Buying your first home can be one of the high points of your life – but it can also be a nerve-wracking process. The key is to plan properly, step by step. Here are 7 tips to help you make your experience as smooth as possible.
- Save up a down payment. Most people need to borrow money from the bank to pay for their first home. This type of loan is called a mortgage. With mortgage insurance, you can now put as little as 5 per cent cash toward your purchase. Learn more now . Tip: There are government plans to help you buy your first home. Learn more about how government plans can help you to buy your first home.
- Make sure your credit report is in good shape. To qualify for a mortgage, you will have to pass a credit check. So before you apply, order a copy of your credit report and check it for errors. And for at least one year before you buy your home, make sure that you pay your credit cards, rent, car payments and other debt in full and on time. It will help protect your credit score. Learn more now now.
- If you are renting now, check when your lease will expire. You could pay penalties if you try to exit your lease early. If so, you may want to time your closing date for your home purchase around the time your lease will expire.
- Ask your lender to pre-approve you for a mortgage. Don’t just ask to be pre-qualified. That will only tell you how much you can afford. A pre-approval goes a step further. If you are pre-approved in writing, you can show your seller your approval document. This will give them more confidence that your offer will go through because you have financing arranged. Learn more now now.
- Shop around before you buy – it’s a great education. Drop in on open houses. Look at a wide range of homes. Don’t stick to just one type. When you view a property, notice what you like and don’t like about it. Also take a good look at the neighbourhood it’s in. Is it safe, well maintained and quiet enough for you? Will it be easy to get to work, schools and shopping? Learn more now.
- Get all your financing details in writing. Whether you choose a bank, a credit union, or a mortgage lender, get every detail of your loan in writing. Be sure to check the lock-in rate, any special conditions and fees.
- When you’re ready to buy, check the contracts carefully. Read every document related to the purchase. Also ask a professional to review them. You're signing a binding, legal document.
Remember: Your first home could be one of the biggest purchases you will ever make.
Don’t rush in or skip any steps, even if the market is hot. It can save you from costly mistakes you may regret later.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.