- In this video you'll learn how to prepare for mortgage
and what are the steps you need to take
before you get your pre-approval.
That's starting right now.
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brought to you by Brookfield Residential.
- Hi everyone I'm Karl,
welcome to another Homebuyers School video.
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So today I'm joined by Mujtaba Syed,
Mortgage Specialist with the Bank of Montreal.
And the question we're gonna answer is,
how do you prepare for a mortgage?
Right, so you're ready to buy that house
and you need to prep to make sure you get that approval.
So what are the things you need to prepare for?
- So first and foremost,
definitely get out there.
Get your pre-approval done
before you even start looking for a property.
Uncover any situation that could be hidden.
Address those situations, fix those situations,
and then you know you'll go through a more streamlined,
more easier process when you actually find your home.
- Before you actually get that pre-approval,
what should you be preparing for?
- What you should be preparing for
is looking at first and foremost,
what is your monthly budget.
What are you comfortable enough to pay on a monthly basis
so you don't feel stressed or stretched to your limit.
Second, know exactly what kind of house you're looking for.
Are you looking for a condo or a duplex or townhouse,
a single family home?
You wanna think about what kind of home fits your needs
and your family's needs.
And then I would also look into what kind of communities
are gonna fit your needs, right.
Do you need something close to a school?
Something to a lot of shopping districts,
or are you gonna need something closer to public transport?
Or something that you might consider later on.
So think about this for the next three to four, five years
that you plan on staying in that property,
what you're going to need.
A lot of that stuff is gonna help make this process
a lot smoother, easier and quicker
if you do the leg work up front.
- And if you want, we actually have a great video
on doing all that leg work that Moe was talking about
and I'll leave it up here in the description below.
Let's say you did get your pre-approval,
is there anything else you need to prepare for
even after that?
- Take the advice of your lender.
If he's telling you to focus on A, B, C and D,
these are the things you should focus on,
definitely focus on those.
You might have some debt you wanna pay off,
don't leave that to last minute.
You might have some savings to do,
start doing that right away.
So whatever guidance that your lender
or specialist gives to you,
take that and start applying that right away,
so when you do find a home there's no hiccups.
You can go right ahead and it makes it an easier process.
- Now I know in previous videos
we talked about credit score.
What are some things that you can do way in advance
to maybe improve that,
because that's part of the five C's of credit
that the bank or the lender takes a look at.
- The most important thing a lot of clients don't realize
is that staying close to your limits on your credit cards
and line of credit balances.
So if you have some credit cards
that are close to their limits,
pay those down.
A bank will always look at to see
what you are allowed to utilize
and how much you have utilized.
If you are using 100% of what they've given you,
they know there's some underlying issues there.
That could reflect very negatively on your approval.
Another thing we discussed in the past,
not doing too many credit checks
so you don't come across as a credit seeker.
That's a very important part.
A lot of these situations
can actually affect your credit bureau negatively.
There's one interesting thing
a lot of clients don't think about,
and a lot of lenders miss this as well.
So sometimes with an Equifax credit bureau,
you can have multiple files on a credit bureau.
For example lets say you have an interesting name,
it's a little bit harder than the usual name,
it's spelled differently
and at some time in the past
a lender has used a different spelling on it.
Now there's another file that exists
for you on the credit bureau.
I've had a client this one time
that had five different separate files on a credit bureau
with all different credit scores.
So when we're looking at it,
we were very, very confused.
But what we did, we just kind of looked at it
and said listen, do you have these credits of products
and she said I have this but I'm missing some.
And then we looked into it
and we found it was hiding in other files.
So we got her to call Equifax
and combine all of these credit files into one
and her score actually improved.
It did take about three weeks
but from there her credit was a lot better,
it didn't make sense to us,
sometimes your credit scores lower
and we can't figure out what it is.
It could be the fact that there is two or three
different files out there
and some are reporting positively on some
and some are reporting negatively on others.
So talk to your lender about that and then combine them.
You might even have a couple of different files
on your credit bureau.
You wanna be able to combine them into one.
- How would you know if you have multiple credit files?
Is it just by doing a credit score check?
- So Equifax is a great product.
You can sign up on a monthly basis.
They'll send your credit report out to you
and take a look at it.
If something shows up on there
that doesn't make sense to you,
for example, there was a credit card showing open
but you closed it a long time ago, call them.
If you call them and speak to them over the phone
they can actually tell you how many credit files
you actually have open,
and you can combine them.
Unfortunately a lot of clients don't really do that.
They don't really contact Equifax.
They don't really stay on top of Equifax
right from the get go.
Until they get to the bank.
So before you even start your pre-approval,
maybe look at your own credit bureau.
It doesn't count as an inquiry against you.
It does cost some money.
You are allowed to have one free one every year,
like the Equifax sends out to you by mail.
But you can always go online any time
and look at your credit score.
And you can actually decide,
hey listen, these are some things missing.
Let me fix this first before I go in for my pre-approval.
- So I have a feeling a lot of people are gonna watch this
are gonna be jumping off
and checking their credit score right now.
- And they should be.
- Yeah.
- That is exactly what we want them to do.
And you're gonna come back to us with a lot of questions
and we're gonna answer all those questions for you guys.
Because this is something I feel like
almost every lender has missed.
Most the clients that come to me,
they're coming to me with low credit scores,
we can't figure out why.
And sometimes it just takes one phone call.
- And just to let you know,
this video isn't sponsored by Equifax.
So Moe, do you have anything else to add
in terms of preparing for a mortgage?
- What I would say is just getting on top of it,
getting in front of it, right.
Because this is gonna be
the biggest investment of your life.
It will take some homework on your end
and it's something that it can be a very frustrating process
if you haven't done that, right.
It could actually delay you from being a homeowner
to a certain time period if you had something sooner.
I would say do it sooner than later.
It's like anything in your life you wanna work towards.
It's gonna take some effort on your part.
Put some effort into it, ask us questions,
talk to the experts in getting into the perfect home
so when you do find the perfect home,
it's easy for you.
- So if you want to know more
about the entire mortgage approval process,
we got a great video series for you here.
As well as a great video series
on understanding mortgage rates here,
which you'll definitely need to know
if you're planning to get approval on a mortgage
in the next several months.
And don't forget to hit the subscribe button
to keep learning from the experts
and I'll catch you in our next video.