If you’re planning to buy a home, I have 10 tips for you on how to start the home buying process.
- Check your credit. A good credit score is essential to buying a home, since it proves you’ve got a good track record for paying off past debts such as credit card bills and college loans. A higher score also makes it easier to qualify for the lowest interest rates, which in turn makes your purchase more affordable. To find out what your credit score is, you can go online to TransUnion or Equifax.
- Start saving. You’ll need cash reserves to buy a home, and you’ll need to prove to a lender that you can afford housing payments that may be higher than what you’re currently paying in rent. Start saving now; you can buy a home with as little as 5% down.
- Earn extra cash. If you’re low on cash, as many first-time homebuyers are, consider taking steps to cut spending or find some way to increase your income. This could include selling some of your stuff or taking a part-time job.
- Consult a lender. The sooner you visit a lender, the faster you’ll know where you stand on getting a mortgage and the steps you need to take to improve your situation.
- Find out how much you can borrow from your RRSPs. In most cases, if you’re a first-time homebuyer, you can borrow up to $25,000 from your RRSPs. If you still don’t have enough money, consider asking your family for a downpayment loan.
- Decide how much you want to spend. A lender can give you an idea of how much you can afford, but you have to create a personal budget to decide what you’ll be comfortable spending on your mortgage payment. You can go on any lender website and look for an affordability calculator.
- Ask your employer for a job letter. In most cases, your bank will need this before approving your mortgage, so make sure to have this handy, as your employer may need time to issue this document.
- Start looking at neighborhoods. Unless you already know where you want to live, take the time to visit a variety of neighborhoods. Scout the areas that meet your needs in terms of transportation options and other amenities. Exploring different locations will help you narrow your priorities.
- Visit open houses. Going to open houses early in your search will let you see what’s available in your area and what might fit your budget. You can then see what matters most in your decision, such as the location, room for entertainment, or outdoor space.
- Interview real estate agents. Every agent is different, so it’s important to speak with a variety of them. You need to work with someone you’ll feel comfortable with.
“If you’re low on cash, as many first-time homebuyers are, consider taking steps to cut spending or find some way to increase your income.”
If you’d like to hear more about the home buying process, feel free to reach out to me. I can provide free coffee and explain it to you in person.