What all you need to know when buying a house for the first time?

Are you ready to buy your first house? In this blog, we will discuss the best seven tips that would help you to get the keys to your dream house.

First and formest thing, it is very important to have a minimum down payment.

But how does minimum downpayment is determined while you are buying a house? Well in Countries like Canada, Generally a downpayment is around 5% of the total cost of the house. Many people get stuck in this hurdle since they need to make huge savings for a downpayment. Hence for every individual saving is essential. 

If an individual works on a saving plan, easily downpayment is saved. Also the more you have downpayment the less amount you need to borrow for your house. After you figure out each downpayment amount, you should use a calculator which would help you to calculate mortgage amount and monthly EMI.

It is very important for you to have a pre-approval because without this you won’t is able to buy a house.

If you are looking for various different houses, who is the person you should call? Obviously, you are not going to call a realtor. Many people in countries like Canada do contact a realtor and look for a house but it’s not the right way.

After you save a huge amount of money for a down payment, you need to have a mortgage pre-approval. You need to call a mortgage broker and your broker or bank mortgage specialist for discussing pre-approval.

You should buy a house which you can Afford.

Many people want to buy a dream house, but people should be realistic and know about the various properties which they can easily afford. It depends on the individual’s household income, various miscellaneous home costs such as electricity bills, condo fees, property taxes and many more. It is important to estimate all the costs before taking a loan.

You need to shop around.

When people are on the hunt for a house, it is very important to do good research and find the best bank for a good rate of interest. It needs to have several mortgage rates from which you may choose the best one. Also, ask your mortgage broker to negotiate rates. Also, you need to know even with a small difference in interest could lead to save and spend a huge amount of money hence you should be careful while choosing an ROI.

It is better to ask a mortgage broker                                                                                                                                You should know that mortgage brokers would help you to get a mortgage form big banks at very low-interest rates. Mortgage workers do good work by comparing different rates from various financial institutions and banks. They aim to find the best deal for their customers.

Despite this mortgage brokers do have access to various mortgage products and different rates form various credit unions and companies. Also, mortgage brokers work with small lenders who do not charge the same overhead costs as big banks do. Hence they have very low-interest rates and fewer fees.

The best part of a mortgage broker is that they don’t charge any fees for their services. All the fees are paid by the lender as the broker’s commission. Also, brokers handle all the negotiations and paperwork and they will assist you with various application processes and a home appraisal pre-approval.

You may take advantage of various programs that are for new buyers.

If you are going to buy a house for the first time, you should know many programs and apply them to them. It could be a rebate or any tax-efficient way which would help you to find for a downpayment. Various programs are run by the government which saves money when you buy the first house.

If you are located in Canada, you are lucky since it provides a rebate of $750 for all the eligible first-time buyers from Home Buyers’ Tax Credit service.

Also, the Canadian government’s home buyers plan or HBP work well for first-time buyers. As it allows them to borrow up to $25,000 from an RRSP for the payment which is usually tax-free.

Also, if you qualify for any land transfer rebates then you may buy a house easily. It is available for people located in various provinces like Prince Edward Island, British Columbia and Ontario. Also, they provide a rebate on land transfer tax for all the people of Ontario who are going to buy a house. 

If you want to buy a house that is already built then you only need to get your house renovated which qualifies for the huge rebate for a small portion in the sales tax. Also, the GST or HST rebate amount for a new house could qualify for the purchase price of the home. Also, it could be used to claim if the net amount is around $450,000 or less.

You need to keep huge savings.

It is very essential for buyers to keep on savings once they have given the downpayment since they would require to pay EMI amount and also various other costs. For a house, various additional costs are also there when you buy your house for the first time. It could be CMHC insurance, or land transfer tax and a closing cost. Hence a savings plan is needed even if you have saved a good amount for the down payment. 

It is very good to save at least 3-5 % for home purchase price since it would help you to cover all the closing costs.

How to qualify for mortgage pre-approval.

It is not an easy thing to get mortgage pre-approval and it is the key step to buy a good home. You need to begin to find a lender. A lender should be able to provide a mortgage loan and give the exact number you nee need with all the conditions. There are two main terms in a mortgage it is mortgage broker or lender and various other terms like mortgage pre-qualification in pre-approval. Both of them have a huge difference. It is all about what you need in place of preapproval for a mortgage. 

Various benefits of having a mortgage pre-approval.

It saves the huge time of yours

If you have a preapproval then it would give you an estimate about how much money you need and which house you can afford. Also, what is the potential monthly EMI? It will help to narrow down your search and would save huge time.

All the realtors would take you seriously.

Many realtors don’t want to waste their time on people who are not ready to buy a house. If you have mortgage pre-approval then many realtors would give you value and will assist you through the buying process.

You need to be lock-in mortgage rates.

If you get mortgage preapproval than within 90-130 days your rates would be locked in. it means if the interest rates rise then your locked-in interest rate would be considered. Also if your mortgage rates fall then the locked-in mortgage rate would be adjusted. Essentially this means you are hedged with a potential spics in huge rates for at least 3-4 months.

Various sellers would like to negotiate.

A seller would give you a priority for purchase if you have a letter for preapproval or a certificate which shows that you will be able to close the deal. Various sellers would want to negotiate on a price and various terms that they would like to have with the buyer.

No need for commitment.

If you have a mortgage pre-approval letter then it does not mean that you need to be committed to obtain a mortgage loan form lender. Also, there won’t is any financial repercussions or different penalties if you would like to go for another lender or choose to buy a house later.

What is there in the mortgage preapproval process?

It is a very fast process and it does not take many days, only 1-2 days provided you have all the paperwork done. You need to be prepared for providing lots of documentation and should confirm from the lender that all your documents are fully reviewed so you don’t need to experience surprise later. It is very important since many lenders would hold a rate without any underwriting.

Any individual who is directly working. With the mortgage broker or with a lender, an individual needs to provide various documents such as personal information or identification, proof of income, Employment verification, proof of downpayment, proof of various assets and all debts and liabilities.

Also, it is very easy to reset pre-approval dates if you are not able to find a house and don’t want to close the deal. But it should be within rate lock period of 90-120 days. 

With a guide, you would have known now that it is not easy to buy a house. It needs lots of process needs to be done before you purchase a house.