Quick tips on how to qualify for a loan or a mortgage and get the best rate
Borrowing money for any reason can be a daunting process. Especially if you want to get the best rates possible. Lenders are strict, but they are in business to lend money and most will do what they can to meet your borrowing needs. Whatever the reasons. Buying a house? Car? Investing? To save money it is recommended to compare rates and terms.
TIP: If you shop around in person to multiple lenders and make applications to several places you risk taking a hit on your credit report because multiple inquiries. Besides, it is very time consuming and can be frustrating. That is why online loan and mortgage brokers are very useful. There are no up-front costs to apply. You make one application and they shop around to multiple lenders to get you the best deal. Click on the links above.
Check your credit score
Here in Canada, credit scores are from 300 to 900 across 5 categories: Poor, Fair, Good, Very Good, and Excellent. Categories vary based on which Canadian credit bureau is being used. The overall process is pretty well the same. Your credit score is a summary of your financial health. It is very important that you know what yours is before you start the application process. See this page for more information on credit scores and how to get yours free.
Try to get a larger down payment
No matter what you borrow for, the lender will most likely always require some amount of down payment cash upfront. The larger your down payment is – the better. The main reason for this is simply that the bigger your down payment, the less you will need to borrow. Thus also saving on the interest you will pay. Sometimes, getting approved for a mortgage relies on the size of the down payment. Rule of thumb is the bigger the down payment the easier it is to get a loan or mortgage, AND the interest rate might be more favorable. Loans
Keep your income consistent
Employment might change. That is normal. However, with a little planning you should keep your job while applying for a loan or mortgage. Showing a steady income is important. Lenders will hesitate if you can’t show a steady income. So if you are planning to borrow or re-finance, the time is before you switch jobs.