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Purchasing a home is, for most people, the most significant personal purchase they will ever make and the most money they will ever borrow. It's a huge commitment that can change the course of your financial future, depending on how much you borrow, the interest rate, and the amount of your down payment. Before you jump into shopping for a new home and mortgage, it is wise to do a little bit of planning and preparation. Doing so increases the chances that you'll end up in a home you can afford and helps ensure the mortgage approval process goes quickly and smoothly. Here are five basic things you should do if you are preparing to purchase a home.

Plan and Build a Budget

Before making a large purchase, it's always a good idea to check your financial situation to ensure that you can afford it. With a home, this is especially true. Not only because a new home is such a large purchase, but because homeownership comes along with many additional costs you may not have thought about. Insurance, maintenance, and property taxes are some of the ongoing costs, while legal fees, title search, and home inspections are a few of the pre-sale or closing costs you'll need to consider. 

Create a budget, listing all of your monthly expenses, the cost of repaying existing debts, etc. Be realistic about lifestyle costs and how much money, if any, you'll need to put into renovations and furniture to make the house truly yours. Once you know how much you can afford, you can shop for a home in an affordable price range. 

Check Your Credit Score

While credit score is not the only factor mortgage lenders consider when assessing your application, it is an important criterion. So check your credit score before you apply for a mortgage and even before you seek a pre-approval so there will be fewer surprises to contend with later.

Get Other Debts Under Control

Having other debts such as car loans and student loans won't prevent you from getting a mortgage. However, the total amount of debt you carry could be a sign of trouble. First, a high level of consumer debt such as car loans and revolving credit card balances or lines of credit are a red flag because they are a sign of risky spending behaviour. In addition, a portion of existing debts needs to be serviced, meaning that a certain amount of the principal and interest must be paid off each month. The more debt you have, the less money you have leftover to make mortgage payments. Paying off credit cards and limiting large purchases before you shop for a mortgage allows you to borrow more and makes it easier to get approval. 

Think About Your Repayment Goals

Most people take between 15 and 25 years to pay off their mortgage. Thinking about your goals for repayment before you buy is essential to help you decide how much to spend, how much downpayment to put down, what type of mortgage you prefer, among other choices. If you choose a shorter amortization, your monthly payments will be larger, but you'll be mortgage-free sooner. Smaller payments may be more affordable and give you more flexibility in your budget, but your overall mortgage costs may be higher. 

Gather a Downpayment

The amount of your downpayment depends on several factors starting with how much you can save. The price of your home may also impact your decision since homes with a sale price of over one million dollars require a 20% downpayment. Below that price, you may need to purchase mandatory mortgage insurance if your downpayment is less than 20% of the mortgage amount, adding to your overall costs. Whatever amount you decide, gather those funds together before you start shopping so that the cash is accessible when you need it.

Taking care of these five things in advance of shopping for a home and mortgage makes surprises and obstacles to finalizing the purchase less likely. 

There's one more thing you can do to make shopping for a mortgage easier - talk to a mortgage broker who has the knowledge and experience to help you through each of these tasks. They can give you advice and recommendations based on your financial situation and your goals for repayment. Then, when it's time, your mortgage broker can match you with a lender who can meet your needs and offer a great interest rate.