5 New Year’s Resolutions for Homebuyers

This is arguably the biggest, most difficult and most time-consuming part of the home-buying process. To avoid taking out a high-ratio mortgage, you’ll need at least 20 per cent as a down payment, which, in some of Canada’s most expensive housing markets, can be more than $200,000. It’s important to start thinking about how you will come up with the money – whether you’re borrowing from an RRSP through the first-time Home Buyers’ Plan, using savings, or getting financial assistance from the Bank of Mom and Dad.

This one’s important, because your potential mortgage lender will be doing the same. A credit score is a number between 300 and 900 that rates your credit-worthiness. According to credit-rating company Equifax, a score of 690 or higher is considered “good.” Lenders will use this score in tandem with other factors, such as your debt-to-income ratio, to determine mortgage eligibility.

Remember that phone bill you didn’t pay in time back in college? It can come back to haunt you. Any any loans, remember that even a one-day-late payment is still considered “late,” and this can negatively affect your credit rating and your future 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.

Interest rates have been on the rise following a prolonged period of record-low rates. With more rumoured increases to come, getting pre-approved for a mortgage now will lock in at the current rate for up to 120 days. A mortgage pre-approval is not an obligation to purchase within this time fame, nor are you committed to that particular lender. It’s just a written confirmation of the approved amount and the promised rate, so you can shop with confidence within a budget you know you can afford.

Online is a good place to start your search, but nothing beats first-hand experience. With budget in mind, bundle up and hit the streets to explore different neighbourhoods and the amenities you’ll have access to. Do you rely on public transit? Is an active night life important to you? Daycares and schools? Parks and rec? Highway access? How close (or far!) do you want to be from family and your work place? Think about your day-to-day needs, and anticipate how they might change over time.