So you’ve decided to buy a home. Congratulations – you’ve completed the first step to buying! But… now what?
Before you run out and start looking at places to live, you’ll want to get a plan in place that will help your journey to home ownership be a grounded experience, and help you to navigate the real estate process. It can be easy to fly off in all sorts of different directions if you don’t have a solid foundation upon which to build the path to your dream home.
Follow these steps and you’ll be well on your way to becoming a home owner.
Step one: educate yourself.
It’s wise to read up on the process so you know what you’re signing up for – and so you’re prepared for the process, which can require patience. While it can happen overnight, it often doesn’t – but that doesn’t mean you’re not on the right track.
Getting more information on the process will also make you a more confident buyer, because you know the steps involved to becoming an owner. Use the Infohub to help you answer the questions you’re asking yourself right now.
Step two: get a grip on your finances.
That means getting a good picture of where you’re at financially, and where you’re going. This is going to help you determine how much house you can afford. Take a look at your debt to income ratio, which should be around 40%, but lower is better.
And while you don’t know what the future looks like, try to anticipate things that may be coming down the road that will affect that ratio – for example, getting married, having kids, getting a new car, and things of that nature. But don’t look to buy a home for who you’ll be then – purchase based on who you are now.
Step three: get pre-qualified, or better yet, pre-approved for a home loan.
This is something a lender can help you with, as it takes a comprehensive picture of your financial standings and shows you exactly how much house you can afford. It’s based on your, income, assets, bank statements, credit score, employment history and more, so you know it’s based on substantial factors, and not your best guess on what you can afford.
Getting pre-qualified and pre-approved also helps realtors see you as a viable buyer, and sellers know that you’re serious about buying when it comes time to put in an offer. It will also give you the confidence and support you need to purchase a home because you’ll know exactly what to afford.
Step four: don’t give up.
You might hit some bumps on the road to home ownership, such as not immediately qualifying for a loan, or getting pre-approval. This doesn’t mean you’re never going to own a home, this just means you’ve got some retooling of your plan.
Adjust your timeline, work on getting your finances in a more secure place, consider partnering with a co-buyer who has a stronger financial history, or look for less expensive homes so you can at least get in the marketplace and move on to a larger space later on. It will all come together in perfect timing.
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