For ease of interpretation, let's call this "getting your financial ducks in a row" and everything that the lender would need in a nice neat package.

What you don’t know can hurt you

First and foremost you need to educate yourself. Mortgages are a complex subject and you don’t want to just take whatever product or term the bank is pushing. With all the information online and the many mortgage specialists who work for you, brushing up before you buy isn’t difficult, it's more about understanding the products and what you’re getting into.

One of the absolute first step is to get Pre-approved. The terms pre-approval and pre-qualification are often confused, even within the industry. But whatever you call it, a casual run-through of your finances – what Toronto mortgage broker George Wilson calls “number-crunching spat out by a computer” – is no guarantee that you actually qualify for the loan you’re seeking. It’s a good idea, George says, to go through the full process to get the “real deal” on what you can afford based on your circumstances. Others even suggest that you should actually apply for a loan before you buy a home, by submitting tax returns, pay stubs and other relevant data! This way, the lender verifies the information, checks your credit and if all goes well, “agrees, in writing, to make the loan”. Having this in hand is powerful, and it gives you more negotiating clout when you're at the table with a seller.

Playing it by ear

Getting hooked on a mortgage based just on the lowest interest rate could lead to regret. It's important as a homebuyer that you look at other factors, such as pre-payment options and penalties, if you want to pay it off early. When you decide on the basis of pricing alone, it might not be the best product for you. Furthermore, when you do find the rate you want, get the company to guarantee in writing how long they’ll hold it for.

buying puzzle

Without a budget and a plan, you probably won’t have a clear picture of your financial needs. Maybe you can afford a house now when interest rates are low, but what about the future?. You have to factor in the possibility that interest rates will go up and you definitely don’t want to be in a position where you can’t afford your mortgage payments. Be sure to include such things like home repairs and maintenance, starting a family or even putting older kids through school.