Buying your first home is such an exciting time, Here’s a few things you should consider before getting started to make sure you have the best outcome possible!
Know What You Can Buy
There’s nothing worse than meeting a first time home buyer who has already written an offer, and telling them they can’t qualify for the home they’ve fallen in love with. A mortgage pre-qualification should be your first step, as I’ll let you know what the maximum purchase price you qualify for is. We’ll also go over what your mortgage is going to cost you monthly, so that you can budget for any added expenses that come with home ownership. We’ll talk about all the factors lenders will consider when they review your mortgage application, to ensure your credit score, income and downpayment are all in tip top condition to ensure you’ll qualify for the best mortgage for you and your family.
Build Your Overall Budget
So you have your pre-approved mortgage amount, now what? It’s time to build your household budget, so your home cost matches how you live. Owning a home, but having no cash at the end of the day to do the things you want to in your daily life, is not the goal! The home price you qualify for, and the home cost you want may not match so it’s important to look at where you want to spend your money. The benefit of a budget is two-fold. Not only does it help you to understand your purchase price range and help you to find an affordable home, but it can also help you to see any gaps in your budget or opportunities for future savings. This will be instrumental when you become responsible for mortgage payments.
Understand All Your Mortgage Options
But Megan, there’s so much to know (Ok no first time buyer has ever said this to me…but these are my inner thoughts)! Do you go with a fixed-rate mortgage or a variable-rate? What are the terms and what about any potential penalties? Which is the best payment frequency, and why? Do I need extra money for renovations? There are so, so many lender options, it can be hard to find the best solution for you. That is where I come in.
Rate is only ONE of the many features that matter when thinking about all your mortgage options (and I’d argue it’s not even the most important…but more about that in another blog). This is why working with me as your mortgage broker will take the guesswork out of picking the right mortgage product for YOU! This means that you’ll get the best rates and, more importantly, unbiased advice all for FREE from someone whose only goal is helping you achieve your dream of home ownership. We’ll talk about your plans for the near future, as well as long term plans to make sure the mortgage you select matches this.
Save Your Down Payment
Your down payment, as a first time home buyer can come from a number of different sources. It could be saved via your payroll deposits, or the sale of an asset, it could come from your RRSP via the Home Buyers’ Plan, or be gifted by an immediate family member. No matter the source, you’ll need a minimum down payment of 5% on the first $500,000 of the purchase price, and 10% on the balance thereafter. This type of financing is called a default insured mortgage, and if you had a larger down payment of 20% of the purchase price or greater, this is known as a conventional mortgage. Knowing all the pros and cons of both types of mortgages is important and will help you decide how much cash to use towards your down payment, and how much to save for a rainy day.
Use a Realtor
Using a realtor as a buyer doesn’t cost you anything! A realtor will help you narrow your search down, negotiate with the sellers on price, and share their knowledge about the city and neighborhood you’re buying in. This person is going to help you make one of life’s biggest purchases, so don’t be afraid to ask questions, and choose someone whose communication style you jive with!