Have you made any New Year’s resolutions yet? A big one for many people is to buy a new home (or buy their first home). It’s easier said than done, especially in select markets across the Greater Toronto Area. That’s why we’ve broken down this ambitious resolution into four resolutions to make it more attainable.
Check your credit score
There are people out there who have never checked their credit score. Are you one of them? If you’re preparing to buy a new home, then knowing and understanding your credit score is essential. If your credit score is good, then great, just keep doing what you’re doing. If it’s not high enough - below 600, for example - then figure out how to improve it.
Tip: part of your credit score is based on the amount you owe versus available credit. For example, owing $800 with a $1,000 limit is worse than owing $800 with a $10,000 limit.
Pay off debts
While discovering your credit score, develop a strategy to pay off debts. It’s best practice to pay off your highest interest debt first, which is usually your credit card. Saving money and having a savings account is pushed so much, but having that money gaining nominal interest is pointless when you’re paying 20% interest on your credit card debt. This year, make a point of prioritizing your most expensive debt. This will improve your credit score and put you down the path to saving for a down payment.
Have a goal for your down payment
So you know your credit score, you’re paying off expensive debt, and starting to save for a down payment. Though real estate prices fluctuate, we recommend doing some research to determine what type of home you may want to buy and in what neighbourhood. When you have an idea of how much your preferred home will cost, it makes saving for a down payment easier and more realistic. It can be difficult for some people to save without a goal in mind.
If you’ve done most of the above and you have money to put down, then go to a bank and get pre-approved for a mortgage. Your shopping around becomes more serious when you have a pre-approval. You can house hunt confidently knowing how much you can afford based on your income and current mortgage rates.
Good luck sticking to these New Year’s resolutions! We hope these tips and our new home search
helps you find your dream home!