Can I really afford this?
After all, the biggest purchase you may have made so far is either for your education or transportation.
No doubt this is a big step. Don’t let anyone tell you that purchasing a home is simple and particularly when it’s your first home. Your first decision is how best to arm yourself with information. With all due respect to your parent’s or that Uncle that is eager to tell you “Let me help you…I done this plenty of times before”it is in your best interest to rely on professional people who do this every day of the week. You wouldn’t let your close friend pull your tooth or have a buddy adjust the brakes in your car and so you shouldn’t ask them particularly when buying a home. Having said that, you should rely on friends and family to be as much a part of the process as you are comfortable with as sharing this once in a life time experience is a forever memory. You Only Buy Your First Home Once!
This is not like buying a car in a very important way. No matter how much you care and maintain your ride it loses value as soon as you drive off the lot and will continue to depreciate in value with every kilometer you drive. A home purchase also requires care and maintenance but if you do it wisely your home will almost always grow in value. Not only can it cost you about the same or less than rent it is like putting more than 50%of that money (the principal portion of your mortgage payment) into a savings account. We refer to it as an “intentional investment” that will build your personal net worth.
So How Can We Help?
Here is a checklist and some of the resources you are going to need to consider:
Your Team of Professional’s
Through this process you will need a Realtor, Lender/Mortgage Broker, Lawyer, Insurance Broker and possibly a Home Inspector. We have you covered from our personal real estate service to referrals with all the industry professionals you will need.
Rent versus Home Ownership
Know What You Can Afford Before Shopping
Get pre-approved and don’t fall for all the over-the-top features unless you can truly afford them today. Click the MORTGAGE PRE-APPROVAL buttonto see what pre-approval is all about.
Don’t Overlook Ongoing Costs
Make sure your eyes are wide open when buying a home. We will NEVER try to oversell a home to you. Our role is to find that perfect home for you within your budget and to buy it for less. With the savings that we can help you achieve you will be able to afford the ongoing costs such as property taxes, insurance and home maintenance.
How Can A Small Extra Payment Turn Into Huge Savings
Ask our mortgage broker/specialist how a small increase in your monthly payment can dramatically reduce your total cost and save you 5 or more years of payments. (Ex. $150,000 mortgage with a $75/month increased mortgage payment shaved 5 years off the mortgage, saved $38,994 in payments and the mortgage balance at the end of the term was reduced by $6,697)
Life Insurance On You For Your Mortgage
While not absolutely necessary we would encourage you to think about it so that your loved ones aren’t left “holding the bag” at a very difficult period of time. Before you sign your mortgage documents ask us how we can make your insurance investment a wise one. There are options so let us clear the fog, put your mind at ease and help you buy the right product for your specific circumstances.
Government Programs & Other Costs
You will be responsible to pay a Land Transfer Tax to the provincial government but as a first time buyer you are entitled to a rebate. (Click the LAND TRANSFER TAX button for more information)Legal Fees, Home Inspection and Moving costs are part of the process and we can provide solid advice to help you out. There is also a First Time Home Buyers Tax Credit that you need to know about.(Click the NEW BUYER TAX CREDIT button for more information) Mortgage Insurance through CMHC, Genworth or Canada Guarantee is needed if your down payment is less than 20%. Our mortgage specialist will guide you through your mortgage insurance options or be sure to ask your personal lender.
Down Payment Options
If you have been able to put anything into RRSP’s those funds can be available to you. See the RRSP HOME BUYERS PLAN information by clicking the appropriate button. You may also qualify for Flex Down that allows you to borrow your down payment so ask our mortgage specialist. You may also reach out to parents or other relatives for help with your down payment. BMOdata shows that 30 % of first-time home buyers expect to get help from family!
- Money for a down payment cannot “magically” appear in your account at closing time, so mortgage lenders want verification that down payment money either came directly from the borrower or as a gift from an immediate relative.
- Mortgage lenders typically won’t allow down payment gifts from family friends or bosses or other non-relatives.
- Your lender may require that the person gifting the money provide a gift letter outlining the amount of the gift, the recipient, the giver’s relationship to the recipient and the fact that the gift is not subject to repayment terms. Sometimes parents or relative lend money for a down payment rather than gifting it, but lenders frown on this because it increases the borrower’s debt-to-income ratio.
- Some lenders require that the gift-giver share his or her banking history to show the origins of the gift money. If your parents are wary of sharing their financial information with you, they may be able to communicate directly with your lender rather than using you as a middleman. The gift should be deposited into your account so that it can be documented and the deposit should exactly match the amount shown on the gift letter to avoid potential issues.
- If a couple is buying a home jointly, the gift-giver may want to specify in the letter that the gift is intended for their grandchild, child, niece, etc. Otherwise, if a couple divorces, the down payment gift may be presumed to be for the benefit of both parties and split evenly between them.
What Else Is There?
We have put together a helpful BUYERS RESOURCE GUIDE that walks you calmly through the whole process, so click the button for the full document. Ask our mortgage broker/specialist about programs such as the Purchase Plus Program that allows you to do home improvements before you settle into your new home, include those costs within your mortgage and not have to use saved funds or charge that cost of improvements on your credit cards.You should always make as much use of low cost mortgage funds as you are allowed to make this your perfect home.
Thank you for taking the time to read through this information. We hope you have found it helpful.
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There is no cost and no obligation only information that will eliminate the mystery and relieve any stress you may have. We look forward to helping you. Take care and happy house hunting!