In my time as a mortgage broker, there have been many instances when I have been asked “Is it a good time to buy a home?” If you were to hear the words of many Realtors, you would hear the words “Its a great time to buy a home”. This may sound self serving, and to some extent, that may be correct. The subject of this post is to dig deeper as to when it is a good time to buy, and what constitutes a good time to buy a home.
I have had a in interesting case with a returning client who came to me recently for help with his mortgage. As a mortgage broker in Vancouver, it is necessary to be creative in making solutions work for my clients, which currently can often involve secondary or private lending solutions. This was a case where such creativity would be necessary.Read More
Among the services I provide to my clients, I consider myself to be a “first-time home buyer mortgage broker“. As a first time home buyer mortgage broker, I know how difficult it is to get into the real estate market, particularly in Vancouver, and it brings me a particular amount of job to help someone get past the challenges if being a first time home buyer.
I have recently completed an e-book and will be launching it soon. I believe it will be very helpful for not just first-time home buyers, but for anyone who is not as knowledgeable in residential mortgage lending, about how to make your home buyer mortgage broker application appealing to a mortgage lender.
As a sneak preview, here are three tips on improving your mortgage application as a first-time home buyer.
3 Home Buyer Mortgage Broker Tips
- Take advantage of the home-buyers plan to fund your down-payment. This program is not technically ONLY for first-time home buyers, but all first-time home buyers are eligible. Under the plan, you can borrow up to $25,000 from your RRSP for the purchase of an owner-occupied residence. If you and your spouse are both applying, then you can withdraw $25,000 each. It is a loan, so it has to be paid back over 15 years (or 1/15th of the loan will be added to income for that year). However, there is no withholding when you withdraw it, it does not have to all be declared as income on any given year, and you don’t even have to use all of it for down-payment! You can use it for any purpose that you need it for. A good mortgage broker, like myself, can help you with some of the finer details and complex situations that often arise from these situations.
- Make sure you pay your bills on time. If you have a high balance on your loan, or you have a lot of debt, those also have a significant negative impact on your credit score, but you can get the bills down and there is no record of your high debt levels. However, when you miss a bill payment, it stays on your credit bureau for 6-7 YEARS. This not just negatively impacts your credit score, but lenders look at this when assessing risk, and they have been particularly uncompromising and (unreasonable, paranoid, strict…and other words that I cannot put in print) in the last few years. While you likely do not have to wait 6-7 years to become bankable if you have had gone through a period of bad credit, the less negative credit on the bureau, the better. At least make the minimum required payments and you will go a long way to making yourself appealing to them.
- Having no credit is just as bad as having bad credit. Many people feel that not requiring credit should prove your ability to pay your bills and should be good evidence of credit-worthiness. This is not how mortgage lenders think. If you currently do not have any credit, then you do not have any documentation that you are an acceptable credit risk, and no matter how strong your income is, you will have difficulty obtaining a prime mortgage approval. Make sure you have at least 3 different credit facilities in your name. (Secondary credit cards in a spouses name are not considered acceptable for establishing your credit).
I am excited to launch my home buyer mortgage broker e-book soon, in which I go into much greater detail and give many different ideas to help home buyers prepare for home ownership, but as a mortgage broker in Vancouver, you are welcome to contact me in the meantime to discuss your circumstances and see if there are any options for you.
This is a continuation of the article published here about the OSFI B20 morgage guidline changes for 2017.
If you are familiar with mortgage brokers at all (which you probably aren’t) you would know that we also have alternative sources of lending for situations where a mortgage borrower will not qualify with a prime institution. We have what we call “B” lenders, who have higher rates but more flexible lending criteria, and we have private lenders, which are individuals and corporations who can lend money on on anything that suits them.Read More