Despite of severe economic crisis, potential Canadian buyers are eager to buy their first homes. When transforming from a renter to a first time home owner, you may be confused by infinite factors that you need to consider. When buying your first home, you should feel excitement, not nerve wreckage.

When you buy your first home, you might encounter one of the most fatiguing experiences of your life. However, you can smartly reduce the extent of frustration by taking up a pre-approved mortgage before even looking for a house. You can save a great deal of money, time, and effort by applying for a loan before shopping around for home.

Mortgage Market

There was a time when anyone with a job was able to get a loan. Various banking institutions advertised bad credit loans and variable rate mortgages to borrowers. This approach misled borrowers into thinking that they could easily pay for extremely expensive mortgages. However, this lending routine proved to be flawed as borrowers were indebted to loans that they could not repay.

Since then, the mortgage market has become much stricter in its lending procedures. Now, if you want to get a loan, you need to have a good credit score as well as appropriate income.

Get your Mortgage Approved

Before applying for a mortgage in order to buy a home, make sure that you have what a mortgage application process demands.

Credit Health: It is better to get a detailed report of your credit history prior to applying for a mortgage. You can scrutinize the report for any possible mistakes. Shopping for a home may take several months, so you can subscribe to a service that offers updates for your credit report on a regular basis.  Your mortgage is unlikely to get approved if your credit score is anything less than what is required.

Monthly Budget: Before applying for a mortgage, you should prepare a record of your monthly expenditures and income. Collect tax returns and paystubs of up to three years. You can utilize different tools and services to organize your expenses. Your mortgage may not get approved due to any large reiterating monthly expenses. Try to pay off previous loans, if there are any.

Mortgage Budget: Before consulting a mortgage lender, you should determine how much you can pay for your home. A general rule of thumb is that your net housing payment, including taxes, insurance, and fees, should be around 25%-35% of your income. Your mortgage application has greater chances of being approved when you know how much you can afford to pay.