A good credit rating is built on a number of financial factors including paying your bills on time and the length of your credit history, but loans can also be a source of bolstering your credit score in a positive way. While this means that loans can actually be a good thing, there are also the kinds of loans that can have a damaging impact on acquiring a mortgage. If you’ll soon be pursuing your own home purchase, here are some loans that may have a negative impact.

Borrowing For Education

When you are young, student loans are an ideal means of paying down your debt and developing a positive credit history. However, if these loans are left to linger they can have a marked effect on your chances of a mortgage approval. Since paying back your student loans will be one of the first times in your financial life that you’ll be able to prove your reliability, you should ensure you pay them on a consistent basis in order to lower your overall debt-to-income ratio.

Credit Card Debt

Many people don’t think of the purchases that go on their credit card as loans, but the money on your credit card does not really belong to you until it’s paid off. While credit cards can be a great boon for establishing your credit in the early days, if you rack up a lot of credit card debt and do not pay your minimum payments by the due date, it will cause a considerable dip in your credit score. In addition, taking on too many cards can be a negative signal to lenders.

Payday Loans

In recent years, payday loans have sometimes been broken out separately from other loans on a person’s credit report. However, unlike many other types of loans, payday loans can be seen in a bad light by lenders because they can be indicative of someone who’s experienced significant financial setbacks, which would negatively impact their ability to pay a mortgage. While some mortgage lenders will not decline an application due to payday loans, some have already started to take this step.

Acquiring loans can be a good means of developing a credit history, but there are types of loans that may look bad on your mortgage application and won’t be of service if you can’t pay them off consistently. If you’re considering submitting a mortgage application, contact your local mortgage professional for more information.

It may feel like a very daunting task to consider buying a home after you’ve declared bankruptcy, and there’s no doubt that it’s an uphill battle. Fortunately, while you’ll have hard work ahead, there are things you can do in order to make your dream of home ownership a possibility. Whether you’ve just declared bankruptcy or some time has passed, here are some things you should consider before getting into the market.

Wait It Out

It might not be what you want to hear, but it’s, unfortunately, the case that you’ll have to wait at least two years before you purchase a home following bankruptcy. Since lenders will not want to take the risk on someone that has proven to have poor financial habits, they will require a waiting period in order for the credit risk you pose to improve. While this may seem like a long time, take the opportunity to improve your financial habits so you can be amply prepared when the time comes.

Build Up Your Credit

In order to own a home, you’ll need to develop some solid financial habits, and that means getting on top of your finances even in times when it feels like you have no leverage. Ensure you get a copy of your credit report and, if you notice any errors, reach out to the credit bureau for corrections. It’s also a good idea to consider applying for a secured credit card and ensure that you pay all of your bills on time. While it might feel like a lengthy task, developing good habits will have a positive impact on your credit over time.

Prepare For Your Payment

When it comes to a poor credit history, you’ll need to pull out every stop you can to that convince lenders that you’re a solid financial bet. Instead of wasting the time, write up a budget for yourself and save a sizeable sum for your down payment each month. It’s possible that 10 or 15% down will do, but a 20% payment will help you avoid private mortgage insurance (PMI) and will go further in convincing lenders of your reliability.

It’s more than a little disheartening to have to deal with bankruptcy, but by waiting it out and developing good financial habits in the interim, you’ll be well on your way to buying a home. If you’re currently preparing to purchase, contact your trusted mortgage professional for more information.

There are few things better than finding your dream home and being able to afford it, but simply because you’ve found the perfect place doesn’t mean you should stretch the truth. It might seem tempting to polish your mortgage application a little in the hopes of making a better impression, but here are a few reasons why you should stick to the truth when signing off on your home.

Your Credit History Tells All

It can be tempting to bump up your salary or make some hefty deposits into your savings account. However, lenders will be taking a look at your financial history by way of your bank statements, credit report and paystubs so they’re likely to discover any erroneous details. If you’re not honest about your financial situation, the lender may suspect that you’re not a reliable buyer. Not only that, making false statements about your finances may give you more home than you can really afford, which can cause setbacks down the road.

Mortgage Fraud Is Still Fraud

A little white lie on your mortgage application might not seem like such a big deal, but because you are painting a picture of yourself that is not true, this can actually be considered mortgage fraud. While there are mistakes that can be made on any mortgage application given all the details required, it’s very important not to mislead the lender or home seller on purpose. It may not be common, but mortgage fraud can be punished with hefty fines or even prison time.

A Bad Way To Begin

There’s nothing like the feeling of moving into your newly-purchased home and feeling enthusiasm for all the things it entails, but being dishonest about your financial situation can sully that. A lie may just be a small detail, but mortgage lenders look at a variety of factors to ensure you’re a good fit for a loan that will stay manageable month after month. While a minor mistruth may seem insignificant, it disables lenders from being able to assess if your financial situation is right for the home you want to purchase.

It may be enticing to fudge a few details on your mortgage application, but there can be serious implications involved in not being honest about the information on your application. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.

There are more than enough details involved in getting a mortgage and moving into your own home that you’ll want to know how to make the process as seamless as possible beforehand. However, there’s a chance you might not be aware of the things you can do to make it a little easier on yourself. If you’re currently looking for a home and are wondering how to streamline the approval process, here are some things to do before applying to minimize mortgage-related stress.

Get Electronic Documentation

In order to get approved for your mortgage application, you’ll need to provide documentation that will likely include bank statements, federal tax returns and recent paystubs, but providing or acquiring all of these documents in paper form can require a lot of drudgery. Instead of paper, get your documentation together and ensure it’s in electronic form so it can be easily accessed or sent from anywhere. This means you’ll have it on hand as soon as it’s needed.

Choose A House You Can Afford

As a potential homebuyer on the market, it’s easy to be swayed by your dream home, but if your dream home doesn’t come with an acceptable price tag, it’s important to move on to the next best opportunity. It can be very easy to be invested enough in a particular home that you can convince yourself you’ll budget for it, but the market can shift and this can push your monthly payment from difficult to not-doable. Choosing a home at an affordable cost will not only improve your chances of approval, it will also minimize your stress after the move-in date.

Have Your Down Payment Ready

It may be all well and good to know that your down payment money is in the bank, but it’s important that it’s in the appropriate account at least 3 months prior to your application submission so you can ensure you’ll be seen as financially sound. While it’s great to have money held in investments and RRSPs, it’s important that this down payment money is kept in an easily accessible account where it can be withdrawn without any time delays or financial losses.

There are many different steps and small details associated with obtaining a mortgage, but by having your electronic documentation and down payment ready, you’ll be well on your way to an approval. If you’re currently on the market for a home, contact your trusted mortgage professional for more information.

If you have a good credit history and are prepared to invest in a home, you may be feeling pretty confident about the mortgage process. However, it’s important to be aware that there are things that can have a negative impact on your application. Whether you’ve just submitted your documents or are getting close to it, here are some things you may want to avoid.

Acquiring New Credit

It may seem silly that something as minor as a new credit card can be a mark against your credit, but applying for new ones can be a bad sign to lenders. The problem is that this can be signal an unmanageable debt load, so you may be considered a high risk for not being able to make your payments.

Forget To Pay Your Bills

It’s easy enough to get lulled into the feeling that your mortgage application will be approved, but this doesn’t mean that you should forget your financial responsibilities. If you’ve had poor credit in the past and neglected paying your bills on time, now is not the time to do this. Instead, ensure that you’re paying all bills and any applicable minimum payments in advance of the due date so your credit score is not impacted.

Close Old Credit Cards

Many people think that closing out old credit cards can be a positive financial step forward and a good way to streamline their finances, but this can cause damage to your credit score. Because closing a credit card will change your available balance and bump up your debt load, it may mean that your debt percentage will increase. Instead of risking this, leave them active until you’ve received approval.

Quit Your Job

Few people will have the ability to quit their job when they’re applying for a mortgage, but doing this or incurring other fluctuations in your monthly income can cause problems with your application. If you are self-employed, there may be peaks and valleys in your finances, but a huge shift in what you bring home can show lenders that you’re not a solid bet.

There can be a lot of stress that comes along with the mortgage application process, but by paying your bills on time and staying on top of your payments, you can avoid negatively impacting your approval. If you’re currently on the market for a mortgage, contact one of our mortgage professionals for more information.

Whether you’re finally prepared to get into the real estate market or you want to know how you can make a deal quick, there are a few necessary documents you’ll need to prove your reliability to a mortgage lender.

Here are the documents you’ll want to have on hand when the time comes.

Previous Tax Returns

In order to ensure the earnings information you’ve provided to the lender, you’ll need to have your tax returns for the two years prior to your mortgage application. In addition, you may also be required to provide your W-2s as backup documentation.

Bank Statements

To make sure you’re a solid bet who will be able to make your down payment, you’ll need to present bank statements to ensure you have a cushion in the case that interest rates increase. If you do get money gifted to you for your down payment, you’ll need a letter to prove you’re not indebted to the provider.

Recent Pay Stubs

It can be much more difficult to get approved for a mortgage if you have a patchy work history or happen to be self-employed, so you’ll need 2 months of recent pay stubs to prove consistent employment. The pay stubs provided should also be an accurate reflection of the salary you’ve provided on your application to ensure no discrepancies.

Investment Statements

It’s certainly a good sign to the lender if you have a healthy balance in your checking and savings accounts, but you’ll also need to provide any statements for mutual funds and other investments. While they may not be necessary to prove financial soundness, they will help with approval if you have a lot of money squirreled away.

A Listing Of Debts

While it may be the least popular of the pile, a lender will also want to know about any outstanding debts like auto loans, credit card payments or student loans. It may be tempting to forego these documents, but it will give the lender a good sense of your honesty and your ability to manage your mortgage.

Mortgage approval may seem like a time-consuming process with no certain end, but by having the appropriate documentation and being upfront about your debts, you may be able to speed up the time frame. If you’re currently perusing your mortgage options, be certain to contact your trusted mortgage professional for the inside scoop.