Buying your first home has become more difficult with rising real estate prices and tougher qualification guidelines as lenders are becoming more conservative. Here are 5 tips for first time home buyers to help you qualify for your first home:
Always set up your offer to be conditional to financing. This gives you time to complete your mortgage approval, but most importantly it allows you to complete an appraisal to confirm the value of the property and a home inspection to ensure there are no problems or hidden issues with the property.
If you are getting money gifted from family for a down payment, put that money into your RRSP if you haven’t maxed out your contributions. The RRSP investment funds must be in the plan for 90 days to get the tax benefit. Plus you can delay claiming the tax benefit to future years when you may be earning a higher income.
Any time you open a new credit account, whether to take out an auto loan or get a new credit card, the lender runs a hard inquiry, which can affect your credit score. If you’re applying for a mortgage soon, avoid opening new credit accounts to keep your score from dipping. Don’t apply for new credit after you are pre-approved either, any new debts you acquire will change your pre-approval amount.
Many first time home buyers forget about the extra costs involved when purchasing a property. In Canada, a lawyer will complete your real estate transaction by registering your title and securing mortgage financing to the property. This all comes at a cost, a good rule of thumb is to save approximately 1.5% of your purchase price to cover these costs.
As a first time home buyer it can be easy to overlook all that home ownership entails. You might only consider the mortgage payments to decide on how much you want to spend but remember as a home owner, you are responsible for utility payments, property taxes, insurance and association fees for condo properties. Before purchasing a home, always consider all the expenses to understand your true cost of ownership.
There are many questions as a first time home buyer but our team is here to answer all of them! We will walk you through the entire process and provide advice and strategies to make buying your first home a stress free and enjoyable experience.