Understanding the First-Time Homeowner Buying Process
Buying your first home is an exciting yet challenging journey. At Dominion Lending Centres, we do our best to educate all our clients before going through the home buying journey. We know that first-time home buyers are likely to have a lot of questions and need extra guidance. We specialize in just that! Call us today to learn more or read on to get a glimpse into the first-time homeowner buying process.
Understand the Costs Associated with Homeownership
The second step in the first-time homeowner buying process is saving for the home. You need to put money aside for:
Down Payment: The minimum down payment required is 5% of the home’s purchase price.
Legal Fees: You will need to hire a lawyer to finalize your mortgage and all associated paperwork.
Property Taxes: You may be required to pay back the current homeowners a portion of the property taxes already paid for the months you will be residing in the house.
In addition to your mortgage payment, there are other ongoing costs associated with home ownership.
Mortgage default insurance: If you don’t have 20% or more for the down payment, you need to pay for CMHC default insurance. This amount is included in your monthly mortgage payment.
Insurance: Homeowners insurance protects your home from unexpected damage.
Condo and/or HOA fees: Some condos, townhouses and other community living properties require homeowners association fees to be paid each month in addition to the mortgage payment.
Repairs and utilities: You need enough cash to pay for your utilities and make repairs in your home.
Save Your Money & Invest Wisely
As you save money, you also need to be mindful of where you put your money. You can ease the first-time homeowner buying process by using the following accounts:
Tax-Free Savings Account: This is an account that allows you to save money without getting taxed.
Registered Retirement Savings Plan (RRSP): This account will enable you to save money for your retirement. You can access up to $35,000 under the Home Buyers’ Plan (HBP).
Investments: If you want to buy a home, you may want to keep your money in easily accessible investments such as low-risk mutual funds and short-term guaranteed investment certificates (GIC). Be aware of the lock-in term for your investments.
Check Your Credit
A mortgage is a loan, and as such, your creditworthiness affects the type of loan and terms you can access. Checking over your credit report with a mortgage broker makes your first-time homeowner buying process more manageable. It gives you a better understanding of your financial situation to help you plan. If your broker notices that you have too many debts, insufficient income, or unpaid collections, you will be advised on the steps you can take to improve your credit rating.
Know What You Can Afford
The most important step in the first-time homeowner buying process is knowing what you can afford. There are hundreds of homes in your desired locale, each with different prices. The best way to find out what you can afford is to speak with a mortgage broker regarding your income, assets, debts, credit score, and down payment to give you a mortgage pre-qualification estimate. With a figure in mind, you can find homes that you can afford while still managing other expenses.
Find Mortgage Experts for Your First-Time Homeowner Buying Process
Buying your first home is an overwhelming process that takes experience to understand fully. It helps to work with mortgage brokers for guidance and expertise during the first-time homeowner buying process. Brokers have access to a variety of mortgage options from many banks and lenders. On top of finding the best mortgage for your needs, they also help you navigate the paperwork associated with pre-approval and approval. Dominion Lending Centres is here to help you understand the home buying process and qualify for your first mortgage in Edmonton. Contact us for more information.Request Mortgage Info
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