6 simple tips to get mortgage-ready

Thinking about buying your first home? Before you fall in love with a house, let’s make sure your mortgage application will shine. These six steps will help you get your finances in shape before applying for a mortgage.

I put together a short video that quickly covers these tips… Perfect if you want the quick version before diving into the details.

📹 [Watch: 6 Tips to Get Mortgage-Ready – Quick Video Guide]

Let’s take a closer look at each step so you can feel confident moving forward

1 – check your credit score

Your credit score is one of the first things lenders will look at. You’ll generally need a minimum score of 680 to qualify for the best mortgage rates with most lenders. If your score’s lower, don’t panic! It just means we may need to look at some alternative options or take some time to boost it.

2- review your credit report

Mistakes happen, even on credit reports! You can request a copy from both major credit bureaus (Equifax and TransUnion in Canada) and check for errors. Old accounts that show as “active” despite being paid off, accounts that belong to someone else with the same name as you, or anything that doesn’t look familiar. Dispute anything that isn’t accurate right away. The credit bureaus update their files very slowly, so the earlier you do this, the better.

3 – watch your credit utilization

Try to use only 30% or less of your credit limits on each credit card or credit line, even if you pay off your card every month. A key point to know is that your balance shouldn’t go above that 30% level at any time during the month, because you don’t know when the credit bureau will pull the information about your balance. If you need to go over 30%, it’s best to prepay the card before making the purchase, so your balance stays below the 30% mark. Keeping your usage consistently low can give a noticeable boost to your credit score. Allowing your balance to creep up toward the limit, or even worse, exceeding your credit limit, really hurts your credit.

4 – tackle debts with high monthly payments

Lenders care about how much you owe every month compared to your income. If you’ve got high car payments, leases, or personal loans, it can shrink the size of the mortgage you qualify for. This is because they use up a lot of your income in the qualifying ratios. So, focus on paying down these debts if you can, it can free up your borrowing power.

5 – no new credit 6 months before applying for a mortgage

Avoid applying for new credit cards, store financing, or buy-now-pay-later plans for at least six months before you plan to apply for a mortgage. Each application creates a new “inquiry” on your credit report, which can slightly lower your score and raise red flags for lenders.

6 – pay everything on time

Yes, this one’s a bit obvious, but it’s still worth saying. Never miss a payment! Set up auto-pay on your bills and credit cards, and if you really want to give your credit score some zing, consider making multiple payments each month. Frequent payments seem to nudge the credit bureau’s algorithm in a positive direction.

Getting mortgage-ready doesn’t have to be overwhelming

Just take it one step at a time. If you’re ready to talk strategy or need a hand reviewing your credit, let’s connect. I’ll walk you through the process and help you feel confident and prepared every step of the way.

Got questions? Let’s talk. I’m here to help!