How to get pre-approved for a mortgage

If you yearn to be a homeowner then you need to start taking steps today to make that dream a reality. Here are the things to begin doing right now to eventually get pre-approved for a mortgage.

IMPROVE YOUR CREDIT SCORE

The most important thing is to pay all bills in a timely manner. If you’re prone to forgetting, use a calendar — digital or analog — to help you stay on track. You also need to keep expenditures on your credit cards at or under 30 per cent of their full capacity. It’s important to have one or two credit cards to establish credit, but to optimize your score, keep expenditures to a minimum.

START SAVING

If you wish to be a homeowner you’ll need to be able to make a down payment. The current minimum rate is 5% (for homes less than $500,000), but if you can afford 20% down you’ll not only lower your balance but also avoid having to get private mortgage insurance (PMI). In addition, you’ll need to be able to cover closing costs as well as a bevy of other expenses that come with buying a home.

PAY OFF YOUR DEBTS

While you don’t have to be at ground zero in terms of debt to get a mortgage, the less you owe, the better the rate you’ll be offered. It’s also important to avoid accruing new debt until you’ve closed the deal. A lender may alter their stance if your financial situation changes before you’ve signed on the dotted line.

The current minimum down payment in Canada is 5% for homes less than $500,000