Getting pre-approved for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender get the ball rolling in the right direction.

Your credit score is a measure of your financial health. According to the Government of Canada, your rating “indicates the risk you represent for lenders, compared with other consumers…The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender.” Thus, a higher rating will typically secure a better mortgage rate, since you’re considered to be more likely to make your scheduled payments.

If you have a poor rating, do some damage control before you apply for your mortgage. For more information, read this.

Escrow is the actual process wherein the buyer and the seller deposit funds and relevant documentation with a neutral third party, which holds them in trust until all the conditions of the sale are fulfilled. This allows for a more seamless sale and minimizes risk for both parties. Escrow opens once both parties have signed the purchase agreement and delivered it to their escrow holder along with the escrow instructions. A good faith deposit (earnest money) or initial down payment is typically delivered at the same time. The escrow holder will then process the escrow according to instructions. In northern California, escrows are almost always handled by title companies.

Fixed-rate mortgages and adjustable rate mortgages (ARM) are the two most common loan types available. Other types are interest-only loans (which are similar to ARMs) and government program loans (FHA, VA and RHS). The more exotic loans issued during the housing boom are no longer being offered as much.

In sellers’ markets, increasing demand for homes drives up prices. Here are some of the drivers of demand:

• Economic factors – the local labor market heats up, bringing an inflow of new residents and pushing up home prices before more inventory can be built.

• Interest rates trending downward – improves home affordability, creating more buyer interest, particularly for first time home buyers who can afford bigger homes as the cost of money goes lower.

• A short-term spike in interest rates - may compel “on the fence” buyers to make a purchase if they believe the upward trend will continue. Buyers want to make a move before their purchasing power (the amount they can borrow) gets eroded.

• Low inventory - fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

Most loan programs require a FICO score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower the down payment requirement and better interest rate. Conversely, home shoppers with lower credit scores may need to bring more money to the table (or accept a higher interest rate) to offset the lender’s risk.

There really isn’t. Prices depend on a number of factors like supply, demand and other housing market conditions. These can vary greatly from city to city, and from one neighbourhood to the next. Rather than season, the numbers of days on market is the biggest indicator of your negotiating power. If the home was recently listed, the seller will have had less time to test the market and gauge buyers’ response to the price, and will be less likely to negotiate