The future’s so bright, I gotta wear shades

Those who know about these things are predicting that the prime rate will start to decline soon, and by a lot. I can’t verify that this will happen, but I can recommend that if your mortgage is coming up for renewal or you are looking to buy a new home you should be ready to move should this occur.

What do you need to be ready to move quickly on a property requiring a mortgage?

Before even talking to a Real Estate Agent you should engage with a Mortgage Agent to find out what you can really afford. We will ask you for several things to be able to provide you with our best advice.

Let’s assume you are a person who has a job, draws a salary, and has savings and/or investments.

First, we need to know who you are and where you have resided (for the past 3 years). If you have a partner, this applies to them also. This requires 2 pieces of ID, usually something like a driver’s license or passport, but one of them could be a credit card or a PR card, and we will need your SIN. Along with this we will ask you to sign a consent form so we can check your credit and share information with lenders. This is a good place to start.

We also need to know how much you make. This means looking at things such as your recent tax slips, your bank account where you get paid, and eventually a letter from your employer.

Speaking of employment, we need to have a minimum of 3 years’ history…the same with your place of residence.

Now we can start to understand how much you can afford to pay each month.

But wait…what are your assets and liabilities? Do you have savings, investments, RSPs, TFSAs? What about a First Home Savings account? How much of this can go towards your Down Payment? And what do you owe? Do you have loans, lines of credit, car payments, alimony, or childcare payments? Anything you are obligated to pay out impacts what you can afford to pay on a mortgage.

Then is there anything else that will affect your ability to get the best mortgage rate? How’s your credit rating? Any bankruptcies or consumer proposals in the last 3 to 6 years? Are your taxes up to date? Little things like that.

OK, so this seems like a lot. But my job is to sell you to the lender in a way that gets the best possible mortgage for your situation. So, the more we are on the same page the better I can do for you.

Depending on your circumstances there may be more that we require (i.e. self-employed, gig work, etc.) but the best approach is to have as much of this information ready before you start looking.

It’s been a difficult couple of years for those buying, refinancing or in the real estate and mortgage industry, but the future does seem bright. Get your shades ready!

I’m Steve Willson, a Mortgage Agent with Mortgage Alliance in Toronto. These opinions are my own and each situation is different. You can reach me through my website stevewillson.ca