Planning a Future Home Purchase? Focus on These Areas:
August 9, 2017 | Posted by: Shayne Beeler
I’ve been fortunate to meet several Clients this year that while targeting a purchase anywhere from 6 to 12 months or more into the future, they saw value in starting the planning process right away. For the record, that’s always our answer to “when is the best time to sit down and start the process?” As soon as possible - you can never start “too soon” as there is always value in doing an assessment of your three key areas.
I’m sure we’ve all heard enough in the news over the last several years to be aware that many mortgage rule changes have been introduced through new regulations. Although they’ve targeted a range of areas, we’re finding that an applicants credit quality is continually being more scrutinized with each change. Making subtle improvements to your credit takes time, hence the value in starting the planning process early. But where should you emphasize making these tweaks? This is where we focus on what resources are available and work through a game plan to make you the strongest borrower you possibly can be. A hint for now: focus on your credit card and credit line balances.
Where is the down payment coming from? If you’ve accumulated the funds, do you/will you have access to them at time of purchase (think GIC or employer contributed share of some RRSP’s)? Do you have the minimum 5% available and if you have more, how close are you to 10%, 15% or even 20% down? What are the cost savings of these key milestones? Many Mortgage Brokers will agree that down payment confirmation to fulfill lenders approval requirements can be cumbersome. The good news, if we prepare in advance, is that it can also be very straightforward with the right attention to detail and planning. A tip for making things straightforward: where possible, focus the accumulation in one account.
Different income “types” have different document requirements from lender to lender. Are you salaried, hourly or do you earn commission? Do you earn a significant portion of your income through overtime or bonuses? If we’re projecting into the future, will your income change/increase/decrease, etc.? What documents should you make a point of saving copies of each and every year? Regardless of your income type, it’s always beneficial to maintain records of your T4(s), T1 General and Notice of Assessment each year. Having these items in complete form (all pages) and quickly accessible can shave significant time off the eventual approval process.
So if you’re planning a purchase in the future, contact us right away. I’ve never heard a Client suggest “I wish we didn’t start the process so early….”