Get Advice Well Before You Buy

I've had many clients come to see me anticipating the purchase of their first home. But often that excitement is soon replaced by disappointment after I've examined their financial situation. If only they had come to see me a year ago, 6 months ago maybe they would now be prepared to buy.

Financial Institutions base their decision to lend money for a mortgage on many factors. The big one is credit. There are simple things the client can do to their credit to be in a better situation to buy. Make sure they have at least 2 revolving credit lines. Revolving credit is payments which could change every month such as a Credit Card. Those credit lines should have a limit of at least $2000. Many Financial Institutions also want to see at least 2 years history of activity on those cards.

The second thing about Credit is the balance on those cards. Your credit score increases if the balance on the card is not near the limit. Try to keep your balance less than 70% of the limit. If you are at 50%, even better. The key here is to use your card regularly but pay it off as soon as you can. So if you have a high balance on your credit cards, pay them down before allowing your credit bureau to be pulled.

The final thing I will mention is the number of inquiries on your credit bureau. When applying for a credit card, looking to buy a car or a house, companies will inquiry about your credit history. Too many inquiries, hurts your score. If you have many companies checking into your credit, it may look like you are desperate for money. A few checks a year is fine. But if apply for a credit card at every kiosk offering a free T-shirt, then you're credit will suffer. Keep this point in mind not only when getting ready to buy a home but once you're in your home as well.

Aside from Credit there is also the issue of saving for a down payment and closing costs. There is also your employment history to keep in mind. Most Mortgage Brokers will work with you for free to help get you get ready. It's never too early to meet with one, even if you are planning to buy years down the road. We will help put you on the road to becoming a home owner.

This blog is courtesy of Kevin Babin from Dominion Lending Centres in Saint John. For more information on mortgages you can contact him at 506-642-5363