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Home Buying Guide For First Time Home Buyers

Home buying guide for first time home buyers

Buying a home is one of the biggest investments of your lifetime, and having some knowledge about the real estate industry and the process of purchasing can make the task easy. Despite gathering information and understanding about real estate transactions, to ensure that everything goes smoothly, it is advisable to hold the hand of a reliable real estate agent like My Friend Fernando Calgary. The real estate agent’s listings will help you find the property of your choice within your budget.

Since the real estate agent represents you and protects your interests, you must meet him face to face to have an elaborate discussion that helps to understand your purchasing goals. On knowing your budget and purpose of buying the property, whether, for your living or investment, the real estate agent would be in a better position to shortlist appropriate properties that save search time.

The more information you share with the real estate agent about the kind of property you have in mind, the easier it will find the right one that meets your unique needs. Discussions with the real estate agent will help you understand where you stand in the constantly evolving real estate market.

After finding a home, you must know the process of buying to save time and go ahead with executing the purchase agreement that signals the beginning of the process. But before you execute the agreement, get ready with your finances so that there is no stopping once you sign the agreement and the process heads toward a smooth closure as per agreed timelines.

Pay from your pocket for the downpayment and other expenses

Like any book has a ‘Foreword’ page that raises the curtain to help readers have a peep at the book’s contents. Similarly, before shopping for a home, start saving much early so that you have a fund for making the down payment. The amount of down payment is a sign of your financial stability and the easier it becomes to obtain mortgage approval.

Preparation for buying a home should begin a few years before entering the real estate market for shopping. Start an automated savings plan by opening a high-interest saving account after envisaging the amount you could accumulate over a certain period that helps you to make the down payment. You can pay anything between 5% and 20% of the purchase price as a down payment.  Making a higher down payment of 20% will help you avoid paying for mortgage default insurance.

Besides the down payment, you must bear some other costs that constitute the closing costs. On average, the closing costs can be between 1.4% and 4% of the purchase price. Closing costs include the administrative and legal expenses payable during the closing of the deal. Consider the total cost of acquiring the property that consists of the purchase price and closing costs, and other charges for upgrading or repairing the property to work out a purchase budget.

Get your finances in order

Before hitting the market to buy a home, get ready with your finances by checking that everything is in order and funds should never be a constraint. It will give a clear picture of what you can afford and organize all necessary documents necessary for filing a mortgage application.

Organize your documents – Keep ready all documents related to your current assets, your present debt level, and your income which are the primary documents that mortgage or lending companies ask for.  Besides, you must furnish the government photo ID card like driver’s license or passport, proof of income and employment, including pay stubs, bank statements, IT (income tax) returns, etc., and proof of down payment well as the source of funds. If some family member pays for your down payment, you must furnish a letter signed by the person/s that acknowledges the purpose of the gift. Provide information on your other assets and your total debts and other financial obligations like lines of credits, car loans, child/ spousal support, etc.

Check your credit score – Lenders refer to your credit score to assess the risk of lending or extending credit to you. A low credit score can debar you from obtaining a loan. On checking your credit score available from the credit report issued by any of the major credit rating bureaus, you will know about the possibility of getting a loan. So do not waste time by applying for a mortgage that is likely to be turned down. Having a score of 700 and above increases the chances of getting a higher loan and if your credit score is below par, take time to improve it so that you can qualify for the loan.

Get a mortgage pre-approval

On looking up the website of any mortgage company, you can learn about the mortgage pre-approval process. Once you organize your finances, try to figure out your affordability. Using an online mortgage calculator that collects data about downpayment, total selling price, repayment schedule or amortization, etc., you can find out the monthly payment you must make over the loan period. You can alter the figures to see which one works best to create a budget that you can honor in the long term.

However, obtaining a pre-approval from a mortgage lender is an official confirmation of the loan that you would qualify for. It is the best way to estimate your mortgage payments, and although this is not a mandatory step, it is always advisable.

Shop around for the best mortgage rates

To find the most competitive mortgage rate, you must shop around because variations in the rates are common due to fluctuating interest rates.  It will take some time, but to speed up the process, you can take help from some online mortgage broker to get the rates in minutes.

First-time home buyers must take advantage of some first-time homebuyer incentives offered in Canada, which could be like the topping on the cake. Look carefully and choose the best offers.

 

 

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Written by Karen Anthony

Karen is a Business Tech Analyst. She is very responsible towards her job. She loves to share her knowledge and experience with her friends and colleagues

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