The trajectory of Millennial home purchases is significantly growing. Millennial home buying purchase power now boasts the largest share of new home loans by dollar value as per realtor.com® analysis of residential mortgage loan originations, larger than both Generation X and the baby boomers. With that being said, Millennials are making lower down payments and taking on larger mortgages when compared to their baby boomer or Gen X counterparts. Canadians have gotten used to the mantra that home ownership is unaffordable. The good news on housing as we head into the second half of 2019 is that roughly three-quarters of Canadians live in communities where home ownership is affordable. Now, with the increase of Millennial homeowners, we’ve put together a list of 5 tips and tricks for Millennials to look for when getting a new home mortgage.
Finding 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. A good lender can act as your guide to finding the best mortgage for your unique situation. When buying your first home, the unknown is inevitable and having a mortgage broker that provides you with accurate, trustworthy and honest information is key to a smooth new home purchasing process.
Pay off student loans and other debt
The average Canadian student graduates has roughly $26,300 in student debt after graduation as per Stats Canada. You recently graduated, you start working and a good portion of your earnings should go towards paying off your student loans and other debt. Buying a house is the most expensive purchase you’ll 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 is instrumental in finding you the best rate for your new home.
The Importance of a down payment
Houses aren’t cheap, especially in today’s day. Millennials are likely to pay 39% more than their baby boomer counterparts who bought their homes in the 1980’s. Millennials are however able to use cool tactics in order to save for a down payment. For example, creating a separate savings account (separate from your emergency savings account) is instrumental. Having 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 mortgage payments will be.
Purchasing your first home is a long process, where without the proper guidance can be a headache. A good first step as you start on this journey is to get pre-approval on your mortgage. By doing so, it will help you develop the appropriate price range for your new home search, ensuring that you are getting the best bang for your buck while also making sure that you are within your financial comfort zone. Not only does it give a clear direction for what you can afford, but getting a pre-approval makes you a more attractive buyer, sellers prefer buyers who are already qualified for a mortgage.
Don’t be fooled by low mortgage rates
Who wouldn’t want to get into the lowest mortgage rate possible? I mean, you’re paying less money, right? Wrong. Paying more attention to the annual percentage rate, or APR, is a lot more important than taking the lowest mortgage rate. By utilizing the APR as a benchmark, you’re including not only your interest rate 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 big deal. It is likely the most expensive purchase you’ll be making at the time. By following these tips and tricks, you’ll be getting into a mortgage and home that fits your situation the best! There is a lot being spoken about the First-Time Home Buyer Incentive program. This program will only be available to Canadian’s where home prices are below $500,000 or the 75% of Canadians that live in communities where home ownership is affordable.
Raising the right financing can be difficult, and if done incorrectly, can cause you serious financial hardship. Gerard can assist you in finding the best financing option for your specific situation.
To Download our White Paper on New Home Construction or for further information on Construction Mortgages, visit our services page on New Home Construction.
Gerard Buckley, Mortgage Agent at Mortgage Wellness, has offices is in Collingwood, Owen Sound and Toronto with access to over 80 specialized lenders.
Please Call Gerard at 705-532-1182 for a complementary consultation.