The process of buying a home can be confusing if you’ve never been a home owner before. When it comes to first time mortgage information, it’s always easier to speak to an expert. Since finding the right mortgage has changed so much, most mortgage applications are treated on a case by case basis as each application is unique in its own way. This list will outline first time mortgage information that is important to first time buyers:
First Time Mortgage Information:
- Credit: What is your credit score (excellent, good, fair, poor, and bad)? The score is important, as is the activity on the report. Banks put less emphasis on the actual score and more emphasis on what the activity looks like (re-payment habits, credit tenure, inquiries, etc.)
- Down payment: Once determining how much of a down payment you need, the bank will need to know where the money is coming from (this is an important requirement as the anti-money laundering act plays a big role now). The minimum down payment required by any bank is 5% of the purchase price.
- Employment: Are you employed, self-employed, commission based? Do you need your bonus or part time income to make the deal work as well? Employment status is the next most important factor in determining if you can afford the mortgage you’re seeking. More complex types of income (self-employed, part-time, commission) require further proof is stable income by way of different supporting documents. Job tenure is also very important. Banks will put emphasis on how long you’ve been at your current employer and depending on the nature of the employment, they may ask for previous employment information as for further validity.
- Debt: How is your debt load? Do you already carry a lot of debt, each with its own monthly payment obligation? Debt impacts your debt servicing ratios (GSD & TDS). These are the two ratios used by ever bank to underwrite each deal. They cannot exceed a certain percentage (each bank will have their own guidelines). Things that will impact your ratios significantly are; car loans, student loans, high credit card balances, lines of credit, personal loans, pay day loans, etc.).
Finding consistent first time mortgage information is probably less easy these days. As banks become stricter with lending guidelines and as the government changes banking rules; information changes subsequently. However, the first time mortgage information you need is not as black & white as it used to be. There is much of a grey area which most consumer now fall under. Be fair to yourself by speaking with a professional such as CMS. Share everything you can in the early stages as it will be of most benefit to you in the later stages of the process as we can cater the first time mortgage information you need to your specific scenario.