5 Mortgage Preparation Steps

5 Mortgage Preparation Steps

Know your Income Information

-gather and keep in a file any income information that may be requested by your mortgage broker or banker.

-if you are employed, know your Gross Salary (before any deductions) as this figure can be used to help you qualify for mortgage financing.

-if you earn a bonus or have worked overtime, know the breakdown of each of the last 2 years of this extra income information.

-you may want to see if you have your Year to Date Pay Stubs (December version), T4’s or Bonus Statements to help verify this.

-if you are self employed, gather your last 3 years of your Notice of Assessments (NOA) as provided to you from the Canada Revenue Agency.

-if you are self employed, gather your last 3 years of your T1 General (the 4 summary pages of each year) as submitted by your accountant to the Canada Revenue Agency.

  1. Know your Assets and Debts

-have an approximate value of any or your assets, as this information will be requested on a Pre-Qualification Application (as provided by your mortgage broker or banker).

-Assets could include bank accounts, mutual funds and stocks, bonds and GIC’s, vehicles, real estate, etc.

-If you own a number of real estate properties at this time, having your property details on a Chart will be very organized and useful (your mortgage broker may want you to enter the details on an Excel spreadsheet chart, as many lenders now require such a chart).

-These assets (whether liquid or real estate equity) could play an important role as “proof of down payment” if you are purchasing real estate.

-having a basic knowledge of your debt balances and payments (probably more important than the balances) will be required on a Pre-Qualification Application.

  1. Pull your Own Equifax Credit Report

-go to http://www.equifax.ca and pull your own credit report.

-review it to ensure the debts listed on the report are actually yours and that your credit score is satisfactory.

-a credit score of 650 or higher is considered good; 680 or higher is excellent.

-keep in mind that debt balances listed on the report are not “real time” and are simply balances reported by your various credit card and loan lenders at some point in the last 1 – 2 months.

-pulling your own credit report is simply part of your preparation and is for your own benefit.

-your mortgage broker will also pull a bank version (very different look from the consumer version) of the report.

-since a mortgage broker is not a lender, when they pull a credit report it will not affect your score, as this is considered a “soft hit”.

  1. Ensure that your Income Taxes are Filed and Paid

-ensure your accountant has submitted your Tax Returns for any past years.

-if just submitting, it may then take a number of weeks before you have received your CCRA Notice of Assessment (as may be required by a lender).

-ensure you have paid any back taxes for previous filed years (this is a critical step).

-it may be possible to refinance a property in order to pay any back taxes.

  1. You are Ready to Fill-out Your Pre-Qualification Application

-contact your preferred Mortgage Broker and request (if you haven’t already) for a copy of their Mortgage Application and Consent Form (your signed consent is required in many provinces).

-if you already have a number of properties, request a copy of their Property Chart to list all of your property information in detail.

-the application you fill out will be a little more comprehensive and detailed as an investor.

-you are already prepared to share your information (from steps 1 – 4) on the application.

-fax or scan (and email) back the application and consent form to your mortgage broker.

-your mortgage broker will complete a thorough Mortgage Review for you.

-a good mortgage broker will be thorough and detailed, taking likely 2-3 business days for your review and will be starting to help build the Best Mortgage Strategy for both your current and future mortgage needs.

-since every potential property you finance will be unique, lenders are not generally willing to fully Pre-Approve your investment purchase until your offer is accepted by the seller on a specific property (and all the details of the purchase and property are known).

-this stage is simply to Pre-Position you to confidently take the next step of making an offer, qualifying for your mortgage once your offer is accepted and planning for your future.

By  Robert  Charlson

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