Looking for a home can be exciting and stressful, especially if the home you are looking for is your first home. If you are ready for your journey into buying your first home, here are five helpful tips for first time home buyers:
1 How Much Can You Afford
Knowing how much you can afford will help determine the amount to put towards a down payment and payments towards your mortgage. Banks and other lenders have formulas and calculators available to see how you can afford to borrow, so it is worth it to have a look at a couple of the formulas to get an estimate as to the amounts you will be paying. Make sure to always factor in other expenses! Just because you get approved for a mortgage, doesn’t necessarily mean you can afford it. Even though it is your first home, don’t get carried away, you can always move up later in life.
2 Wish List
Before you actually start shopping around for a home, create a wishlist of your needs and wants, as well as things you could compromise on. This will help with narrowing down your criteria on your first home and finding a home that fits your needs.
3 20% Down Payment
Aim to put at least a 20% down payment on the home. It is highly recommended, especially for first time home buyers that you put 20% down so that you qualify for a conventional mortgage. If you have money in your RRSPs, you can use up to $25,000 towards the purchase of a new home.
4 Cost of Closing
The closing costs of your home can range from 1.5 to 3.5% of the total cost of the home. Depending on the location of the house, you might have to hire a moving company to move your stuff. Be sure to create a moving budget and try to estimate the cost of moving. Other costs that you might have to pay include:
• Home inspection fee
• Legal fees
• Property transfer tax
• Land transfer tax
• Title insurance
• Interest adjustment
• Property and fire insurance
5 Understand the Different Payment Options
Understand that there are different payment options available for paying off the mortgage. Paying off your mortgage sooner rather than later will save you thousands in interest costs. Make sure you understand the different payment options and understand the terms of payments.