Buying a home is one of the most important financial and lifestyle decisions you will ever make. To ensure you make smart home buying decisions from start to finish, it is important to look at our Homebuying Step-by-Step guide. The ultimate first step is to do your research. You need to find out the essentials of buying a home, before you start the search for your perfect home.
Make sure you’re ready: Before you start your search, make sure home ownership is right for you. Ask yourself some fundamental questions such as: Will I be relocating in the near future? Can I manage home repairs?
Know your financial situation: It is important to figure out how much you can afford to spend before you start looking for a home. Your mortgage payment will probably be the biggest expense, but there are other costs you should be aware of. The more you know about your current financial situation, the more prepared you’ll be when you meet your lender or broker. All this ‘credit’ talk is important, because it will allow the lender to determine if you are credit worthy. The sooner you know what is reflected on your Credit Report the better!
Employment: It is important to have a steady income and also proof of employment for the last two years. Any changes to your employment will have to be explained. If you are self-employed you will be required to show a bit more documentation, including financial statements prepared by a certified accountant, alongside Notices of Assessment and T1 and/or T2 Generals to name a few.
Down Payment: In Canada, you need to show a 90-day history of the down payment to prove you have not borrowed the money. Any movement of substantial amounts during that 90-days, will require an explanation to the lender. You are allowed to get a gift from a close family member for the down payment, but this money must not be repayable, and the lender will need a letter from the gift giver to confirm this.
Determine your needs: Before you start searching for a home, think about your current and future housing needs, which location is right for you and what features are important to you in a home.
Find the right professionals: Buying a home, requires the services of real estate professionals, lawyers, mortgage professionals, home inspectors and so on. It will give you peace of mind to have experts on your team to answer your many questions along the way. Working with a mortgage broker will also assist you in getting pre-approved, so you know exactly what you can afford before you start searching.
Original article: www.cmhc.ca