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Before you start thinking about the kind of home you want and where you want
to live, it's a good idea to take a financial inventory.
This stage of the process - saving, budgeting, planning - is not as exciting
as choosing a neighbourhood and looking at homes. But it will put you in the
best position when it comes time to talk mortgages. Click below for more information.
. Preparing
to buy a home
If you are already a homeowner, click through the links below
for tips on how to manage your prized asset in a financially smart manner.
. Doing
renovations the right way
. Refinancing
your mortgage
. Using
your home equity for other goals
Preparing to buy a home
For most of us, the first step in the home-buying process
is to ramp up savings - the more you can put towards a down payment, the less
interest you'll pay and the more you may save on mortgage insurance.
If you don't already have a budget, check out our articles,
"How
to budget for life: Parts 1 and 2," for tips to help boost your savings
in the archives section.
Paying down debt and building a good credit history are also
part of this process. The better your credit history, the more leverage you'll
have when negotiating a mortgage. Last month's Vault article, "Managing
credit now brings future financial rewards," offers valuable suggestions
on how to build a good credit rating and reduce unnecessary debt.
Now, how much home can I afford?
Our convenient mortgage calculator
will give you a good idea of how large a mortgage you can qualify for. The calculations
are based on some traditional debt-to-income principles:
The first lending principle states that your monthly
housing costs - including mortgage payments, insurance, property taxes, applicable
condo fees - should not exceed 32% of your family's gross monthly income. This
is also known as the Gross Debt Service Ratio (GDSR) calculation.
The second lending principle states that monthly housing
costs plus all other debt (loans, credit cards, lease payments) should not exceed
40% of your family's gross monthly income. This is also known as the Total Debt
Service Ratio (TDSR) calculation.
Pre-approved mortgages
Once you've set your savings plan, and determined how much
home you can afford, getting pre-approval is the next step. Having a pre-approved
mortgage tells potential sellers that you are serious about entering the housing
market.
A pre-approved mortgage qualifies you for mortgage financing
at an interest rate that is typically guaranteed for 60 days from the time that
financing is arranged.
To prepare yourself for the kinds of questions that mortgage
lenders will be asking, have a look at Scotiabank's "Borrowing tips."
Fast fact: You can purchase a home with as little as 5%
down. However, if your down payment is less than 25% of the home's appraised
value or its purchase price, you are required by law to purchase mortgage insurance.
Additional resources:
What to look for in a home and neighbourhood
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Etobicoke MLS Real Estate Properties & MLS.CA Homes for Sale All Pages including SiteMap, Add URL, Etobicoke Real Estate Blog and Guestbook, 
kathy@etobicokehomes4sale.com Copyright © at Etobicoke, Ontario, Canada M9A 3T7 (416) 236-1241 First created - Tuesday, June 6th, 2006, 2006 at 6:06:41 PM -
Last Update of this website:
Tuesday, June 3, 2008 1:42 PM
At this Etobicoke, (Islington Kingsway and or Toronto West ) Ontario, Canada Real Estate Property web site you will find relevant information to help you and your family.
