Buying a home through mortgage financing for the first time can be challenging especially when you don’t have proper information about home ownership. When they get stable income, most people in Canada rush to mortgage lenders without due diligence. This often leads to regret in future, due to different terms and rates that weren’t the best that could have been achieved. Are you a first time home buyer? The following tips will help you search, negotiate and obtain an affordable mortgage for your dream home.
Know your credit score first
Determining your credit score first will help you analyze your previous credit history as well as your current financial situation. This will give you a chance to improve your credit score if it’s too low so that you can increase your chances of getting a mortgage from lenders.
Don’t focus on Mortgage interest rates only
Most of the first time home owners only consider applying for mortgages when the interest rates are low. The most crucial thing is first of all to have a clear understanding of the extra cost that comes with home ownership, the type of mortgage that you have signed for, repayment methods and the amortization period provided by your preferred mortgage lender.
Always take advantage of the Federal government’s Home Buyer’s Plan if possible
In Canada, the Federal government has come up with first time home buyer’s plan as a way of promoting home ownership. Under the Home Buyer’s Plan, you will be given an opportunity to increase your down payment. You are entitled to take a total of $20, 000 from your RRSP tax-free, and you will be given a 15 years payback period.
Go for homes that fit your budget
You should consider paying a down payment for a house that you can afford. When you pay a small down payment, this poses a threat as it leaves no equity in your home. Depending on your financial status, go for homes that will enable you to make a reasonable down payment without squeezing yourself to the limit.
Remember to factor in the closing costs
When calculating your anticipated expenses, always include the closing costs. This additional expense will come in when seeking for services such as home inspection, legal fees, and land transfer taxes, property insurance, utility and moving costs. They are the hidden expenses that most first time home buyers forget.
Always use the most cost-effective payment amortization schedule
Before you sign up for a mortgage, use a mortgage calculator with the help of a realtor to find out the most cost-effective payment plan. Doing this research will save you thousands of dollars. Note that the sooner you pay off your mortgage, the more you save on interest cost.
To find out more about mortgage tips for the first time homeowners, contact PrestoMortgages, the trusted mortgage broker in Ontario’.