People often feel powerless when it comes to mortgages, but you have more approval power than you think. How can you stack the cards for the best mortgage and increased buying power? Maintain a great credit score. Whether looking to buy a house or just get on a solid foundation, your spending habits should be the same. While the following are tips to live by for the year before taking on a mortgage, to establish a healthy money pattern for your lender, some of these tips are simply standard operating procedure for anyone wanting a good credit rating.
- Maintain your status quo. Upgrading to new technology or a new car, or any other big-ticket items, can suggest you like to “Keep Up With The Joneses,” which can indicate impulsive credit behaviour.
- New jobs have probationary periods, even with a great company at a higher salary. Banks like safe bets, not probationary periods, so changing employment could impact when you’re able to secure financing.
- Keep banking transactions transparent. Transferring funds from varying accounts complicates matters. It may be your cash, but can look like you’re borrowing willy-nilly, ringing alarm bells for lenders. Documentation is the answer.
- Pay bills and stay on top of details. This shows that you’re a creature of pattern, you respect due dates, and you take your responsibilities seriously. Lenders like these attributes in borrowers. In fact, pay all disputed bills, because you can be credited disputed funds later while protecting your credit score now.
- Married? Maintain separate accounts for both of you and keep good credit behaviour with all accounts.
- One credit card, a reasonable limit. If you need to charge it, it’s not in your budget. Living within your means is important for having good credit and also for paying down your mortgage. Pay off excess cards, keep only one, and do not apply for additional credit of any kind in the year previous to applying for a mortgage.
- Cash isn’t always king, it can be a conundrum! If you plan to purchase a home and have reason to accept cash gifts of any kind, depositing it can be problematic for your lender. Document your cash. Call Alex if you don’t know how to proceed.
When it comes to developing good credit, every penny spent counts. Spending judiciously isn’t just smart when you’re looking for a home, it’s genius for years to come, when you’re left paying for (and maintaining) that home. Alex will be happy to give you more guidance, so if you’re planning on buying in the future, now’s a great time to have that talk.
