First Time Home Buyer

Your Dream Home Awaits.

Start Here: What You'll Need To Get Your First Mortgage

When purchasing a home your mortgage will be the single most important financial decision that you will ever make. Being a first-time home buyer can be a very overwhelming experience, but it doesn’t have to be that way. Simplifying the process is what I do best. I will explain all your options, recommend financing solutions to have your mortgage approved at the lowest rate with most flexible terms and educate you on all incentives available to you being a first-time home buyer.

What you’ll need to get started:

Down payment will be verified with a 90 day bank account history. Account ownership and account number must be visible.
Closing costs require that you have an additional 1.5% of the purchase price on top of your down payment.
T4’s for the last 2 years, Notice of Assessments for the last 2 years, current letter of employment, recent paystub.
Self employed borrowers will require full T1 Generals and Notice of Assessments for the past 2 years, articles of incorporation or business license, 6 month business bank statements.
If down payment is being gifted( must be by an immediate family member only) they will fill out a gift letter issued by the lender and confirmation of the amount being deposited into your account.
Any large deposits or transfers between accounts must be confirmed by 30-90 day bank history of each account .

The Do's and Don'ts

Don’t quit your current job, change your status from full time to part time or do anything to reduce your current income.
Don't spend any of the money set aside for down payment or closing costs.
Don't forget to tell us if you are on maternity or parental leave, or will be in the near future.
Don't stop paying your bills.
Don't pack away documents that may be required to verify income or down payment.
Don't neglect to tell us if you're on probation.
Don't make large deposits to your bank account without supporting documents.
Don't buy a new car, furniture, or apply for new credit or loans without first discussing it with your realtor and mortgage professional.
Don't cosign a loan or mortgage for anyone else.
Don't change anything on your transaction without notifying your realtor and mortgage professional.

Do get pre-approved before looking at homes.
Do contact a mortgage professional to get started.
Do have your down payment and closing costs organized 90 days before starting the house hunt. If you have money in multiple accounts transfer it all in one account and leave it in for 90 days
Do keep track of your credit before looking to buy. Better credit means better rate.
Do ensure your probationary period ends if you are on probation when starting a new job before looking for financing
Do keep on hand your last 2 years of income documents( T4’s, Notice of Assessments or T1 Generals) if your thinking of buying a home.

Common Mistakes When Applying For A Mortgage

Not considering a mortgage pre-approval before shopping for your dream home.

Getting pre-approved for a mortgage is a crucial step in the home-buying process. In many cases, home-buyers under or over-estimate how much they can afford to pay for a home. Being pre-approved will have you looking at homes within your price range. A pre-approval also eliminates any surprises that could arise due to credit ratings, which in turn affects the ability to obtain a mortgage and complete the purchase.

Failing to understand the impact of your credit score.

Understanding your credit score is very important for many reasons, not just when applying for a mortgage. From qualifying for a credit card or a loan to getting utilities or renting an apartment can be impacted by how good your credit score is. Buying a house is no different, and knowing the credit score needed to buy a house is an important first step in your homeownership.

Credit scores help determine the interest rate and other costs associated with a mortgage. If your credit scores are high, it tells lenders that you’ve paid your bills on time and haven’t “maxed out” your credit cards. Lenders see you as likely to pay your loan payments consistently and on time. They see you as a low-risk investment and offer you a lower interest rate and other costs on your mortgage.

If your score is lower, lenders see you as a risky investment. They will charge you a higher interest rate in exchange for taking on this risk.

Focusing solely on the interest rate.

Often clients give more thought to interest rates than the mortgage solution. Rates need to be considered, but there is much more to consider. Customer service and communication are more important than the rate. Your mortgage professional will explain all the options you have along with the rate so that you better understand the overall cost of homeownership.

Not knowing all your down payment options.

There are different options available, depending on how much of a down payment you can afford. Your mortgage professional will discuss the low down payment options.

The minimum is 5% down, which requires mortgage default insurance, which can either be paid upfront or added to the amount of the borrowed funds as well as a conventional mortgage option of a minimum of 20% down. Your mortgage professional will also discuss with you utilizing RRSP’s if this is an option as well as a gifted downpayment and all the first time home buyer privileges.

Changes to your financial situation before closing.

When you apply for a mortgage, lenders will pull credit bureau reports, verify employment, and view bank account details to ensure that your financial picture qualifies for the mortgage you are applying for. Changing jobs, skipping or missing credit payments, or incurring more debt may jeopardize closing on your home. Therefore, it is best to hold off on any changes that may affect the closing of the mortgage deal.

Forgetting about closing costs.

In all the excitement of the home purchase and being approved for the mortgage, closing costs often get overlooked. There are certain details and associated costs to consider. When calculating closing costs, it is a requirement to have an additional 1.5% of the purchase price to cover costs for such things as home inspection, lawyer fees, land transfer tax and property tax, and utility bill adjustments.

Bill Schmidt Mortgages

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