Thinking of buying your own place? It’s normal to feel a little overwhelmed. After all, it’s the biggest purchase you can make. In an effort to remove some stress from the equation, here are a few tips from the experts.
Get a pre-approval
Your credit is one of the three most important factors to be considered before you can get approved for a mortgage, the other two being down payment and income. There are multiple real estate agents that usually don’t work with clients who haven’t been pre-approved for a mortgage.
As a buyer, if you want to avoid paying CMHC’s mortgage default insurance, which is calculated based on the size of your mortgage and the down payment, you need to have a down of 20% at least.
The down payment also affects your loan, for the bigger the down payment, the smaller your loan is. A tip to boost your down payment, “Borrow money from your RRSP.” As a first time buyer, you can get $25,000 tax-free and have 15 years to pay it back.
A real estate agent
Even though not a necessity, it is always recommended to have a real estate agent for they know the market and can easily walk you through the entire process. They also usually know credit councillors, insurance agents, home inspectors, etc., to further ease your burden.
Keep your BUDGET in mind
When buying a house, make sure that you have a set budget in mind, because a lot of times, people don’t consider the actual costs involved with buying a house. Also, keep in mind contingencies, like what if you lose your job? Will you still be able to afford your house?
Also, even if the bank has approved you for your credit, doesn’t mean that you have to entirely exhaust it.
Keep an open mind!
When buying a house for the first time, you should be open minded to options that fit in your budget. Multi-million mansions are nice, but they are also cost in millions. Keep in mind that the wallpapers in the kitchen can be changed, and so can be the walls and the cupboard, but it’s hard to change the roofing or the plumbing.
You won’t live in that house forever
A starter home as it is known as, very few people will actually live in the same house for ever. So remember that not everything needs to be the way you imagined it to be.
Being emotional is pretty common for first time buyers. Keeping in mind the future, make sure that you buy something where you can see yourself in five years. Besides, always check the resale value and the location of the house you’re purchasing.
Don’t forget the closing costs
CMHC recommends people to put aside 1.5 to 4 percent of the purchase price to cover themselves from the brunt of the closing costs. First-time home buyers can also qualify for a tax credit of up to $750, so make sure to look into it as well. And most importantly, save wherever you can. You never know when the roof leaks or the hot water tank breaks down!