How to Set Realistic Expectations of Your First-Time Home Buyer Mortgage
When buying a home for the first time, seeking the counsel and help of an experienced mortgage broker is critical. A mortgage broker specializing in first-time home buyers can help you negotiate a mortgage, find the right home within your budget, and avoid any unnecessary delays or complications. This process helps set expectations.
In this post, Dominion Lending Centres explores some of the expectations a first-time home buyer may have and the reality of the situations we experience. You can then use the information to prepare adequately and qualify for a first-time home buyer mortgage. Contact us to learn more.
Expectation: I have sufficient funds for the down payment.
Reality: Like most first-time home buyers, you’ve probably been saving up for your down payment for several years. Unfortunately, you may fail to qualify for a suitable first-time home buyer mortgage because your down payment isn’t sufficient. Your savings may also fail to cover the down payment for your dream home.
Generally, you’re required to have a minimum of 5% of the home’s price as the down payment for homes below $500,000. However, having a 20% down payment also prevents you from needing default mortgage insurance.
Expectation: The down payment is all I need to get my dream house!
Reality: Besides the down payment on the new home, you also need to consider additional costs such as:
- Lawyer fees
- Appraisal charges
- Inspection costs
- Moving costs
If you’re trying to get your first-time home buyer mortgage, remember to add 1-1.5% of the home’s price to cover additional costs.
Expectation: It costs the same to rent and own a home.
Reality: If you’re moving from a rental apartment and are ready to apply for your first-time home buyer mortgage, remember that your expense structure will change. Once you clear the immediate expenses, you still need to factor in recurring expenses such as property taxes, insurance on the mortgage, utility payments, repairs, etc.
It’s best first to analyze your budget and consider how additional expenses may strain your income. This can help you decide if you’re ready for homeownership or if you should save more.
Expectation: I can use the mortgage money for whatever I want.
Reality: Mortgage funds can only be used to purchase the house. You cannot borrow more than 95% of the purchase price. You cannot consolidate debt. You cannot borrow more money to complete undocumented renovations.
Setting Your Expectations with a Mortgage Broker
With a qualified mortgage broker from Dominion Lending Centres, you can plan for your first home and avoid nasty surprises. We can also help you qualify for a first-time home buyer mortgage in Edmonton. Contact us today for more information.Request Mortgage Info
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