Is 2018 your year to buy or build the home of your dreams? Here are 6 New Year’s Resolutions to get you to your goal:
SAVE FOR A DOWNPAYMENT
Well, not really. There are several programs available today that allow you to purchase a home with no money down and the interest rate is only slightly higher than a traditional mortgage. Other more common programs only require a 3-5% down payment. With the average price home being about $250,000, a typical down payment ranges from $0 to $12,500. If you are wanting to opt for a loan program that requires a down payment, it’s important to start thinking about how you will come up with the money – whether it’s using your RRSPs through the first-time Home Buyers’ Plan, savings, or financial help from the Bank of Mom and Dad.
CHECK YOUR CREDIT SCORE
This one is so important because a potential mortgage lender will be doing the same. The credit score is a number between 350 and 850 that rates how 'credit-worthy' you are. According to Equifax, a score of 690 or higher is considered “good.” Lenders use this score, along with other factors, like your debt-to-income ratio, to determine your mortgage eligibility.
Remember that bill you accidentally forgot to pay a couple of years ago? It can really come back to haunt you. Fun fact...late payments are not reported to the credit bureau unless they are 30+ days late. We strongly recommend always paying by your due date to avoid late fees and minimize interest charges, but you do have a little room before your score is harmed. And late payments do hurt your potential to qualify for a better mortgage. If you’re not happy with your credit score, take some time to bring it up to par before you start the pre-qualification process. Liz has some great tips on how to fix those mistakes and clean up your score!
GET PRE-APPROVED FOR A MORTGAGE
We LOVE the current low interest-rate environment! It's a great way to buy a nicer home with a lower monthly payment. Interest rates will rise sooner or later (some say sooner!). A mortgage pre-approval doesn't obligate you to purchase or commit to that particular lender. It’s simply a written confirmation of your ability to purchase a home which is submitted with your offer when the time comes to submit an offer. In this market, most sellers are requiring pre-approval letters in order to entertain your offer.
Internet shopping is a great place to start your search, but nothing beats first-hand experience. With your budget in mind, hit the streets to explore different neighborhoods and the amenities you’ll have access to. Make a list! Do you use public transit? Is an active night life important to you? What about daycares and schools? Parks and recreational areas? Highway access? How close (or far!) do you want to be from family and your workplace? Think about your day-to-day needs, and anticipate how they might change over time.
And last, but not least…
Working with the right real estate agent who has experience in the area and the type of home you plan to buy is essential to making the process as smooth and stress-free as possible. She will make scheduling viewings a breeze, be ready and on your side to foresee any small hiccups or major problems, negotiate the best price, and finally make an offer, see you through to closing, and of course be there for you for any questions or concerns after closing.