For most Canadians, home ownership is a goal, and Etobicoke is a great place to find a nice starter house. At the outset, a lender will look at two factors: income and credit history.
Often potential buyers have a good income report, but their credit history may not be as good. This can be due to any number of elements like a past bankruptcy, too many late payments on credit cards or other debts, or simply because you do not have enough credit history established as yet.
What is a Good Credit Score?
First, let’s look at what a good credit score should be. Those individuals with credit scores in the 700s have the best chance for the lowest interest rates. If you have numbers from 620 to 680, this is not bad. From 580 to 619 may allow you certain mortgage options and still maintain a relatively lowdown payment requirement. Credit scores in the 500s are not ideal.
This does not mean you are completely ruled out for a home mortgage. You would need to be able to produce a higher down payment, probably around 20%, and expect to be offered a higher interest rate. If you are still in the planning stages, start by improving your credit score. After you get copies of your credit reports, check them carefully for any errors. There may be debts that you paid off but were not recorded or incorrect amounts listed.
Outstanding Credit
For any outstanding credit, make payments on time and pay off as much debt as possible before applying for a home loan. This could include refinancing vehicles if a lower interest rate is available or extending the time, which would net you a lower monthly payment. If you are looking for the extra cash to take care of this, review your budget and see if you can eliminate the daily latte or cook at home instead of getting take out.
There are other options. These include reducing your expectations on the home you are looking for. That can mean something that is not move-in ready or a fixer-upper, either of which will be offered at a lower price, which means less cash for the down payment. Another choice would be to find someone who would be willing to co-sign. Close relatives and good friends are the best places to start. You may also want to consider taking a short-term, debt-consolidation loan, especially if that interest rate is lower than the interest being charged on your credit card accounts.
The Bottom Line
The bottom line is that you are looking for ways to improve your credit profile and to still fulfill your dream of owning your own home.
An excellent source of information and techniques is dealing with a financial advisor or mortgage broker. Every day they work with people like you who are striving to improve credit and qualify for loans to complete real estate transactions. Companies like easyhouseloan.ca have access to a wide range of lending opportunities and can best advise you on the methods you can use to find a house you can afford. They also monitor trends in buying and selling as well as interest rates and other economic swings. A mortgage broker in Etobicoke will be fair and honest and allow you to adjust your expectations relative to your personal circumstances.