Things to Consider Before You Buy A House
We have put together some important information you will need to consider when planning for your next big move. This applies to everyone who might be considering to either sell and buy or buy for the very first first time.
Build a Team of Industry Professionals
Your Realtor and Lender can provide a network of other required professionals when the time comes:
- **Builders – We have established relationships with many amazing builders in the city. Let us help you with that!
- **Accountants – know and understand the potential tax implications for what you would like to do:
- What tax benefits do I have access to as a first-time buyer
- What tax implications are there for using my RRSPs as a first-time buyer
- What tax implications are there for using my RRSPs as a NON-first-time buyer
- How do the writes off on my rental work
- What tax implications are there if I purchase a property as a rental versus a second residence
- What tax implications are there when a change of use occurs on a property (keeping existing as a rental and buying a new principle)
Know Your Credit Report
- Know your Credit Score (the recommend minimum is 680 when applying for a mortgage)
- Know your details
- What Open credit lines are showing
- Are there old debts that should be removed?
- Are there issues that need to be addressed such as late payments, writes offs, collections
- There is a difference between a soft credit pull versus hard pull (you should know how your credit score inquiries affect your score?)
- It is always imperative to pull your own report at so that you know what is on it. You are entitled to a free report every year from:
- Most negative items on a report can be corrected and lenders can work with this BUT it takes TIME to get the corrections made and for the correction to reflect in the score
Shop with Confidence – Obtain a Formal Pre-Approval
- At 120 days prior to purchase you should complete a proper pre-approval
- There’s a difference between preapproval and just a pre-qualification
- This will require documents for Income and Down Payment
- Your application will actually be reviewed by an underwriting centre
- Ensured deals will still be subject to insurer approval will have bank approval
- Secure a rate guarantee (up to 120 days for resale)
- Very important in a rising rate environment to have a rate locked in
- We saw 4 rate increases in the month on July so people who locked in a 120 day rate hold in June greatly benefited from there formal pre-approval
- You must have taken possession by your rates expiry date (not enough to just write an offer)
- Get it in writing – if you haven’t received a lender approval letter you may not actually have a formal pre-approval or rate hold in place.
Determine Your Household Budget
- It’s about more than what you qualify for, it is about what you can afford
- Complete a budget sheet – what is the total you would be paying out every month
- Housing expenses: mortgage payment, property taxes, utilities etc.
- Non-Housing expenses: life insurance, groceries, entertainment etc.
- How will this change over time?
- Mat leave
- Change of job
- Change in liabilities
- Include in your budget additional fees on your purchase
- Legal fees, disbursements and adjustments (property tax, condo fees)
- Home Inspection and appraisal
- Service hook-ups (hydro, telephone, cable, etc.)
- Moving Costs
Should you have any questions about any of the above, feel free to contact me.
It is always good to engage your professionals early to achieve your goals as per your plans.