How to Get a Mortgage for a House

No dream comes with as much exhilaration and sense of achievement as buying a house. Whether it’s your first purchase or yet another step on the property ladder, each new experience is a fresh beginning. A practical plan is just what you need to turn that vision into reality.

When it comes to a house purchase, getting a mortgage is a critical early step. In this post, we’ll highlight a few ways to finance the purchase of your new home.

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What Do I Need to Buy a House?

Before getting a mortgage, it’s a good idea to assess your overall financial health. While it doesn’t hurt to dream big about the house you’d love to have, you also need to be realistic about your budget and how much you can comfortably afford. To buy a home, you will need:

Enough liquid cash for your down payment (which includes your deposit) and all closing costs
A high enough income to cover your mortgage, mortgage insurance (if applicable), utilities, property taxes, and home insurance along with all other costs of living
The ability to pass a stress test and qualify for a mortgage

Ideally, you will also want to cushion your budget for any unforeseen expenses. Life is nothing if not unpredictable! Now that you know what you need, let’s think of the types of houses to match.

Your final choice will depend on the local real estate market at the time. As you gather all pertinent information, you can set a budget that has a low, mid-range, and absolute ceiling that you will not exceed. Taking these preparatory steps now will keep you logical and grounded throughout the entire home-buying process.

You’ll undoubtedly have many questions when buying a house, which is why the right Realtor® is so critical. The posts below can help you decide:

What Credit Score Do I Need to Get a Mortgage?

It makes sense that a strong credit score puts you in a better position. Traditional lenders like to see a rating of at least 680.

A high credit score helps you get approved in the first place, but the benefits don’t stop there. With a proven history of paying all of your debts on time, every time, you represent less of a risk to the lender. In turn, they will often reward you with the best rates.

What if your score is less than stellar but you still have dreams of buying a house? All is not necessarily lost. Some B-Lenders and private lenders may still approve you, albeit at a higher rate. However, if it gets you into the market sooner rather than later, the benefits might outweigh the costs. Alternatively, you might move your home-buying goal to the back burner as you work to improve your credit score.

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How to Get Pre-Approved for a Mortgage

There was a time when getting pre-approved for your mortgage was one of the best-kept secrets to buying a house. It’s advantageous, but not technically required. However, in today’s challenging landscape, a pre-approval is pretty much an essential step.

In any case, there are some impressive benefits for getting a Certificate of Pre-Approval before placing offers.

You’ll get an accurate estimate of how much you can borrow.
It allows you to lock in your interest rate for 90 to 120 days.
Sellers love to see pre-approvals because there’s less risk of the transaction falling though.

An informed buyer is a successful buyer! The posts below can help you during every stage of your search:

Where to Get a Mortgage

Fortunately, the steps to obtaining a pre-approval are straightforward. It can be as simple as applying for a mortgage online before beginning your home search. However, it’s a good idea to keep your options open so you get the best possible rate and terms.

A visit to an experienced mortgage broker may be in order. They can search multiple lenders all at once, allowing you to choose a loan that works best for you.

During the process, the lender will verify your income versus your liabilities to determine your approval amount. When complete, you’ll receive a Certificate of Pre-Approval that you can submit to sellers along with your offer.

Even with a pre-approval, there are a couple of things to keep in mind.

It’s an estimate of how much you can borrow based on your current financial status. If anything happens, such as a career change or a large purchase on credit, the lender can reduce the approval amount or even deny your loan altogether. That’s why real estate professionals advise against any significant life changes or purchases until your transaction closes.

Before releasing the funds, most lenders will require an appraisal on the house. This is an assessment of the property value as determined by a Certified Appraiser on behalf of the bank. A lender will not provide more than the appraised amount. If you offer more, you will need to cover the excess funds yourself. This is one of the nuances that can trip anyone up, especially a first-time buyer.

Buying a house involves a lot of moving pieces in a market that is always changing and evolving. By working with a skilled, local real estate team, you can ensure all of your bases are covered. We are here to protect your interests at all times, negotiate the best terms of your sale, and turn your home purchase into a straightforward and positive experience.

Ready to start the search for your next home? Our Peterborough real estate agents are here for you every step of the way. Reach out to team@jeffandkatie.ca or call 705-243-9797 to start the conversation.