A Few Bumps In The Road Challenges For First Time Home Buyers
Mortgage interest rates have reached historical lows, which means mortgage payments are more affordable than ever! Right now is the perfect time for people to buy their first home. If you want to consider buying your first home, without the right preparation there can be a few bumps in the road. With the right information and some advanced planning with an Alberta mortgage broker, first time home buyer loans can be smooth sailing and stress-free.
More Requirements Means More Bumps in the Road
Now, lenders have more guidelines when it comes to first time home buyer loans, which means banks have to scrutinize applications much more than ever before. What does this mean for you? Your credit history needs to handle the intense scrutiny to qualify for your first mortgage.
- A minimum two-year history with at least two credit sources, showing that you have paid your debts on time. While you should not overextend yourself
credit-wise,if you plan to buy a home, start working towards establishing a solid credit history right away.
- The credit report banks and lenders now get show more about your credit and debt habits, which means having credit balances below 65% of total credit available and consistently making payments and not using the maximum amount of credit regularity is key to keeping your credit habits in check.
The Price Isn't Always Right
Another potential bump in the road for first time home buyers is that the number of years that a mortgage can be amortized over has been dropped from 30 to 25. While five years may not seem like much when considering the length of time it takes to pay off your mortgage, what this does is reduce the amount you qualify for. When it comes to a first time home buyer loan, you need to get pre-approved before you go house shopping so you know exactly what you qualify for.
Don't Let the Down Payment Bring You Down
Many first time home buyers have a limited work history, which makes it difficult to come up with the minimum 5% down payment. While family members can gift the amount required, there can't be a liability on the buyer to repay the funds and the person gifting the money cannot have a share in the home being purchased. While the gift idea may seem like the perfect solution, for those who have limited credit history and minimal time at a job, it can trigger the need for a co-applicant on the mortgage.
Navigating the process of first time home buyer loans can be challenging and stressful, which is why our experienced mortgage brokers at Dominion Lending Centres can help you navigate your mortgage journey so it's as smooth as possible. Contact us today and speak to a member of our team so you can take a step towards buying your first home.Request Mortgage Info