A mortgage pre-approval is a crucial step in your homebuying journey. It provides you with an estimate of how much money a lender is willing to lend you for buying a home, based on your financial situation. With a higher pre-approval amount, you can unlock the door to your dream home. Here are some strategies to boost your pre-approval and achieve your homeownership goals.

 

  1. Save for a larger down payment: Saving more money for a down payment is the most effective way to increase your pre-approval amount. Set a savings goal and automate transfers from your checking account to a dedicated savings account or down payment fund. Utilize unexpected windfalls like tax refunds or work bonuses to bolster your savings.
  2. Boost your credit score: Obtain your credit reports and review them for errors or discrepancies. Make timely payments for all your financial obligations and avoid opening new credit accounts before applying for a mortgage. Keep older, well-managed credit accounts open and use them responsibly. Maintaining a good credit score will strengthen your pre-approval.
  3. Increase your income: Evaluate your performance at work and consider discussing a raise with your employer. Explore part-time jobs or side hustles that align with your skills and interests. Supplemental income can be dedicated to savings for a down payment or reducing your debts.
  4. Reduce your debt: Create a list of all your outstanding debts and prioritize repayment based on interest rates or balances. Develop a budget to identify areas where you can allocate more funds towards debt reduction. Cut back on discretionary expenses to free up money for paying off debts.
  5. Add a co-borrower: Consider adding a co-borrower, such as a spouse or family member, to increase your combined income and creditworthiness. A strong co-borrower can enhance your application’s strength and potentially raise your pre-approval amount. Remember, both you and your co-borrower share responsibility for repaying the mortgage.
  6. Negotiate longer mortgage terms: Opting for longer mortgage terms, like 30 years instead of 15, can lower your monthly payments. This reduction can improve your debt-to-income ratio, making it easier to qualify for a larger mortgage. If your financial situation improves, you can always make extra payments to pay down the principal faster.
  7. Explore government assistance programs: Canada offers various government programs and initiatives to support homebuyers. For instance, the First-Time Home Buyer Incentive allows eligible buyers to finance a portion of their purchase through a shared equity mortgage with the government. Additionally, some provinces and territories have their own programs that can further increase your borrowing capacity.

 

With determination and these strategies, you can move closer to owning your dream home. Take control of your financial profile, increase your income, and reduce your debt to secure a larger mortgage pre-approval. Get in touch with our trusted realtors today and start making your homeownership dreams a reality!

p.s. First time buyers will need more guidance and we have the tools to help these first time buyers through the process to make the best decisions.  

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