Buying a first home can be a daunting and stressful experience (no kidding). However there are steps that can be initially taken to help the process run more smoothly. Here are 5 quick tips for first time home buyers.

Be aware of your credit score

This is the first item a lender looks at when determining whether you qualify for a loan. It’s a no brainer…the higher your score, the better your standing. Credit reporting agencies have different tiers which go from poor to excellent.

You definitely want to be in the good or excellent category. Being in the poor or fair category just won’t cut it for getting a good interest rate from major lenders.

tips for first time home buyers

Some home buyers may qualify for a loan if they fall into the fair or good category. However, the interest rates may not be that favourable.

I advise first time buyers to check to see their current credit report. Checking your own credit report doesn’t affect your score. Having someone or another institution check your score creates a “hit” to your credit.

Each time this happens your score is lowered. That’s an important note to remember. Doing this initially on your own shows you what your credit landscape looks like.

I’ve had clients who have done this exercise and were amazed to see that their score was either higher or lower than what they expected. I’ve also had others who were surprised that a utility or cell phone bill that they thought was paid in full actually wasn’t.

And now they have a lower score because of that unpaid bill that was reported to the credit bureau.

Bottom line: Build your credit by having at least 2 active trade lines i.e. credit cards. Pay your bills on time. Monitor your credit by periodically checking your score online.

Save for a down payment

House prices in urban markets conservatively increase 5% year over year. When the market is heated, prices can increase by 8% or more. This means that first time buyers have to deal with escalated prices whenever they’re entering the housing market.

Saving for a down payment, even at a minimum of 5%, takes planning and discipline.

There are options to getting that sizable down payment. When I bought my first home I took advantage of the First Time Home Buyers Plan. At the time, the plan only allowed me to use up to $20,000 from my RRSP to purchase.

Today the plan allows you to use up to $25,000. The money used has to be paid back within 15 years. I’ve also noticed a trend recently when it comes to my first-time buyer clients. They’re getting a “gift” from their parents towards the down payment.

Not everyone is that fortunate. But considering the prices of homes, it is a great option to have.

Get a pre-approval

This is an important step in the home buying process. You may have your eyes on $400,000 houses, but do you know whether you can get financing for one?

This is one first-time the first questions I ask potential home buyers when I’m contacted. The lending criteria varies from lender to lender. I advise clients to see a good mortgage broker who has access to multiple lenders and can shop around for the best rate on your behalf.

However, if you have a great relationship with the bank where you do business, then see theirs in house broker. It’s important to get that range in price before you start looking at homes.

At the same time, it expedites the process, once you start looking and would like to put an offer on a property. In a heated market, waiving the financing condition (not advised) can make the difference in winning a bidding war on a property.

Find a good realtor

Studies have shown that most people start their home search by viewing homes online. Their online viewing can take weeks or months before they physically start to view available homes.

Once you’ve saved for a down payment, built good credit and have a mortgage pre-approval, it’s time to find a good realtor. This should be someone you feel comfortable with. Realtors from any real estate board have access to the same listings and information.

So that’s not an issue. You should feel as though there is good communication between you and your realtor. After all, this is the biggest purchase of your life! I often say that I don’t sell real estate.

That’s because I feel that I should be there to facilitate the transaction and be a guide every step of the way. People have different reasons why they choose their realtor.

They could be a friend of the family or even a family member or they were referred by a colleague or friend. The bottom line is that whomever you choose, they should educate you on the process and try to make it a pleasurable experience for you.

Your first house may not be your dream house

It’s easy to get excited about what you would like your dream house to look like. You can picture it in your head. But the price tag is way out of your reach…for now.

I always tell my first-time buyer clients that it is important to just get into the housing market. There are benefits to home ownership. Not to mention the pride in owning your own home.

But even though you have visions of that dream house, it may be best to compromise on some features in a first home. Then as you build up equity, climb the property ladder to eventually get your dream home.

-Thanks a lot for reading my article- 5 Quick Tips For First Time Home Buyers. Hopefully, you read and enjoy it. Have a good day!