2021 is going to be a big year for Canadians looking for a new home. Reports indicate that 52% of Canadians believe that real estate will continue to be one of the best investment options in the new year, and we couldn’t agree more.
Before you take the plunge into homeownership, make sure you get your ducks in a row. Here are 5 things to consider before making the move.
1) Assess Your Credit Score
The first thing you need to do is check your credit score. Since mortgage lenders will definitely be looking at this number and it can take months to improve, you must make this one of your first steps.
Credit scores range from 300-900, and a “good” score is considered 690 or higher. You can use online credit checking software to find out what your score is. Some of the most common software in Canada includes Equifax, CreditKarma, and TransUnion.
2) Improve Your Credit Score
Once you know your score, you can start improving it. If your score isn’t considered “good” enough for a mortgage, don’t worry! There are lots of ways you can work on increasing it. For example:
– Always make payments on time
– Pay the minimum due each month, or more if possible
– If you’re not sure if you can make a payment, contact the lending company
The government of Canada also suggests using 35% or less of your available credit regularly. Keep your credit usage rate below that number.
3) Secure Your Down Payment
The amount you save for a down payment affects the amount the bank will lend you, your monthly mortgage payments, how long you must make those payments for, and the amount of CMHC insurance you pay.
The minimum down payment allowed in Canada is 5%. Insurance is avoided with a down payment of 20% or more. However, with record-low interest rates, many consumers are taking advantage of insured mortgage products to take advantage of promotional rates which in turn increases their buying power. Speak with your mortgage professional to determine which is best for your unique situation.
4) Apply for a Mortgage
It’s best to get pre-approved for a mortgage as that provides you with more time to search for homes while your interest rate is secure. Pre-approval allows you to know your exact budget while you shop for homes.
To get pre-approved, the bank will require you to bring in various documentation. The faster you do this, the sooner you’ll know what you’ve been pre-approved for.
5) Find Your New Home
The final step is the most fun: finding your new home! Work with a realtor who knows the ins and outs of the neighbourhood you want to move to. They should have multiple years of experience and expertise in that particular market and excellent negotiation skills.
Let’s Find Your New Home
The de Denus Team has the experience and expertise to find you a home that meets all your needs as well as your budget in the Hamilton area. Feel free to browse our sold portfolio and contact us to start the home buying process!