reassures your lender and has a positive impact on your profile.
- Your income determines whether or not you will be able to meet monthly payments in addition to current expenses and debts you already have.
Your marital status is very important because if there are two of you applying, you can increase the chances of getting a larger loan. - One of the things you don’t routinely do is check your credit report before you embark on the process. Going through your file allows you to make sure that there are no anomalies that could prejudice your request.
Establish your current and future budget
Making a budget is essential in order to prepare yourself for the amounts you will have to pay during your purchase process such as the down payment, notary fees, but also after the acquisition of your property such as property taxes.
Knowing where you are currently in your finances will allow you to make a realistic budget forecast and to make sure you are ready to commit to the purchase of a property because let’s not forget that in addition to the monthly payments, other expenses are to be covered such as municipal taxes and condominium fees.
Know the qualification rules
As of June 1, 2021, authorities have tightened borrowing rules by increasing the qualifying rate also known as the “stress test” for all types of loans. This rate fell from 4.79% to 5.25%, which means that households will have to demonstrate more borrowing capacity than before. This new rule was put in place to stabilize the market, protect households from debt and financial institutions from non-payments.
There are two things that can help put the odds in your favor and ensure you pass the test. Before you apply, be sure to reduce your debt as much as possible. You can also increase your down payment, which will decrease your debt ratio and also the amount you have to borrow on your mortgage.
