Your credit report will be one of the primary documents a mortgage lender will reference when determining whether or not you qualify for their best mortgage rates. That means the process of qualifying for a mortgage begins long before you decide to buy a home! 

The number one tip on qualifying for the best mortgage rates is pay your bills on time – every time. If you can, set up on-line automatic payments from your checking account so you don’t miss a payment deadline.  The number two tip is to not accumulate too much credit card debt. Having too many credit cards or just two or three cards charged to their maximum negatively impact your credit rating, even if you pay the balance due on time each month. 

The number three tip is to have enough cash on hand to make a substantial down payment. The more you put down on your mortgage, the less risk the lender perceives in giving you a loan, because of the dollar amount you invest up front. 

The number four tip is to be prepared. Gather together all your paperwork including pay check stubs, proof of self-employment income, listing of debts and assets and a current bank statement and any other information needed. 

The number five tip is to talk to your mortgage broker about your financial situation. Find out if you can pre-qualify. Talk about what lenders require in order for you to qualify for a more favorable interest rate (more income, less debt, higher down payment, etc.). 

Be sure to contact us when you are ready to take that next step.

June 20th was the first day of summer and the Vancouver Real Estate market is still moving along at a good pace. In the past week there were approximately 200 sold listings in the City of Vancouver.  Definitely not a slow real estate market!

In comparison to the market we have been accustomed to in the past few years, there is a definite increase in the number of price reductions. Within the City of Vancouver 328 price reductions were reported in the past week. I don’t necessarily believe it is because the property values are falling. I think the reductions are due to overly optimistic sellers and Realtors. Some Realators are looking at the price of  properties sold in early 2008, and then adding 5% to the price. They are assuming the market has continued to move upward, and pricing accordingly.

A number of weeks ago I toured and inspected a property listed on the West Side. This is a nice home listed in the 1.6M ballpark. I was pretty surprised when I saw the home, thinking it was substantially over priced . Three weeks later the house is still on the market and has now been reduced by $200,000. It should now sell quickly. This is an example where the media would print the headline, “Prices being reduced by hundreds of thousands in Vancouver.” In reality this home was very poorly priced; there were no comparable sales remotely close to the original asking price.

For the past five years, the media has been saying that prices will be falling and the market is cooling. I suppose if they continue to tell people this, eventually they will get it right. I believe that we still have a healthy market. I have recently been on both the Buyers and Sellers end of deals that are comparable to times when sellers were receiving 3,4 or 5 offers. It is the same idea as one gas station selling a litre of gas for $2.00 when every other station is selling for $1.40.  If the station at $2 brings down their price to $1.40 it doesn’t mean that gas prices just dropped 60cents. It is just another example of … “you can ask whatever you want … the proof is in the sale price.”

Overall I think we are in a more balanced market.  Sellers can still get a good price for their property and Buyers can find good value when they do their due diligence. I also believe the days of the bidding wars are over. I had a sale a few summers ago where I priced a home at the low end of market value to facilitate a quick sale. After the first open house we had 15 subject free offers. The house sold so much over asking price the sellers could have bought a 1 bedroom apartment in Kits with the extra money!

As a Seller in today’s balanced market, the most important aspects for a successful sale are current comparable sales, and taking the emotion out of the sale of your home. An experienced Realtor will help you set realistic expectations so that your home can be marketed properly, resulting in a very successful transaction.

If you would like to know how my marketing plan differs from a Realtor who will just “stick a sign in the ground” I would love to hear from you.

Simon Clayton
www.simonclayton.ca
604-764-0711 (Direct)

This communications is not meant to cause or induce breach of an existing agency agreement.

The obvious reason to get pre-qualified for a home loan is so that you know how much home you can afford. The purpose of the pre-qualification process is much broader, though, than simply crunching income vs. expenses numbers to see what mortgage payment you can afford!

As mortgage professionals we use your income vs. expense ratio as a starting point in determining the “big picture” of your home purchasing process. We will run a credit report to determine your credit card and loan balances. Also, the credit report will show whether or not you are current on all your debt payments.

After all this information is compiled, you will have a good idea as to your creditworthiness, the mortgage amount you can comfortably afford and what, if anything, you need to do to improve your credit rating.

Your Averbach consultant may suggest you pay off credit cards and will certainly advise you to clear up any problems or incorrect information in your credit report. It’s a good idea to begin the pre-qualifying process several months before you actually plan to begin shopping for a home. That way you’ll have time to clear up any credit report issues. About 90-120 days before you close on your home, you can lock in a favorable interest rate as a hedge against rising rates in the future.

A not-so obvious reason you may want to visit a mortgage broker before you begin house-hunting is so that the seller knows you are able to acquire a mortgage without any surprises. Your offer to the seller is much stronger when you don’t have to put “qualifying for a mortgage,” as a subject-to clause!

If you have any questions about the steps necessary to pre-qualify for a mortgage please give Mike (604-710-2550) or Justin (604-736-1855 ) a call or fill out the form on our Contact Us page.