What to consider before buying a home

What you should do before you start house hunting

Derek Sherbinin, broker/owner of Century 21 Mountainview Realty and the broker/owner of Centum Mortgage Store. — Photo courtesy Century 21 Mountainview Realty

Buying a home is probably the single biggest investment you will ever make.  It is exciting to get into your dream home, but it isn’t something you want to jump into without a bit of forethought and advanced planning. 

I asked Derek Sherbinin broker/owner of Century 21 Mountainview Realty and broker/owner of Centum Mortgage Store in Castlegar what a potential homeowner would want to consider before hitting the market.

Build your credit rating

If you know you will be in the housing market in the next six months to a year, build on your credit rating as a good first step, Sherbinin recommended.

“One of the best ways to increase your credit rating is to have a credit card or cellphone and pay those balances every month,” said Sherbinin.

Even people who may have had a poor credit rating in the past can improve their credit by demonstrating a record of responsibility by paying off a credit card or cellphone account on time each month. 

Get a pre-approved mortgage

When you are actually ready to start house hunting, Sherbinin suggests getting a pre-approved mortgage.

“Before you start, make sure you get pre-approved so you know what type of mortgage you can afford,”  said Sherbinin. 

He said that often people would go house shopping before really knowing what they can afford.  They will fall in love with a house out of their price range.  After they realize they cannot afford that house, they have to go back and look at what they can afford, and it doesn’t match up to what they saw earlier. This leads to disappointment. 

By getting pre-approval, you can go shopping within your budget before stepping foot into any house.

A bank or financial institution will hold your pre-approved mortgage rate for 90 to 120 days.  If the interest rates go down, you simply contact your bank, and they run your pre-approval again and you have another 90 to 120 days. 

It only takes about 30 minutes or so to get preapproved.  If the interest rates fluctuate, you are guaranteed the rate that they had quoted you. If they go down, you get the lower rate.

To get a pre-approved mortgage, the bank or broker will look at your debt-to-income ratio.

“You are allowed to use 40 per cent of your gross income for all of your payments (combined),” said Sherbinin.   “If you have no other payments other than a mortgage payment, you are allowed to use 32 per cent of your gross income for a mortgage.”

Decide your needs

As a potential home buyer, you should also sit down before shopping and think about why you are buying a home and what you really need.  You need to explain your situation to your realtor so he or she can look for a home that fits your situation.  How many bedrooms do you need?  How big of a yard? How many bathrooms?  Are you flexible in any of these conditions? Do you need to be near schools because you have children?  Would you rather have a larger lot and live farther away from the downtown, or is being within walking distance important to you and your family?

“Bigger houses are just more expensive in general.  Taxes, heating, renovation costs and maintenance costs are all higher.  You have to figure out what your balance is, what you are comfortable with,” said Sherbinin.  “Choose a house that will be big enough for your family but small enough for your budget.”

Find a home inspector

Sherbinin recommends finding a home inspector before you go house hunting. 

“Do research on home inspectors.  Every house you are interested in, you should have inspected,” said Sherbinin. 

He said people often wait until the last minute to get a home inspector.  But if you do your homework and have an inspector in advance, this can save stress at the moment of the sale. 

By planning ahead, making a realistic budget and knowing what you need, looking for your new home will be an exciting time.  Hopefully, you will not only be living in your own home, you also will be making an investment and saving for your future.