Knowledge is Key to Home Buying
As much as looking to buy a home might be exciting, looking around for mortgages for money to purchase can be quite a daunting process. You will come to realize very soon, that you do not really know much about mortgages. A study conducted by Yale Law Journal has revealed that at least 33% of the participants, even after signing their mortgages did not thoroughly comprehend the terms and conditions stated in their mortgages.
Five Step Guide to Home Buying
Here are a few steps that will be helpful to understanding how the process works:
Step 1: Deciding on the property
Are you looking for a new build and custom build? There are mortgages available for those of you, who are looking to build a house from scratch or buying a newly built property. Builder and construction mortgages are available to facilitate your funding requirements. By speaking to a mortgage broker ahead of time will help you to understand if you qualify for a mortgage.
If you are looking to buy home that has already been built, you may want to consider if house or a condominium, best suits your purpose.
Step 2: Pros and cons of condominiums
A condominium is convenient and offer security. If a condominium is the way forward, you will need to consider the additional monthly charges of condo fees that you incur, along with your mortgage payments and property taxes. The advantage of condo fees is that maintenance of the building will be the responsibility of the property management company. The fee in certain condominium buildings may include heating and water bills.
Whereas if you own a residential property you are liable to mortgage payments, property taxes and utility bills. However, any damages to the residential property will be an added cost to you.
Step 3: Setting a housing budget
Just as much as the location of your home matters when you are looking to buy a home, it is equally important to set yourself a realistic budget for your monthly payments such as mortgage payments, property taxes, utility bills and other monthly incidental expenses. The point is to ensure that you do not take on a hefty mortgage that you are unable to maintain as time goes by.
Starting to put aside extra cash in to a savings account in anticipation of these payments or staying on in rented accommodation until you improve your financial standing will be a smart move. Speaking to friends and family who are homeowners will be a great way to gather information on the buying a home and to get an indication of monthly payment amounts.
Steps 4: Down payment and other expenses
Depending on the property and your financial standing, the down payment requirement may vary from little as 5 percent up to 20 percent on the mortgage. A down payment of 20 percent and the mortgage applicant being able demonstration high income will be beneficial towards getting high insurance premiums on the property waived off. This will also result in the smaller interest payments on the principal and will not have a big impact on the payments, should there be an increase in interest rates.
The escalating housing prices can be a dampener on your attempts to save towards a down payment. In addition to the down payment, mortgage applicants are required to have money in their account for all other ancillary fees such as legal fees and disbursements, property transfer taxes, appraisal fees, inspection fees and other fees as these payments are not covered by the mortgage.
Step 5: Planning savings
Inquiries on the process of obtaining an approval on a mortgage should be done in advance and planned accordingly. Apart from saving money, some potential applicants may need to plan out how they can improve their credit scores. First-time buyers may have the option of withdrawing the down payment from an RRSP and arranging the repayment over a period of time.
Mortgage Intelligence provides competitive rates, advice on mortgage approvals and solutions to their clients.
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Original article by Golden Girl Finance
We hope the above steps are helpful and informative. When it comes to home buying, call the team at (866) 452-1100 a free assessment and let us assist you.