You have big plans and want to buy a home in the near future. Of course, you feel a little unsure about what the future holds and want to ensure that you are taking the right steps toward a sound and tranquil home buying experience.
That said, here are nine tips for potential home buyers that will ensure that you have all your ground covered.
Tips for potential homebuyers #1
Have a big down payment
It may not be easy for most, but if you can come up with a 20% down payment or more (let’s say, 25%), you can avoid some seriously costly mortgage loan insurance that is mandatory if you put anything less than that down.
Your best bet would be to defer owning a home until you have eked out the 20% down payment, and getting a little help by withdrawing from your RRSP under the Home Buyer’s Plan.
Tips for potential homebuyers #2
Get a mortgage preapproval
Before you even bother shopping for a home, you need to know how much money you can afford to spend on a home, so make an appointment with a mortgage broker beforehand and get preapproval.
By verifying your income and checking your credit, your lender can ensure how much home you can truly afford and you can then put in an offer on a home with confidence.
Tips for potential homebuyers #3
Know your credit rating
When it comes to handing out mortgages, lenders have rules and ratios by which they must abide. Hence, your credit rating.
Unfortunately, sometimes the amount of money they are willing to lend you exceeds the amount you can afford in reality. Do your math and look into what you can really afford each month without sacrificing your lifestyle or ending up house poor.
Tips for potential homebuyers #4
Have some interest rate foresight
While we are currently enjoying a sweet, sweet super low interest rate, you need to consider what the future could potentially hold and look at things from a perspective of rising interest rates. Calculate what it will cost you if interest rates rise by as much as 2% or 3%. If you wouldn’t be able to keep your head above water under those circumstances, then reconsider how much you can really afford.
Tips for potential homebuyers #5
Be prepared to renovate
If you are buying a home from a previous owner, there is a good chance that you will either need to repair something or consider renovations for esthetic reasons.
Consider this when you jot down all the dollar amounts you will need to live in a home over the long-term.
Tips for potential homebuyers #6
Prepare for negotiations
Whether you end up negotiating the homeowner down or end up in a bidding war, you need to consider these numbers when you are shopping for a home. So if you go after a home that costs exactly what you can afford and you end up in a bidding war, could you afford that extra amount of money? Think about it.
Tips for potential homebuyers #7
Get life not mortgage insurance
It makes better sense to get life insurance rather than mortgage insurance, especially considering that, if you should pass away, only your mortgage gets paid off and those you leave behind will be left to pay all the other debts that incurred on a monthly and annual basis via home ownership.
Tips for potential homebuyers #8
Go for biweekly or weekly mortgage payments
Opting for bi-weekly or weekly payments will ensure that you end up paying off your mortgage faster, as there are 52 weeks in a year which equals, 26 payments, which means you are essentially paying off 13 months in one year rather than 12.
Tips for potential homebuyers #9
Keep saving money
Sure, you just put a massive down payment on your home, but that doesn’t mean that you get to squander away the rest of the money you make. Your objective should be to always have three months worth of home needs payments (mortgage, utilities, etc.).
As well, you should keep some money aside for unexpected repairs because, as we all know, surprises are inevitable when it comes to life, not to mention homeownership.
If you’re ready to buy or sell a home in Canada today, visit ComFree.com.