A new year is upon us and there are likely many Canadians who want to add homeownership to their goals this year. However, 2024 poses some unique challenges compared to previous years with record high levels of inflation and interest rates. Despite some of these hurdles, the good news is that homeownership is a goal that’s still achievable. Here are a few considerations to keep in mind as you prepare for homeownership.

Review your finances

If you’re planning to buy a home in the new year, a great first step is to conduct an in-depth review of your finances. This involves taking inventory of your savings, existing debts, and credit card usage to assess whether or not you’re prepared for homeownership. This type of assessment is crucial when it comes to your ability to afford a down payment and manage your monthly mortgage. Part of this review should include getting a credit check and understanding your credit score. A credit check is important because it’s a critical factor that lenders look at to determine your eligibility for a mortgage.

Get a mortgage pre-approval

The next thing you’ll want to do is get a pre-approval. A mortgage pre-approval provides insight into what banks, lenders, or credit unions are willing to lend and how much you can borrow, helping you set a clear budget for your home search. Doing this will ensure you’re searching for homes in neighbourhoods that you can afford, saving you time and disappointment over homes out of your price range. From a seller’s perspective, a pre-approval gives buyers additional credibility and demonstrates that they are serious about making a purchase. This is especially beneficial in more competitive market environments.

Search for a mortgage beyond your bank and shop around

Most people are inclined to go directly to their bank if they need to get a mortgage. However, this isn’t always the best move, as there are numerous other lenders like monoline lenders and credit unions. These lenders often offer more competitive and flexible mortgage products with better rates and features. At Homewise, we work with our clients to explore the marketplace and shop around for a variety of mortgage options, spanning Prime A, B, and private lenders. Our goal is to help them find the best mortgage that fits their unique financial situation.

With interest rates at their peak, choosing the right mortgage is especially crucial. It is recommended that potential buyers weigh the pros and cons of fixed-rate versus variable-rate mortgages. A fixed-rate mortgage might seem more appealing because there is predictability in your monthly mortgage payments, but variable rates could offer savings in the event that interest rates go down. If you’re unsure which way to go, this brings us to the next essential step: consult the experts.

Consult with real estate and mortgage experts

Before locking in a mortgage and making a home purchase, consider consulting a mortgage and real estate professional. In addition, take the time to understand current market trends including interest rates, housing prices, and inventory levels in your desired neighbourhood. In this current market especially, deferring to experts will help you make a thoughtful and informed decision that considers your unique financial goals – today and in the future. Our team at Homewise and Homewise Real Estate works with our clients to provide a holistic experience that takes them through the home-buying process from start to finish.