Getting Your Finances In Order

House hunting begins at home with planning. Before you start looking at homes you need to know what you can afford to make the most of your house hunting experience, saving you time and energy. Here's where a CENTUM Approved Mortgages Inc. Mortgage Professional can help! As experts in mortgage financing, they will review your individual home financing options with you, help you obtain a pre-approval, enabling you to shop with confidence knowing how much you can afford.

How Much Will I Initially Need To Purchase My New Home?

You will need enough funds to cover your down payment and closing costs, as well as the remaining balance on the cost of the home (usually obtained through a mortgage). The money you pay up-front for a house is the down payment. Down payments are usually a percentage of the purchase price of the home. The source of money for your down payment is often either your savings or the net proceeds from the sale of a home you already own. The larger your down payment, the more you save overall. A larger down payment reduces the amount of your monthly principal and interest payment and reduces the total amount of interest you pay over the life of your mortgage. Check out How To Save For A Downpayment for more tips and information.

Closing costs are the legal and administrative fees and disbursements associated with buying your home. These costs are in addition to the purchase price of the home. They can vary depending on the property being purchased, services required, taxes, applicable insurances, closing dates affecting interest adjustments, and the balances of any prepaid expenses.

The Home Buyer's Plan (HBP) is a great government program that helps first time buyers with their downpayment. It allows you to withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSPs) to buy a qualifying home. Generally you will have up to 15 years to repay your RRSP withdrawal. For more information visit the Canada Revenue Agency website.

Your Credit

A credit check is an important step in qualifying for mortgage financing. As part of the application process, the lender will order a copy of your credit bureau report so it is important for you to be aware of your credit score and how it is comprised.

Your personal credit report is compiled by Canadian credit bureaus from various sources. The report shows information generally going back six to seven years, including personal information such as your name, address, date of birth and Social Insurance Number. It also includes historical data such as current and previous addresses, current and previous employers, and public records like bankruptcies, liens or judgments. Most importantly, your credit report contains your credit card, mortgage and loan payment information. This information is used by lenders to see if you have missed payments, carry high balances, or are in other ways overextending yourself financially. Payment history is the most important factor in your credit rating — so try to pay your bills on time, even if it is just the minimum balance due each month. Lenders evaluate your credit risk based on information in your credit report. It is a good idea to review your credit report periodically and check for inaccuracies that may have an impact on your credit standing.

Your credit report will also contain your FICO score which is a number between 300 and 900 that lenders use to determine your credit risk. A FICO score is a snapshot of your credit risk at a particular point in time. The higher your credit score, the more likely you are to be approved for loans and receive favourable rates. Canada's largest financial institutions use FICO scores to make millions of credit decisions each year.

To obtain a copy of your credit report contact Equifax Canada or Transunion Canada.

Know What You Can Afford

Knowing your affordable price range will bring your house hunting into focus. How much of a house you can afford depends on three things: (1) How much you can afford for the monthly mortgage payment, (2) How much of the down payment you have available, (3) The amortization, or length of time required to pay off the loan, assuming the interest rate does not change.

CENTUM Approved Mortgages Inc. provides you with some great online Mortgage and Affordability Calculators to help you determine exactly what you can afford.

Getting Pre-Approved

Why should I apply for a mortgage pre-approval? If you get pre-approved for home financing, you will save time by knowing what you can spend on a home before you start looking, be protected against interest rate increases while you shop, and increase your comfort level when shopping for a home by eliminating uncertainty.

You can start the approval process by contacting CENTUM Approved Mortgages Inc. Apply Online.

TOP GUNS REALTY INC., Brokerage
830 Rowntree Dairy Rd. #17 . Woodbridge . ON . L4L 5V3 Phone. 416.749.8486  Fax. 905.850.5525

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