Finding the right mortgage is as important as finding the right home, and with careful planning, responsible homeowners can qualify for the best rates. Start following this timeline a year before you want to buy a home, and you’ll be set for financial success by moving day.
1 YEAR OUT: REVIEW YOUR CREDIT REPORT.
Download it from equifax.ca or transunion.ca and correct any mistakes.
TIP If your score is low, work on fixing it now – there’s enough time to make an improvement. Start by paying off debt such as a car lease, credit card accounts with limits upwards of $1,500 as this can help boost your credit score.
10 MONTHS OUT: TACKLE DEBT.
Responsible buyers enter homeownership with as little debt as possible.
TIP Focus on bringing your credit card balances to less than 50% maxed out. Loans that are at capacity hurt your score.
8 MONTHS OUT: LIVE ON LESS.
Homeownership comes with expenses that renting doesn’t: property tax, water, heat and so on. Start putting aside those amounts every month as this will help you prepare to take these bills on when you are a homeowner.
TIP Park the money in a high-interest savings account and apply it to your closing costs later.
6 MONTHS OUT: RESEARCH MORTGAGE BROKERS.
Brokers generally offer better rates than banks, and they help borrowers with less-than-perfect credit history, as well as those who are self-employed. Find 3 brokers and ask them what their best rates are, what kind of mortgages they can secure and what documentation
TIP Once you have answers, visit your bank and ask if you can get a better rate there.
4 MONTHS OUT: ASSEMBLE THE PAPERWORK AND APPLY FOR A MORTGAGE.
Most pre-approvals are valid for 3 months, but your broker (or bank) will need time to process your application.
TIP Order your credit report yourself. Why? When someone else (such as your broker, who needs a copy) orders your report, that’s recorded and can impact your standing. Pull the report yourself, and it isn’t recorded.
3 MONTHS OUT: START HOUSE HUNTING!
Attend open houses and private showings knowing exactly how much you can spend.
TIP Remember that your pre-approval is a maximum. You may find your perfect home for less. Don’t over extend yourself it is always better to have a buffer for emergencies.