Four Tips to Qualify for a Home Purchase in 2021
Low mortgage rates, pent-up demand, and reduced supply during the pandemic have ignited a fire in the Canadian housing market.
Though we are seeing interest rates hike up a little earlier this year, mortgage experts believe that mortgage rates will remain low in 2021.
From The Guardian, “Buyers sought bigger properties in suburbs and smaller cities…They were able to do so because they were either among the lucky ones who kept working or because they benefited from generous emergency assistance.”
Disposable income increased 10 percent from 2019 as households “hoarded” salaries and government benefit payments — and really had nowhere to go.
Being prepared for the home buying process and knowing what to expect will help you stay organized and be in a better position to eventually and successfully buy your home.
If you are looking for your first home, it can be both an exciting and worrisome time!
There are First-Time Home Buyer Incentives that can help reduce your monthly mortgage payment without increasing your down payment. Inquire with us so we can help you navigate all the government incentives that may be available to you.
Below are four tips on what to do and prepare to qualify for a home purchase:
- Know your credit score and do necessary credit repair and improvements. Looking to your past will help mortgage lenders know what to expect in the future. Are you able to pay your bills on time? Have you had late payments, disputes in the past with creditors, etc.? For large banks and credit unions, typically anything above 680 is considered good. For smaller banks and other lenders, a lower credit score is accepted.
- Find out what you can comfortably afford by using our mortgage calculator to calculate down payment, monthly mortgage costs, etc. A borrower’s capacity to pay the mortgage is one of the lender’s main focuses. There are a variety of factors that help determine borrower capacity which includes income, assets, and liabilities. Tip: reduce your debt.
- Work stability is a key consideration in your eligibility for a mortgage. The more consistent your income, tenure, and stability in your employment the better. New employment is fine as long as your income is guaranteed. For most non-salaried employment, such as self-employment, a lender will use an average of the last two years of your income.
- Get Pre-Approved! Learn what documents you’ll need to get a mortgage pre-approval. Check out our Mortgage Pre-Approval Checklist!
With your pre-approval in hand, you’re ready to start your home search! You’ll be in a more confident position to look for and place your offer on a home!
All in all, buying a home will be among the largest transactions you’ll enter into over your lifetime. And the rules governing borrowing for home-buying change over time, too.
The COVID-19 pandemic has added new uncertainties for today’s prospective homebuyers. The price of housing, the stability of income, and the overall health of the Canadian economy have all been impacted by the pandemic—and the effects are still unfolding.
However, the four tips above offer practical advice that can provide a guideline and plan for first-time homebuyers through a changing landscape.
It is highly advisable to speak to a qualified and experienced mortgage broker like Butler Mortgage who can run through penalty calculations and advise on many other aspects of mortgage solutions.
Looking for Mortgage Solutions During Pandemic Times?
If you were in the process of looking to buy a home or you own a home and looking for the right mortgage solutions during this pandemic, don’t hesitate to connect with us.
We are offering historically low mortgage rates. Speak to one of our senior mortgage agents to understand where you are today and what choices you have.
Avoid a bad future financial position. Avoid confusion. Avoid headaches.
CONTACT US any time and let’s start the discussion.