Buying a home is one of the most exciting life experiences there is. To make the process as smooth as it possibly can be, there are some things you shouldn’t do before signing on the dotted line and closing on a property.
Nothing is written in stone until you have those keys in your hand, so these six tips may be useful to you to ensure that happens:
Don’t buy something major. That driveway might look stellar with a new car sitting in it, but if you’re planning on mortgage shopping, waiting until after you’ve secured the funds might be wise. You don’t want to chance not being able to get financing because your shiny, new car reduces your debt-to-income ratio, which banks use to calculate how much they’ll lend you.
In addition, Canadians must now pass a mortgage stress test. That means a lender will simulate your financial circumstances by qualifying you at the higher of either the benchmark rate—the qualifying rate set by the Bank of Canada composed of an average of the posted five-year fixed rates used by Canada’s major banks—or 2 per cent higher than the rate being offered by the banks.
Don’t quit your job. Mortgage lenders want to see consistency, and they will look at your job history, to be sure. Unless you’re offered the job of your dreams, it’s better to stay put until you’re sure of a lending institution’s firm lending offer.
Don’t become best buddies with the seller. Being friendly is one thing, but if you make what you think is an insignificant comment like “I’m going to change the horrible paint colour in the living room,” it could possibly rub the seller the wrong way. Keep it casual.
Don’t get too emotional. Keep a level head by not sweating the small stuff and by not falling too much in love with the place, either. A sense of logic is important in the home-buying realm. Thinking with a clear head is best.
Don’t give any money directly to the seller. Any deposits should go into a trust account. You don’t want your money spent before the deal is closed. And you don’t want to have to fight to get that money back should something happen and the deal doesn’t solidify.
Don’t try to navigate the waters alone. Your agent will help you through the process. He or she will schedule a final walk-through of the home before closing and will have your best interests at heart. Your agent will be able to answer your questions and figuratively hold your hand every step of the way.