Are you planning on buying a home?
Why own?
You can build equity, enjoy pride of ownership...
Owning is a very safe, long term, profitable investment.
If you're planning on buying in the near future, preparing ahead can save you time and money.
Do you know what your bottom line is?
This is not just what you're going to pay for the house.
It has to do with location, distance to work, number of bedrooms, bathrooms, parking, etc.
Single family home? Condo? Townhouse?
Buying a home can be very emotional and you don't want to be making these decisions under pressure, if competing for a particular home.
Do you know what your credit looks like?
A lot of people swear they have great credit, but a bill or two paid late, or even wrong information on your credit report, can make things more difficult. Take the time to check your credit rating/score, and if you find mistakes, fix them immediately. Pay any outstanding debts right away. Wait for a full month after fixing any mistakes and paying any outstanding bills, and request a copy of your credit report from Equifax, and check it again. Once everything has been fixed and debts paid, stay on top of it. Don't be late with your payments.
Avoid large purchases before buying a home.
I know you can get really excited about being a home owner and you run out and buy all your furniture,
or you buy a new car, for that new garage you'll have....
... then you'll go apply for that mortgage, and you will no longer qualify for the house you thought you were going to buy. If you make large purchases before buying a home, you may have to settle for a much smaller mortgage (which may mean a much smaller house, with less space, and probably no garage for that new car).
Calculate the maximum mortgage you're comfortable paying.
Generally the bank will tell you what you qualify for, but that's not always what you're comfortable paying. If it is, work with that number. If not, then come up with a figure that will still let you live life.
Keep in mind that interest rates may (will) go up.
Once you calculate the monthly payment you're comfortable with, calculate it again by allowing for a higher interest rate. (You may face much higher interest rates, by the time your mortgage comes up for renewal, in 3 or 5 years... Re-calculate your payment, by adding 2% to the current rates).
Could you still pay that higher amount, on top of all your other commitments?
You may want to think about that. Any danger of losing your job in the next few years?
If so, would you consider renting out part of the house, to bring in some extra money?
Maybe a room-mate, for a little while?
Things to consider....
How much cash will you have available the day you buy?
Will you have enough cash on hand, not only for the down-payment, but also for all the other closing costs, and additional fees?
Fees: legal fees, home insurance, land transfer tax, moving costs, etc.
Remember, if you're buying in the City of Toronto,
you also have the Municipal Land Transfer tax to worry about.
Emergency Fund: Did you budget for any repairs or maintenance the home may need? If you're buying a fixer-upper, did you get quotes for all the work you need to get done? Do you have enough available cash? If you are out of work for 2-3 months, do you have a separate account to cover 3-5 months of mortgage payments?
Do you have all your documents in order?
The bank will want to see pay stubs, tax documents (past 2 years); maybe bank statements and collateral, if you're self-employed, etc.
If you don't have your paperwork in order, start now.
Have you been pre-approved?
Now that you have everything in order, you must get pre-approved for a mortgage.
You may think you can afford X, but the bank may only be willing to lend you Y.
Being pre-approved will make it easier for you to make your final decision. It will also put you in a better position to put an offer on a property, than someone you may be competing with, who has not been pre-approved.
Plan ahead so you can find the right home, and make a good investment, when the time is right for you.
It pays to be prepared.
If you require additional information, don't hesitate to contact me.
Toronto Real Estate by Sylvie Conde, Broker
Sutton Group-Associates Realty Inc., Brokerage 416-966-0300
sconde@sutton.com
www.sylvieconde.com
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