I advise my clients that it is important they are clear on what makes up the gross income on their pay cheques. Often clients believe that the amount they see as their total pay is what they earn every time, however, many may earn overtime, commissions, bonuses, vehicle allowance, living allowances etc which are over and above their base guaranteed pay. This can create confusion as some of the extra pay categories are treated differently.
One important piece of advice I give to my clients is to get their financial house in order well before applying for a loan. Know your numbers!! TThis includes: 1. **Check and Improve Credit Score**: A good credit score is crucial for getting a favorable mortgage rate. Clients should review their credit reports, identify any errors, and work on improving their score if necessary by paying bills on time and reducing outstanding debt. 2. **Save for a Down Payment and Closing Costs**: Clients should start saving early for a down payment and closing costs associated with the mortgage. Lenders often require a certain percentage of the home's purchase price as a down payment, typically ranging from 5% to 20% or more, depending on the type of loan. 3. **Organize Financial Documents**: Clients should gather all necessary financial documents, such as pay stubs, bank statements, tax returns, and investment account statements. Having these documents ready will streamline the application process and make it easier for the lender to assess their financial situation and helps a broker give them sound advice. 4. **Avoid Major Financial Changes**: Clients should avoid making any major financial changes, such as switching jobs, taking on new debt, or making large purchases, before or during the mortgage application process. These changes can affect their eligibility for a loan or the amount they qualify for. 5. Lastly, and most importantly, **Get Pre-Approved**: Getting pre-approved for a mortgage before starting the house-hunting process can give clients a better idea of how much they can afford and make them more attractive to sellers. Pre-approval involves a lender reviewing the client's financial information and providing a conditional commitment with a rate hold for a specific loan amount. This is where we shine as mortgage brokers. As a mortgage broker I can assist with all those steps. By following these 5 simple steps and preparing in advance, clients can improve their chances of getting approved for a mortgage and securing favorable loan terms and this way, you know your numbers!!
The best advice I could give to a client preparing for the mortgage application process is to be honest! Whether it's about income, downpayment, debt, or credit, honesty is truly the best policy -- especially when trying to get approved for a mortgage. Everything has to be verified before final approval anyways, which means the truth always comes out. Save yourself the time, headache, and stress and be honest from the start!
Too often, unprepared buyers wait until they find a house to get pre-approved. That puts them in a disadvantage compared to buyers who are ready to seal the deal. To be a prepared buyer, get pre-approved before you find your dream home. Your bid will be stronger because it's backed by a lender who is ready to close. Plus, a hard credit pull doesn't significantly impact most people's credit. Even if you rate shop, credit bureaus will consolidate your inquiries into one - meaning, your credit is minimally affected.