Purchasing your first home can be very exciting. You pick your favourite neighbourhood, you attend some open houses and you start mapping out your future. When you buy a home you are not only buying a place to live, you are making one of the most important financial investments you will ever make.
We’ve created a handy guide for you, the first time home buyer, to ensure you know everything there is to know about your best investment.
Prepare a monthly budget to determine how much your mortgage payment could be. You need to be able to comfortably pay off your mortgage without it getting in the way of your everyday life. Your budget must include all bills, credit cards, and food, basically anything you need to get by every month. If paying a monthly mortgage payment will put you into deep debt then you may want to rethink home ownership. It is recommended that no more than 32% of your gross monthly income go towards home expenses.
Your down payment should be at least 20% of the home’s purchase price. You can make a down payment for less but the CMHC – Canadian Mortgage and Housing Corporation – has implemented new rules for those who make down payments of less than 20%. You can read about these new regulations here.
Besides making a down payment on your future palace, you will need to save money for appraisal fees, legal fees, property taxes, home inspection fee, condo fees (if you are purchasing a condo), and moving costs etc.
If you pay your bills on time and have never defaulted on a loan, chances are you have good credit. You will need a credit score of at least 620 to qualify for a mortgage. Equifax and TransUnion are two agencies that are trusted in Canada to deliver accurate credit scores.
This is the most important thing you’ll do when it comes to buying your first home. You may not be familiar with mortgages and which one is right for you. A broker can help you get the right package and the best rate. Brokers work directly with lenders to ensure you get exactly what you need. They can also help people with less than suitable credit scores find a mortgage or point in the right direction to rebuild their credit.
Moreover, you may not be suited for an open mortgage or you may find a fixed rate doesn’t make sense for your financial situation. Work with a broker and you’ll save yourself a lot of time and heartache trying to find funding for your dream house.Back
Canada’s mortgage website
Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).
We All Need a Mortgage
Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.
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