Things to do when preparing to buy a new home
February 13, 2013
It’s the biggest purchase most of us will make in our lives so take your time. Look around think about what’s important to your family now and in the future. Look for things like amenities, walkability, access to schools, transit and potentially medical facilities. More and more the focus in the building industry is on developing sustainable neighbourhoods rather than just suburbs and this means a better lifestyle for you and your family. With the web filled with information gather your notes on a new development in advance and come in prepared with specific question for the sales agent.
What is a Sustainable Neighbourhood?
A sustainable neighbourhood meets your needs, while protecting the environment. Homes in a sustainable neighbourhood are located near shops, schools, recreation, work and other daily destinations. This helps reduce driving costs and lets residents enjoy the health benefits of walking and cycling. Land and services, like roads, are used efficiently. Sustainable neighbourhoods also feature a choice of homes that are affordable.
Purchasing a new home is a major financial investment this means that the bank will be checking your credit to ensure you qualify for that home of your dreams. Some tips to ensure you are ready for a great financial review are:
- Don’t borrow any new money, credit cards, 12 month financing offers, don’t buy a new car.
- Get a credit report so you know where you stand — a great source is Equifax.ca or transunion.ca
- Reduce existing debt — get rid of high balance credit cards, store charge cards, payday loans etc..
- Switch to automatic bill payments so you don’t have any late payments showing on your credit, this way you can’t forget!
You will need cash in hand with the purchase of a new home, things like down payment and closing costs need to be part of the financial plan for your new home. There are lots of ways to save!
- Change your current spending habits by cutting out unnecessary luxuries, ie that weekly steak dinner out might have to go on hold for a while.
- Sell (or donate) old stuff — you’re planning to move and there may be a bit of furniture etc..that won’t be coming with you. Get rid of all that extra stuff now and place the cash earned in a savings account and don’t touch it!
Don’t stress too much about the down payment
Just a line above I had expressed the need to save, don’t get me wrong you are still going to need liquid cash. However, in the past we have been told that it’s very important have the 20% deposit, but in my opinion, the ability to make the mortgage payments is the main factor for affordability. In other words, it’s the size of the mortgage that matters. Of course you can get better rates with a larger down payment so it’s better if you have one, but don’t sweat it too much. Talk to your mortgage agent, get pre-approved and enter the market knowing what you can afford.