So you’re thinking about buying a house? Maybe your plan isn’t to purchase in the immediate future, but there is still a lot you can do to prepare. It’s a good idea to think about the home buying process ahead of time to make sure you are ready and there will be no surprises during your mortgage approval process.
Start saving for a down payment
Consider beginning to save or invest money to be used for a down payment. Decide what percentage you would like to be able to put down. Think about other fees associated with buying a home in Alberta as well. You can see details of that here.
Pay down debt
Pay down as much debt as you can. Making payments to debt on time can help improve credit score, however lenders will also be looking at your debt-to-income ratio. As your mortgage will be the largest debt you ever carry, showing that you have the capacity to pay off this debt (and other debts) with your current income will help you in the lending approval process.
Check your credit score
Have a look and see where your credit is currently at. It’s better to be aware of what the lenders will see when they pull your score. Knowing ahead of time gives you a chance to potentially improve your score.
Dispute any credit score mistakes
After checking your credit score, this is a good opportunity to dispute any issues you may have seen with it. Errors on your report can give lenders the wrong impression. The Government of Canada gives information on disputing a mistake on your credit score here.
Check your payment history
It’s important to consider how you’ve made payments in the last 5 or so years. Too many late payments may disqualify you from receiving the best rates or result in being approved for less. Any late payments that have reasonable explanations, consider addressing prior to starting the home purchasing process.
Don't make any applications
Be wary of making any purchases that require “hard” inquiries or applications that could negatively impact your credit. Large purchase applications just before applying for a mortgage could result in not receiving the approval you are looking for.
