first-time home buyers

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First-Time Home Buyers


Five Things Every First-Time Home Buyer Needs to Know.

Morcan Financial Inc. 1225 Kennedy Rd. • Suite 2000

Toronto, Ontario Phone: 647-933-4228 • Fax: 1866-589-1391


How much do you qualify for? There are strict guidelines in mortgage lending regarding how much of your income can be used to make mortgage payments, especially if you’re buying a home with a smaller down payment. No more than 32% of your gross (before taxes) income can be used to cover your mortgage payment and property taxes plus a set amount for heat expense. Another 8% of your gross income can be used for other debts (loan payments, credit card payments, etc.) for a total of 40% of your income for your mortgage, property taxes, heat and other payments. Example: Your gross (before taxes) annual income is $50,000. 32% of $50,000 = $16,000 / 12 = $1,333 per month $1,333 is the maximum amount that can be used for a mortgage payment, property taxes, and heat. 8% of $50,000 = $4,000 / 12 = $333 per month $333 is the maximum amount that can be used for any other monthly payments (loans, credit card payments, lines of credit, etc.). There are exceptions , talk to you mortgage agent.

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Down Payment Unless you are purchasing a home with no down payment under a specific “no down payment” mortgage program, you will be required to provide proof that your down payment money is not borrowed. Examples: If your down payment is from savings, you will be required to provide three months history on the bank account the savings are in. If your bank account is from an RRSP or investments, a statement on the RRSP or investment account. If your down payment is a gift from a family member, you must provide a copy of a “gift letter” together with confirmation that the gift money has been deposited into your own bank account. If your down payment is coming from the sale of your current home, a copy of the sale contract to confirm the sale price and a copy of a recent mortgage statement to confirm how much is currently owing. If your sale has already completed, a copy of the “Statement of Adjustments” from the lawyer who handled the sale.

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Income You will be required to provide your mortgage agent with written confirmation of

your employment and income. Your mortgage agent will let you know the exact documents required for your situation, but generally if you are not self-employed, the following will be required:

- A letter from your employer, on company letterhead, signed and with contact info, confirming your position, time on the job, hours, and salary.

- A copy of a recent paystub, or most recent T4. If you are self-employed, your mortgage agent will let you know what documents to provide.

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Credit Report Your credit history and credit “score” are just as important as your income, employment and down payment when it comes to getting approved for a mortgage. The companies you have credit with report on a regular basis to the “credit bureau,” Equifax. It’s important to always be aware of the information contained in your credit report. Your mortgage agent will let you know how to obtain a copy of your own credit report, and how to correct any inaccurate information. Credit reporting is all about making your payments on time. Many people will skip making a small minimum payment because they know they’ll be paying off the entire balance at the end of the month. But every time you miss a payment due date, it’s recorded on your credit report. You may have paid your balance off in full, but the fact is you made that payment late. A history of late payments can cause serious damage to your overall credit rating, which will affect whether or not you can be approved for a mortgage. If you have damaged your credit, your mortgage agent will have suggestions to help you get your credit back on track. And if you have no credit history at all, your mortgage agent can suggest ways to establish credit so you can apply for a mortgage in the future.

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What type of mortgage is right for you? 3

If you’ve mentioned to anyone that you’re buying a home or applying for a mortgage, you’ve probably gotten lots of opinions on the type of mortgage you should have. With so many mortgage options available today, how do you know which one is right for you? Everyone has an opinion on mortgages and interest rates, but to be sure you’re getting expert advice, you need someone who specializes in mortgages. When you visit a bank for a mortgage, the person you meet with knows only the products offered by that particular bank. But a mortgage agent is familiar with all the options available. Why limit your options to what’s offered by just one bank? Your mortgage agent will help you by explaining the different types of lenders and mortgage products, determining what is most important to you, and finding the lender with the mortgage that is just right for you, and best suited to your unique situation.

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Profile

Michael Williams is a mortgage professional with Morcan Financial Inc. With eight years of experience, Michael has arranged financing for hundreds of clients in the Toronto and surrounding areas. He specializes in working with first-time homebuyers, and takes the time to help his clients through the mortgage process, step-by-step. Morcan Financial Inc. has been in business since 1998. Morcan agents pride themselves in their ability to assess a client’s entire portfolio and determine the right mortgage products for the client’s needs. With access to a multitude of mortgage products from a wide variety of mortgage lenders across Canada, we will find the mortgage that is best for you.

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