With a wide variety of popular regions to choose from, it’s no wonder why Montreal condos are a top buyer’s choice. The ease of access and close proximity to the downtown areas makes these affordable housing solutions the preference for many residents.
But before you start scouring the online listings of Montreal condos for sale, it is always wise that you know a bit more before you apply for that mortgage. Avoid common pitfalls and get approved more easily by gleaning from these tips first.
Credit Score Is Imperative
What is your credit score? Did you know that over 25% of people have no idea what is even on their credit report? Take the time to pull your report and find out. You may be surprised at what you find. Typically, banks want to see a score of 650 or higher to grant approval on a home loan of any type.
Debt To Income Ratio
While your credit score certainly matters, your debt to income ratio also matters. This is factored based upon how much debt you have wagered against how much take-home income that you are earning. In the average lending scenario, banks want to see a debt to income ratio that does not exceed 35%.
If you have past foreclosures that are on your credit, you will want to take a closer look before you apply for lending on any Montreal condos. According to Realtor.com, banks look back three years on foreclosures. So if you have a foreclosure on your credit report that was discharged three or more years ago, you will be in the clear. If not, you may not be approved and may have to wait to borrow.
Liens Or Judgements
If you have past liens or judgements that are haunting you, you may be able to explain some of these to the bank. Usually, however, they are bad signs that often result in the mortgage application being rejected. In some cases, you may be able to explain these, however, and even have your credit rescored without them to try and get approved.
Before you start shopping for Montreal condos, consider getting preapproved by a bank first. This will let you shop more confidently, and will also let you know what your spending limit will be if you do find that ideal home sweet home. Most banks will issue you a preapproval letter, so you can shop confidently for that condo.
The Down Payment
Lastly, don’t overlook the down payment. Generally speaking, banks want to see you put at least 20% down. If you are unable to tender this amount, you may have to pay extra for mortgage insurance that protects the bank in case you default on the loan. BE aware that this insurance can add a sizable fee to your monthly bill. Make sure you factor this into your equations if you are planning on putting less than 20% down on your purchase.