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Steps Needed Before Acquiring A Mortgage

Unless you’re independently wealthy, buying a home will require the use of a mortgage - a financial instrument used by banks that is defined below as:

“A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.” (Oxford)

With a payback calendar that typically takes years if not decades, a mortgage is the usual way of purchasing real property. The key to buying a home is to determine beforehand how much you can spend. This is referred to as being preapproved or pre-qualified for a mortgage, an essential part of the financial process. You’re only setting yourself up for disappointment if you have visions of owning a $1 million home, but only qualify for a mortgage covering half that amount.

To pre-qualify for a mortgage you will be required to provide financial information to your mortgage broker, banker or other financial institution. This information will typically include such facts as your total savings and any investments. It will also include information about your work, employment history, wages, debt loads or any other information the lender deems of interest.

The lender then reviews the information to determine exactly how much they would be willing to lend. Knowing what funds are potentially available will help you in deciding the price range of the homes you should be looking at. You must also provide a down payment out of your savings before a lender will provide a mortgage.

This is a percentage of the purchase price that varies from province to province. If buying a home is a goal, then you should begin saving for a down payment as soon as possible.

Remember: the larger the down payment the smaller the mortgage - and the smaller the mortgage the quicker you will own your property outright, which is the goal of every homeowner.

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Finding The Right Neighbourhood Is Important

When looking for a new home you should always consider the neighbourhood it’s located in; after all you’re going to be living there a long time. Remember your home does not exist in isolation, and neither do you. What style of home do you like? What needs must be satisfied for you to be happy? Where do you see yourself in the future? These and countless other questions need to be asked before settling on a home and area.

Your present situation will help to determine the home you finally settle on. If you’re single, part of a young couple, a growing family or a retiree, your housing needs will be entirely different. With your present lifestyle in mind (and with a vision of where you want to be in the future also handy) it’s a good idea to simply drive around your community to see where you want to live.

Even if you’ve lived in the area your entire life it’s likely you’ll discover something new about your city just by driving around. If a family home is on your checklist, then look for an area where there are plenty of children. You can gauge the vitality of a neighbourhood by the activity on the street. If there are schools and shopping in the area, if there are children playing in parks or riding their bicycles, this suggests a developed, safe and family-friendly area.

Local municipal governments often compile information on their neighbourhoods, such as crime rates, transportation routes, school catchments areas and other data. So, what should you do? One way to learn about the different community areas includes regularly attending REALTOR® open houses in the neighbourhoods that appeal.

Finding the right neighbourhood for you is essentially a self-directed course of study - but the right decisions will make the process of home ownership easier and infinitely more satisfying.

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