Buying a home is most probably one of the biggest investments of anyone’s life. And, honestly, it’s not that easy to get a home of your choice without a refined financing plan. Well, to deal with that you can surely consider hiring private residential mortgage services, and buy a home on your budget. Still, the mortgage approval process can be a little difficult for individuals who haven’t prepared well.
To make the whole grind easy for you, we have summarized a brief catalreogue of some important things you need to consider before applying for a residential mortgage. Please have a look!
Know Your Borrowing Limits
It’s important to understand the basic rules or tactics lenders use to check your eligibility for the loan. Generally, most lenders use the 28/36 rule for this purpose. That means your monthly payment on a home mortgage should not be greater than 28% of your gross income, and your other debt payments, such as car loans, your potential mortgage and any other installment payments you pay should be less than 36%. Although it’s not a hard and fast rule for every loan approval, most lenders use this tactic, so it’s better to have an idea about it.
Increase Your Credit Score
Increasing your credit score can help you get swift mortgage approval with a low interest rate. Therefore, it’s better to know your scores from the three major credit bureaus. There are many ways to get this information, for example,
- You can acquire paid services for a detailed credit score report
- Otherwise, you can consult various credit card companies that provide free information on this aspect
Knowing your credit score will help you improve its value, by avoiding things like opening new accounts, and taking new loans or doing anything that needs a credit check.
Be Clear About Your Requirements
Most lenders require a standard package of materials from the client before listing their name for the loan. This package generally includes:
- A month of currently pay stubs from any buyer
- Your latest two years worth of tax filing
- Three months of bank account statements
- Written details of non-payroll large deposits and withdrawals
It’s important to have these documents in your hands before applying for a home loan, or hiring any of the residential mortgage providers in Ontario. In a nutshell, improving your credit score, having knowledge of your financial capability and a clear record of required documents will make it easy for you to get your mortgage approved.