Buying a new home, especially for the first time, can be both an exciting and a challenging experience. Most often, a home is the biggest asset and purchase in life, and will take a large portion of income. Therefore, as a first-time home buyer, you will have to make several important decisions to ensure the best use of your resources.
First and foremost, you should find out what you can afford and ensure you can afford it. You will also have to determine the downpayment you can make and learn about first-time home buyer incentives available to you. Finally, you will have to decide if you will do it all on your own, or if you will engage professional mortgage brokers who could leverage their experience to expand the number of options available to you.
Here are a few essential tips you can use as a first-time home buyer to streamline the buying process and make the best use of your assets.
Find Out What You Can Afford
Before viewing any properties, you should do homework to determine how much you can afford to spend on your new home. Every considerable purchase starts with budgeting, and buying a new home is no exception.
Frequently, budgeting starts with a mortgage calculator, which will help you assess monthly payments, total interest paid during the mortgage period, and total payment. Residents of Essex County, Windsor, or Ontario can make use of the Axiom Mortgage Solutions mortgage calculator, which can give them a rough idea of their future repayments.
Make a Decision on Your Down Payment
All home buyers in Canada, first-time buyers included, should be able to bring in at least a 5% downpayment. Meanwhile, it should be remembered that any mortgage with less than 20% down payment will be accompanied by mortgage loan (CMHC) insurance, which will add to the total mortgage cost.
Naturally, the higher the down payment amount, the lower the monthly payments will be, and the less interest home buyers will pay during the mortgage period. Coming up with a higher initial down payment can also make the mortgage more affordable in the long run.
Take Advantage of First-Time Home Buyer Incentives
Many first-time home buyers are unaware of the numerous incentives available to them. These incentives can make the purchase much more feasible and provide buyers with additional resources.
The First-Time Home Buyer Incentive was established in 2019 and is aimed at helping people across Canada buy their first home. Other programs home buyers can use include the Home Buyer’s Amount, RRSP Home Buyer’s Plan, and GST/HST New Housing Rebate.
Ensure You Can Afford the Home You Want
Finding out what you can afford is one thing, but it can take a completely different angle when you have to ensure that you can actually afford it. First-time home buyers can get over-excited upon getting a large mortgage and be tempted to spend as much as possible on their new home, only to find themselves in a financial situation known as “house poorness”, wherein a large proportion of the household budget is spent on mortgage payments, property tax, maintenance and utility costs, and other homeowner costs.
In this situation, even a minor change in expenditure can lead to dire consequences, not to mention the effects of more serious changes that may result from illness or job loss. The general rule of thumb to follow is that your home expenses should not exceed roughly 30% of your gross income.
Consider a Mortgage Broker
First-time home buyers, especially those with a good credit score, can be overwhelmed with the number of financing options available to them. They may find it difficult to navigate the mortgage process and obtain the best available rates.
Working with a mortgage broker comes with the benefit of leveraging the experience of seasoned professionals and expanding the number of options. Mortgage brokers can help you compare rates among multiple lenders, negotiate a lower rate, and secure better mortgage terms.
Get Professional Help from Axiom Mortgage Solutions Today
First-time home buyers seeking an experienced mortgage broker in Essex County, Tecumseh, Windsor, and Leamington should look no further. Contact our brokers Rob and Sandra Zanet (DelCiancio) by phone or email today for advice on your first-time home mortgage and a financial option that best fits your individual situation.