Buying a Home? Here Are 5 Things Not To Do
November 3, 2022 | Buying
Over the past 15+ years, we’ve helped hundreds of buyers find their dream homes in Toronto West and beyond. After getting to know the market inside and out, we’ve developed a fool-proof system that removes the stress that comes with buying a home in the city’s competitive market.
If you’re buying a home in Toronto, here are 5 things you should NOT do before heading to the market.
1. Start Your Home Search Before Getting Pre-approved
Before you begin searching for your dream home, you’ll want to get pre-approved for a mortgage. Pre-approval lets you understand exactly what you can afford, helping you save time and prevent disappointment by ensuring you don’t shop for homes outside of your price range.
Getting pre-approved also shows sellers that you’re a serious buyer. This increases the chance that your offer will get accepted. This step is all too often bypassed by house hunters and we always educate our buyers on the importance of pre-approval.
2. Change Your Job or Career Path
Now that we’ve covered the importance of financing in the house-hunting process, it’s worth looking at items that may impact your qualifications to lenders. Lenders will want to know that you have a steady and reliable income. If you choose to change jobs before seeking a mortgage, it could complicate things.
Each circumstance is unique – but as a general rule, most lenders require a minimum of 3 months of consecutive income (if you’re a salaried employee) as a basic qualification for financing. For self-employed buyers, lenders generally require 2 consecutive years of employment. That being said, smaller moves like a promotion or role change within your current company generally won’t deter or discourage lenders.
Beyond the process of getting approved for financing, a change in your job or career could introduce other complications to your long-term financial health. For instance, if you are unemployed for longer than you had originally anticipated, it can become increasingly challenging (and stressful) to keep up with the costs of your new home.
The process of buying a home can feel overwhelming, but it doesn’t need to! Explore more of our buyer-focused resources below to ensure you find success in the market.
3. Max Out Your Credit Card
When it comes to buying a home, credit history becomes especially important. If you want to get approved for a great mortgage, ensuring you have strong credit is a must. When you apply for financing, your total qualifying income will be offset by any existing debt you’ve incurred – this includes any other loans you’ve received and current lines of credit. Having bad credit could lead to paying a higher rate of interest on your mortgage or in some cases, being denied altogether.
One simple way to improve your credit score is by limiting the amount of available credit you use. As a general rule, do not utilize more than 50% of your credit limit at a time. It’s also important to maintain your credit health after you’ve been pre-approved. Be careful about opening or closing new credit accounts as this will negatively impact the long-term health of your credit.
Want to optimize your credit score before buying? Click here to read our 7 steps to building and maintaining a better credit score.
4. Make Another Major Purchase
In Toronto, buying a home is no small expense. Before you head to the market it’s best to leave as much room as possible in your budget to prevent overspending. An easy way to do this is by avoiding any substantial purchases before you buy a home.
During your home purchase, there are other expenses you’ll need to account for beyond a down payment and financing. Other transaction costs like lawyers, movers, CMHC mortgage insurance, and land transfer tax can add up quickly.
It’s best to wait until after your home purchase has wrapped up before making any large purchases. Ideally, at least a few months after you’ve moved in and have a better idea of your current finances.
Thinking about relocating to Toronto? We work with dozens of newcomers settling in the city and have created a specialized process to help them transition to life in Canada. If you’re interested in relocating, check out these pages from our site.
- Our Favourite Toronto West Communities
- Guided Real Estate Services For Relocators
- Get Answers to Your Property Purchase Questions
5. Go With the First Mortgage You See
Beyond the final sale price, one of the largest costs that come with buying a home is interest. Interest rates can vary significantly by lender, and in Toronto, you’ll have a lot of options to pick from. Rather than go with the first mortgage you see, it makes a big difference to shop around.
Not sure where to start with finding the right mortgage? Ask a real estate agent. They can connect you to local mortgage specialists and offer trustworthy advice about creating a savings plan.
Ready to talk about buying? Unlock a smarter way to buy a home in Toronto while getting first-class service every step of the way. Book your buyer’s meeting.
