Since the vast majority of home-buyers use the services of lenders, this article will assume that the reader will borrow some money to buy their home and explains what actions a buying borrower needs to do to better their borrowing success.
Strengthen Your Credit
The first step towards home ownership is to strengthen your credit. The better your credit, the better (i.e. the lower) the interest rate your will qualify for. Make sure to pay off your credit cards and settle up any credit delinquencies or disputes. Even if you cannot pay off a card’s entire balance make sure that you pay the stated minimum payment by the due date indicated on your monthly statement. Also, get a credit report so that you can evaluate it and understand what the lenders will be looking at and basing their lending decision on before you approach a lender for a loan.
Determine What You Can Afford
Figure out how much you can afford for a house and how much you will be able to borrow. Most people taking out loans for home ownership are expected to put down 10% to 20% of the appraised value of a home. For example, if you have $30,000, you can make a down-payment for a home that is worth $300,000 (with a 10% down-payment) or $150,000 (with a 20% down-payment).
You also want to calculate your projected housing expenses. Determine the average annual costs for insurance, natural gas or oil, electricity and real-estate taxes in your area. Add that to the price of the home you want to buy and also add how much you are estimated to pay in closing costs (lawyer fees and land transfer taxes etc.). You can either use an on-line mortgage calculator or make a spreadsheet to calculate the total. If you find that the total is above 28% of your gross annual income, then it is probably not a good time to get a mortgage.
Now you are prepared to seek the actual amount of money that you will need to borrow for your new home. When you do apply to various lenders, submit all of these applications within the span of a two-week period so that your inquiries do not alter your credit report as repeated credit report requests (other than ones that you request for yourself; and obviously each possible lender will request) have a negative effect upon your credit rating. So that you have a realistic idea of what money you will have and therefore what price range you can afford, make sure to do this before you get in touch with a real estate agent. If you do qualify for a loan, make sure to look at first-time buyers' programs - which usually have lower down-payment requirements. These are sometimes offered by various lenders and/or by various levels of governments.
Start House Shopping
To get a sense of all your options, make sure to check out as many Ottawa homes for sale and open houses and housing styles as possible. Do not make any rash decisions. In order to help with this process, sign a buyer representation agreement with a well-known local real estate agent, they can then sign you up for the Multiple Listing Service (MLS), which is an “Alerting” service that helps you search for properties in your desired areas by letting you know when a property becomes available in an area in which you are considering buying.
Also, find a real-estate agent who is knowledgeable about your target area to represent you and work with you in your search process. Make sure to provide him or her with every “must have” or “Must not have” detail of the home you are seeking: such as the number of bedrooms, bathrooms, the size of the yard, whether you want a garage, the overall layout (bungalow, duplex, town-home, split-level), traffic and population densities, etc.
Scout out the area in which you would like to live by visiting it at different time of the day and week. Check out its proximity to shopping, schools, public transportation, and other amenities that you want. Also take note of the amount and the speed of vehicular traffic, available parking, noise levels, and business and general activities in the area and whether the neighbourhood is being up-graded by new residents or its overall maintenance is drifting sideways or downwards. Once you have assessed all these factors, then you will be far better informed as to how much and what sort of house or in what neighbourhood you can afford and wish to make an offer to buy.
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