Are you in the process of buying a home and trying to figure out the best way to get a mortgage? Securing a mortgage can be daunting, especially if you're new to the process — it means understanding credit scores, debt-to-income ratios and a fair bit of paperwork. But with the right preparation and a few simple tips, getting a mortgage can be far easier than you'd think.
As someone who does this every day, here are my five tips for getting a mortgage.
Tip #1: Check your credit report
A credit report is a summary of your borrowing history and habits, and it's something lenders weigh heavily when deciding whether you're a viable candidate. Review yours thoroughly and make sure there are no red flags, like delinquent debts in your name. If there are, it pays to resolve them before moving forward with an application.
You'll also want to make sure the report doesn't contain errors — like debts you've already settled — that could quietly work against you. If you find any, correct them before applying for a home loan.
Tip #2: Find out your actual credit score
Many people are surprised to learn their credit report doesn't list their actual credit score. To get that number you may need to log into Equifax, and you may have to pay for it. Either way, it's important to know where you stand. The higher your score, the more likely you are to get approved and lock in a competitive rate. Get it into the 680s or higher and you'll likely qualify for the best rate a given lender is offering.
Tip #3: Lower your debt load
The more debt you carry, the more a lender may hesitate — especially if that debt eats up a large share of your income. Consider paying down some debt before you apply, and focus on credit card debt first. Lowering it can improve your debt-to-income ratio and raise your credit score at the same time.
Tip #4: Boost your income
Your income is a key factor lenders use to decide how much you qualify to borrow. With home prices holding steady and limited inventory on the market, you may need room to negotiate — so it can pay to boost your earnings, whether that's weekend shifts or a few evenings of a side hustle.
Tip #5: Use a mortgage broker to shop the rate
Every lender sets its own rates and closing costs, and comparing them is exactly where a broker earns their keep. I gather the full picture across the market, so that when you're ready to sign, you know you're getting a rate worth signing for.
Looking for a licensed mortgage broker in British Columbia? With 15+ years in banking and finance, I save you time and money by shopping 200+ lenders for the mortgage that fits your life — now and down the road. I work for you, not the bank.