You’re Pre-approved for a Mortgage – Three Things to do Next

You always dreamed of the day when you would finally own your own home, and now that you’ve been pre-approved for a mortgage, you’re one step closer to seeing your dream come true. Before making an offer, consider:

• Setting a realistic budget you can follow

• Planning for unexpected events

• Making a homebuyer’s to-do list

Planning ahead doesn’t have to be hard, and it may save you in the long run — here’s how

1. Set a budget

You might think your home-purchase budget should be the same amount as your pre-approval, but before you start looking for homes in that price range, consider adding up all the costs involved in a home purchase. After all, your mortgage isn’t the only expense you’ll have.

Keep in mind fixed costs, like closing fees which tend to amount to about two to five per cent of the cost of your home. Closing costs can include home inspections, appraisals, attorney fees, land-transfer taxes, land registration, and mortgage default or Canada Mortgage and Housing Corporation (CMHC) insurance.

Home insurance, property taxes, and condo fees should be considered depending on the type of home you’re looking to buy. Adding all these fixed cost to your budget, you might decide to borrow less than you qualified for in order to have more room in your budget.

In addition to these fixed costs, consider variable expenses — like moving costs if your friends won’t move your stuff in exchange for beer and pizza, the cost of new furniture, and any renovations you’re looking to do.

Some of these expenses can come later on — unless you don’t think you’ll be able to stand that peeling linoleum flooring in the bathroom for months or years. Will the roof need to be replaced soon? What are things that might translate into big costs down the road?

2. Plan for unexpected events

Taking on a mortgage is a big commitment. If you’re buying a home with a partner, you may need both of your incomes to pay the bills. But if something happens and one of you can’t work, you might be unable to pay your mortgage.

There are ways to help protect your family and home:

• Start an emergency fund to cover your expenses for three to six months

• Consider a side-hustle to help cover expenses

• Protect your home in case of theft, fire, or other damage with homeowners insurance

• Insure your mortgage balance in case the unexpected occurs, with Life coverage, Life & Disability coverage, or Life & Critical Illness coverage

3. Make a homebuyer’s to-do list

You’ve got your mortgage pre-approval, decided on your home-buying budget, started an emergency fund, and got a quote for the insurance policy — now what?

Now you need to find the home you want and make an offer.

Steps in buying a home

• Make an offer on a home with the help of a real estate agent or lawyer

• Decide on the terms — e.g., closing date, possession date, contingencies

• Negotiate with the sellers

• Sign the sales agreement

• Get a home inspection and appraisal

• Provide documentation to your lender for your mortgage

• Get insurance to protect your mortgage balance

• Pay the down payment

• Pay for closing costs

After you’ve bought your home, you’re not done yet! Here’s some of the key things not to forget when moving.

Enjoy your new home

Moving into your first place is exciting, but you also want to be confident you’re taking care of your (and your family’s) future. That’s why it’s important to know how much your budget will allow, what steps you need to take for the big move, and how to protect your home for whatever life has in store.

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