Home Buyers Mortgage

First time homebuyers face a daunting task when it comes to investing in their first home. Not only is it a huge financial investment, buying a home also means becoming a part of a community, learning to maintain your house, interact with your neighbours and perhaps even start a family. On top of all that, it’s also a great deal to learn. Check out some of these important questions that first time homebuyers should ask themselves.

Why Buy, When You Can Rent?

While renting may seem cheaper initially to a first time homebuyer, it’s important to remember that your monthly rent payments are pure expense. On the other hand, if you own a home, a portion of each of your payments will go towards your loan balance, if you have a fixed rate mortgage. Your mortgage property and taxes can often be deducted from your taxable income each year, and you will build equity over time if the market value of your home increases.

When Should You Buy A Home?

This can vary a lot depending on your situation, but a good rule of thumb to understanding when you’re ready to become a first time homebuyer is to answer the following questions:

  • Is your credit good?
  • Have you had steady income for the past couple years from a job?
  • Can you afford the taxes, mortgage and insurance payments?
  • Will your current income stay steady or increase?
  • Do you have enough saved for a down payment?If you answered, “yes” to all of the above, congratulations! You’re in a good position to start house hunting.

How Much Will My Down Payment Be?

There is no set amount for down payments, but in general you will want to have enough money in your bank account as a first time homebuyer to generally cover three costs: the deposit, the actual down payment and closing costs.

Your deposit (sometimes called ‘earnest money’) is given to a homeowner as a good faith deposit when you put an offer on a home to show that you are serious. Tjis can range from 1% to 3%.

Your down payment is the percentage of the home price that you will have to pay at closing. This amount will vary based on your loan agreement, but can range from 10% to 20%. Talk to your mortgage broker about first time homebuyer loans that can allow you to put down as little as 3%.

Your closing costs include such fees as settlements, lender charges, appraisals, land surveys, inspections, attorney’s fees and more. Your mortgage broker will be able to give you an estimate provided by your lender so you won’t be caught unawares.

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