6 Mar

First Time Home Buyers – What you need to know.


Posted by: Tracey Brock

First Time Home Buyers – Here are the Top 5 Questions you should ask yourself when you are starting to look for your new home.

Purchasing a new home and applying for a Mortgage can seem quite overwhelming even for the veteran home owner. Before I start the pre-approval process with my clients we always go over 5 key items to determine not only their goals but, their monthly budgets as well.

Here are a list of the first 5 topics I discuss with all my clients. I encourage you as a home buyer, new or expert purchaser, to ask yourself these questions too.

1. What do you feel your monthly budget is for your new home? This includes your mortgage payments and your monthly property tax payments. In this current real estate market where house prices may seem out of reach, it is important to keep in mind what you feel on a monthly basis, that you can afford for your new home. Deciding this up front is a great way to stay on track.

2. How long do you plan to be living in this home? Is this a starter home or is this a home you plan to retire in. Knowing where you will be in 3 – 5 years helps you and your mortgage broker to determine the proper term of your mortgage.

3. What is the amount of money you will require to purchase this home? For the majority of home buyers, the minimum down payment is 5% of the purchase price. In some scenarios, the minimum down payment is 10%. Over and above these costs, you must also consider closing costs. Typically for first time home buyers, budgeting an additional 1.5% of the purchase price for closing costs is a good estimate. For home buyers purchasing for a second or third time, I now tell my clients to budget 2% of the purchase price for closing costs.

4. Your credit score and bureau are an important factor when being approved for your new home. How would you rate your credit? Your ability and willingness to pay your credit card and loan debts is a deciding factor when a lender is considering approving your mortgage application. A minimum Beacon Score of 680 is typically required and at least 2 tradelines reporting in good standing for 24 months. There are always exceptions and a good Mortgage Broker can guide you in the right direction if you don’t quite meet this criteria.

5. How do you get started? Always look to the guidance and expertise of the professionals in the industry. Mortgage Brokers, Realtors, Home Inspectors and Lawyers. Ask a lot of questions! There is never a question to small or not in need of answer. Stick to your budget, no one enjoys being “House Poor” where the only entertainment is who is hosting Saturday Night Live this weekend. Finally, make a list of wants and needs and focus more on the “Needs” column when you are deciding on your dream home.

Good luck to everyone who is out there searching for their new home. In this ever changing market where Government influences are constantly effecting the horizon, I encourage you to seek out a Mortgage Broker. We want to help because really…..

It’s about more than just mortgages!