Today a potential first time home buyer contacted me with some concerns about their credit rating. They had some slow credit in the past and although a student in school, they are looking forward to the future of becoming a first time home buyer in the next few years. It is not a bad idea to consult a professional in the beginning stages while you are thinking about your options as a professional can help you get on track to reach your real estate goals. Contacting a professional for advice may even enable you to reach your goals in a faster amount of time.
Here are some tips to think about when you are considering purchasing your first home in the future:
Your Credit
Poor credit or no credit you will want to get it in check before any financial institution will provide you with a mortgage approval. It is good practice to pull your credit yourself once a year to ensure that it has no errors and to correct any mistakes that might be reported incorrectly. This is always a good idea to make sure no one has stolen your identity as identity theft is also becoming more popular.
Having Balances on your existing credit also can lower your credit score, so if you have any credit cards or credit lines etc it is recommended that those balances do not go above 50% of the allowable credit.
Pay your bills on time – Keep your payments on time to ensure that your existing creditors are reporting positively to your credit bureau derogatory credit is the only reason why you will be turned down for a mortgage, after all why would a bank want to lend you money if you cannot seem to pay your bills on time.
Down Payment
You will require at least 5% down to purchase your new home. If you are currently saving for your down payment, consider getting an RRSP loan which is secured by the RRSP amount. These loans are relatively easy to acquire and assist in building good credit and in turn commit you to saving for your down payment. When your loan is paid in full you are then allowed to apply your RRSP as your down payment (max $25,000)
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