Follow These Important Steps to Get Closer to New Home Ownership:
So — you’re ready to buy a home. The only problem is, you’re not exactly sure where to start. This year has thrown many curveballs to young Ontarians looking to break into the housing market. Lockdowns due to COVID19 have driven up prices north of the GTA with many homes selling above asking price with multiple offers. How do you make the right choices as a first time home buyer?
Canadians have gotten used to the mantra that homeownership is unaffordable — but is that true? The good news on housing as we head into 2021 is that roughly three-quarters of Canadians live in communities where homeownership is still affordable. Now, with the increase of Millennials ready to buy their first home, we’ve put together a list of best practices for Millennials when getting a new home mortgage.
1 – Find a Mortgage Broker You Can Trust!
A good mortgage broker is incredibly important when buying a home. It’s even more important when you’re buying your first home. An experienced lender can act as your guide to finding the best mortgage for your unique situation. Many have gone through other trying periods in Canadian financial history, giving them a more balanced perspective on current events following the COVID19 outbreak.
When buying your first home, the unknown is always inevitable and having a mortgage broker that provides you with accurate, trustworthy and honest information is key to a smooth new home purchasing process.
2 – Pay Off Student Loans and Other Debt
Newsflash: as per Stats Canada, the average Canadian student graduate has a whopping $26,300 in student debt after graduation. If you’ve recently graduated, a good portion of your earnings now should go towards paying off your student loans and other debt. Buying a house is the most expensive purchase you’ll like ever make and being debt-free will be incredibly helpful when getting a mortgage for your new home. Also, by lowering your student loans and other debt, you’re increasing your credit score which will help you spend less money on interest charges as a first time home buyer.
3 – Realize How Important Your Down Payment Is
Houses aren’t cheap, especially in today’s economical climate. Millennials are likely to pay 39% more than their baby boomer counterparts (ouch!) who bought their homes in the 1980s. That’s a hard fact to swallow, however, take heart that Millenials are also noted using cool tactics in order to save for a down payment.
For example, many create a separate savings account (separate from your emergency savings account). Setting this up and designating a portion of your cheque go towards your down payment is incredibly helpful in getting the keys to your new house faster. At the end of the day, the bigger the down payment, the less your monthly mortgage payments will be.
4 – Get That Pre-Approval
Is getting a pre-approval before you’ve gone house hunting actually that important? Yes — one hundred times yes — in fact, we’d even recommend not going through any open houses as a first time home buyer until a pre-approval is complete. Why?
Purchasing your first home is a long process and without the proper guidance, it can be a headache. A Pre-approval will help you develop the appropriate price range for your new home search, helping you identify what your actual budget is and preventing the frustration that comes from falling in love with something you can’t afford. Not only does a pre-approval give clear direction for what you can afford, but it also makes you a more attractive buyer. In a market where sellers are holding the power, keep in mind they prefer offers from people who are already qualified for a mortgage.
5 – See Beyond Mortgage Rates
Getting the lowest mortgage rate is the most important part of choosing a lender, right? Wrong. Pay more attention to the annual percentage rate, or APR, as it’s a lot more important than mortgage rates alone. By utilizing the APR as a benchmark, you’re including not only your interest rate costs but also any fees or charges you’ll be paying for the loan. The lower your APR, the better!
Buying your first home is a pretty big deal. It is likely the most expensive purchase you’ll have made in your life so far. But by following the points we’ve discussed here, you’ll be getting into a mortgage and home that fit your situation the best! When you are a first time home buyer, it’s important to be aware of all of the grants and programs that may be available to you from both Ontario and the Government of Canada. Navigating through the qualification details isn’t always so simple, which is where help from a mortgage broker fits in!
Gerard Buckley and the Buckley Mortgage Team are here to guide you through the entire home buying process. We’re dedicated to educating all of our clients on smart financing practices as we help you make the biggest investments in your life. We offer offices in Collingwood, Owen Sound and Port Elgin, giving you access to over 80 specialized lenders.
Ready to see if you qualify for your first home? Try our online pre-qualification tool today and fast track your mortgage pre-approval!