Capital Mortgages specializes as a service-oriented brokerage that prides itself on integrity and maintaining a service level second to none in the industry.

Five Tips For Your First Mortgage

Applying for your first mortgage can be a stressful time. You have got your sights set on your ideal first home, and the only thing that stands in the way of making it yours is the bank’s decision to approve your mortgage request. This can be especially nerve-wracking for those who feel like they might not meet a lender’s criteria or who don’t have a picture-perfect past on paper. To ease your worries, our team here at Capital Mortgages has put together a list of five tried and true tips for successfully securing your first mortgage approval.

Maintain A Positive Credit History

A bank wants to make sure that when they lend you money, you will pay it back. This is not to say that one financial mistake will ruin your chances of approval, but your overall credit history needs to be strong to convince a lender to trust you. Make sure that you’ve paid back or are up to date on all of your payments with your creditors before applying for your first mortgage.

Aim For a Home You Can Afford

A lender will look at your overall financial situation when deciding whether or not to approve your mortgage. Typically, the rule of thumb is that your housing cost shouldn’t exceed 39% of your gross income, and your total debts shouldn’t exceed 44% of your income. Take the time to make sure your financial picture is in line with these numbers before applying for your mortgage.

Work With A Mortgage Broker

Brokers specialize entirely in mortgages – they spend their days negotiating financials with lenders and are well versed in rate options and where to find the best lending source. Working with a broker as opposed to with a bank directly will be one of the best investments you make, both financially and time-wise.

Avoid Sudden Job Changes

Lenders might be wary of applicants who suddenly change jobs eight months or less before applying for a mortgage. If your career move involves a natural progression or promotion, that’s a different story.

Reconsider Borrowing The Maximum Amount

Sometimes you’ll be surprised at how much lenders will be willing to extend to you. Many people get excited by the number they are offered and use this as a gateway to buying a home that’s out of their financial reach. However, what these lenders have not considered when looking at your financials is whether you plan to have children, save for retirement, invest infrequent travel, or take on other investments shortly. Avoid putting a financial strain on yourself and determine exactly how much you can afford to spend on a house before seeing how much you’ve been approved for.

At Capital Mortgages, we’re passionate about helping first-time homeowners through the process of securing their first mortgage. Contact us to learn more about how we can help!

Capital Mortgages specializes as a service-oriented brokerage that prides itself on integrity and maintaining a service level second to none in the industry.

Are You Using Your Home As An ATM?

It’s a trend that’s becoming concerningly popular: Many homeowners are now opting to re-borrow all or part of what they have already paid off on their home mortgages in order to finance lifestyle purchases. While some people are extremely vigilant in managing the implications involved in refinancing their homes, there are still a number of risks to consider when using your most valuable asset as an ATM.

Firstly, pulling cash out of your account to pay for other purchases will only serve to push up your monthly repayments to a higher amount than they previously were. This is a slippery slope, as you never know what kinds of challenges you will face in life that might prevent you from affording these installments. If the payments become too much to handle, you’ll risk losing your most valuable asset: your home.

To paint a clearer picture, your monthly repayments would increase because of the extra costs involved in extending your mortgage. These include a valuation fee and legal fees. If you don’t have the extra finances to cover these costs and choose to add them to your overall debt, you will risk paying interest on them over the lifetime of your loan.

Of course, some of us will be extra responsible and will manage to pay back all the equity taken out on our homes within a short period to avoid interest charges. However, too many people end up viewing their home’s equity as a savings account and dip into it to pay for lavish purchases like vacations, aesthetic upgrades, or new cars. In this sense, they begin to treat their homes as an ATM and are unprepared for the onslaught of additional charges that comes along with doing so.

Always keep in mind that home equity is not a tangible concept until you sell your house. Until you do, equity is only a perception of your home’s current value. The only way to eventually monetize it is to either sell your property or take on additional debt and interest.

Interested in learning more about the risks behind refinancing your home? Hop on a call with one of our Capital Mortgages brokers today. 613-223-3888