The smart people who think about these questions and more respond every day with these six practical tips.
1. Get real pre-approval
Too many buyers are shopping, armed with a simple pre-approval from an online calculator that provides a high-level estimate of what you might be eligible for, the mortgage broker explains. Ron Butler, serving clients in the Greater Toronto Area, Ottawa, Vancouver and Calgary. “But true pre-approval is actually a sophisticated process, requiring the detailed attention of a potential lender,” he adds, “it will depend on your credit score, a thorough analysis of your income and the nature of your deposit, among other factors.
And keep in mind that “while you may be authorized to purchase, the lodge you may not want to buy, ”he adds. Before advancing the mortgage funds, the lender must agree to the deal, a “must” part of the buying process. If you are serious about making an offer, have a lender analyze your numbers in detail, confirm what you can actually spend with confidence, and understand that the house or apartment must be successful for the deal to work as well. . In other words, if the lender feels that the property you want is not worth the price you are willing to pay, they may refuse to advance you the funds you need.
2. Know your numbers
First-time buyers are most likely to have small down payments, notes Butler, and that can often mean they’re overwhelmed to get into a home. But don’t stretch yourself so much that you find yourself with no wiggle room.
It means don’t skip the home inspection. “If you only have 5% down payment and you try to put it together, you can’t afford a house with unknown issues that pop up after you buy it” because you don’t have enough money. money to fix them. And houses develop problems over time; it is in their nature. You are going to have leaks, breakages and inevitable maintenance and repairs. Condominiums, on the other hand, come with maintenance costs that “never go down,” he comments, so “a deal that only works if your costs never rise is a deal that is practically doomed. to failure “.
In order to make your home buying situation work, you need to make sure you have the resources to handle the inevitable additional costs of home ownership. These resources can come in the form of additional savings that you’ve set aside (instead of using them as part of your down payment), or you can create leeway by allocating a portion of your monthly income to managing the down payment. additional current and unforeseen costs. , from property taxes to regular repairs.
Bottom Line: If you need everything you need to hit the 5% minimum down payment and make regular mortgage payments, chances are homeownership should probably be put on hold until what you are able to create more wiggle room in your budget. .
3. Don’t let FOMO be your main motivation
“It’s very common that I talk to hopeful buyers who say a version of ‘if I don’t buy now, I’ll be out of the market forever’.” But buying decisions can’t be based solely on fear of missing out, or FOMO, Butler says.