Getting pre-approved for a mortgage is an essential step towards buying a home in Ottawa. It’s a process that many homebuyers don’t take seriously, but it can make a huge difference in the home buying process. A pre-approval letter from a lender shows that you are a serious buyer, and it can give you an edge over other buyers who haven’t been pre-approved. In this article, we’ll discuss the do’s and don’ts of getting pre-approved for a mortgage in Ottawa.
DO: Check Your Credit Score
One of the first things you should do before applying for pre-approval is checking your credit score. Your credit score is a major factor in determining your mortgage interest rate, so it’s essential to know where you stand. You can check your credit score for free once a year with one of the major credit reporting agencies, such as Equifax or TransUnion.
DON’T: Apply for Credit Cards or Loans
While you’re in the process of getting pre-approved for a mortgage, it’s important not to apply for any new credit cards or loans. Every time you apply for credit, it shows up on your credit report as a hard inquiry. Too many hard inquiries can lower your credit score, which can hurt your chances of getting pre-approved for a mortgage.
DO: Gather Your Financial Documents
When you apply for pre-approval, you’ll need to provide your lender with various financial documents, including pay stubs, tax returns, and bank statements. It’s a good idea to gather these documents before you apply, so you can provide them quickly when asked.
DON’T: Make Large Purchases
During the pre-approval process, it’s important to avoid making any large purchases, such as buying a new car or furniture. These purchases can increase your debt-to-income ratio, which could hurt your chances of getting pre-approved for a mortgage.
DO: Shop Around for Lenders
It’s a good idea to shop around for lenders when you’re getting pre-approved for a mortgage. Different lenders may offer different interest rates and terms, so it’s important to compare your options. You can use online tools to compare rates and fees, or you can work with a mortgage broker who can help you find the best lender for your needs.
DON’T: Change Jobs
If you’re in the process of getting pre-approved for a mortgage, it’s important not to change jobs. Lenders want to see stability in your employment history, and changing jobs can make it harder to get pre-approved. If you do need to change jobs, it’s best to do it before you start the pre-approval process.
DO: Be Honest About Your Finances
When you’re applying for pre-approval, it’s essential to be honest about your finances. Your lender will review your financial documents and credit history, so it’s important not to hide anything. If you have any questions about what to disclose, ask your lender for guidance.
DON’T: Make Large Deposits
During the pre-approval process, it’s important not to make any large deposits into your bank account. Large deposits can raise red flags for lenders, who may question the source of the funds. If you do receive a large deposit, be prepared to provide documentation to show where the funds came from.
DO: Get Pre-Approved Before House Hunting
Finally, it’s important to get pre-approved before you start house hunting in Ottawa. A pre-approval letter from a lender shows that you are a serious buyer, and it can strengthen your offer when you find a home you want to buy. Without pre-approval, you may be at a disadvantage in a competitive housing market.
By following these do’s and don’ts, you can increase your chances of getting pre-approved and make the home buying process smoother and more successful. Remember to check your credit score, gather your financial documents, shop around for lenders, and be honest about your finances. Avoid making large purchases or deposits, changing jobs, or applying for new credit cards or loans. With these guidelines in mind, you’ll be well on your way to getting pre-approved for a mortgage in Ottawa.
Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re looking for local mortgage brokers in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!