Home Buyer "Must Do's" Before Finding Homes For Sale

Let’s face it, buying a home can be stressful and daunting at times. Not only is it one of the biggest purchase you you will ever make in a life time, you also have to consider goals, commitments and lifestyle.

Before you begin looking at homes for sale, the very first thing you have to do is to look at your finances. You will need to review your financial situation to determine what you will be able to afford as a down payment and how large a monthly payment you can afford. The higher the down payment, the less you will have to pay monthly as your mortgage amount will be lower which means less interest accrued.

An important part of your strategy for buying a home includes paying attention to your current credit status. If there are any credit problems in your history, it’s a good idea to take care of this ahead of time. Your lender will scrutinize your monthly income at the time you apply for a mortgage. Debts and other obligations reduce the amount of money you can spend on housing. If you are planning on buying a new car, boat, or any major furniture, it may be wise to postpone these purchases until after you buy your home. The lending process requires mortgage lenders to request a mortgage credit score from credit bureaus to help them determine your credit worth. A good score may benefit you in the time required to get approval on your mortgage as well as the rate you receive and the way in which your mortgage is managed.

The analysis takes into account about 100 variables gathered from your credit file at one of the two largest credit bureaus – Equifax and Trans Union – and specifically looks at such things as how much you are currently in debt, how many places you have applied for credit recently; and what kind of credit you have had in the past.

Before you apply for a mortgage loan, find out whether anything in your credit record might present a problem. By using the web links provided, you can confidentially find out directly from the credit bureaus, how your credit stands. Order a report two or three months before making a loan application to give yourself plenty of time to iron out any wrinkles you may discover. Before you even start looking for a home, it’s a good idea to pre-qualify for a loan. Visit with your mortgage specialist ask him or her to determine the maximum amount you qualify for based on your specific financial information regarding the types of loans available.

The pre-qualifying interview should be free. Remember to bring tax returns, salary stubs and other financial data to the interview. You will want to find out how much debt you can carry under the most commonly available mortgages.

Ensure you receive all information available and get a feel for which mortgage suits your needs.

Remember, you are not obligated to use the lender who pre-qualitifies you. When you’re ready to borrow, compare the rates and mortgage options available from several lenders. Because each inquiry on your credit report will slightly reduce your credit score, be sure to limit the number of inquiries. If you’re not sure where to start; click the online resources tab for a direct link to a local lender. If you are confident with the lender you choose, it is a good idea to make a full loan application and start the loan process. This will make you a much stronger buyer, so shop around first.

1) About a half year prior to when you would like to start looking for a home, pay off any small debts so that you can bump up your credit rating.  Variable interest rates are still low and most home buyers would prefer the low rate - unfortunately with the new mortgage rules and regulations, many Buyers don't qualify and have no choice but to accept a higher interest rate.  

Click here for the Mortgage Calculator and see how much mortgages vary when the interest rate changes by only .25%!

2) Find out how much you can afford. Click here for the affordability calculator.

3) Find out how much of a down payment you will want to put down.  For those who put down only 5% will be unfortunately penalized by the CMHC as an insurance in case you default on your mortgage.  For those who have 20% for a down payment, you will not have to pay any insurance fees.

Money given by parents or other measures can be qualified as a gift and will/should not impair the loan or its terms.

Click here for more information about the CMHC and what they do.

4) Determine where you want to live.  If you would like to know where to live, you can click WHERE IS THE BEST PLACE FOR ME TO LIVE which is a very useful tool. You will be overwhelmed if you are looking in to many places.  Narrow down the search and make it easy on yourself by knowing where you would ideally like to live before hunting for properties.

5) Make a decision about who you will be working with.  Before going out to buy a home, seek out mortgage assistance and find out what mortgage works best with you.  Remember, a small fraction of interest can change your monthly payments significantly.  Seek out which home inspector you would like, what lawyer will close the deal, what insurance company you will be using, etc.  If you require assistance with any of these, I can point you in the right direction.

6) Put together a wish list of what you would like.

7) There will be closing costs involved, the link contains typical closing costs involved.