When you purchase a home, it is one of the most significant milestones in people’s lives. If you feel prepared to make a purchase but aren’t exactly sure you know where to start, we’re here to help. Let’s take a look at some of the best steps you can take to make purchasing your home easier for you.
The pre-approval process
The pre-approval process will help you determine important factors like the down payment you will need to make and the types of homes you will be able to afford. Before you decide to go with a lender, check with different lenders and banks and be sure to compare their rates so you can find one that works best for your budget.
Consider all costs associated with homebuying
Your mortgage and downpayment aren’t the only costs associated with purchasing a home. Many people looking to buy a home, especially those buying for the first time, can overlook or completely forget about other expenses like closing costs, land transfer taxes, lawyer fees, property taxes, home inspections and more. When you are in the market for a new home, work with your agent and other supporting professionals to ensure you are factoring all costs into your budget.
Build up your savings
Most mortgages require you to make a down payment. The minimum down payment required to purchase a home in Canada is typically around 5%, but you should aim to put down more than that amount. To avoid getting mortgage default insurance, which protects the lender if you default on your mortgage, you need to put down a deposit of 20% or more. Take the time leading up to your purchase to make sure you are saving for the down payment of your future home, so mortgage default insurance is another fee you won’t have to worry about with your mortgage.
Pay off your debt before you purchase a home
When you are ready to make a purchase, it is a good idea to make sure you pay off any outstanding debts you are carrying. Debts like credit card payments, car payments, student loans, and other lines of credit can harm your ability to get the mortgage you need to purchase a home. A debt to income ratio is what lenders use to determine how well you will manage monthly expenses while also paying off your debts. If you want to calculate this figure on your own, you can do so by adding up your regular monthly debts, dividing that number by your monthly income and multiplying it by 100. As you pay off more of your debts, you’ll be lowering your debt to income ratio and making it easier for you to get the mortgage you need.
Work with a real estate agent when you want to purchase a home
Real estate agents can help make a complicated process much more streamlined for you and your family. Your agent can help you narrow down your options based on what you want in a home and neighbourhood and what your ideal budget can get you. Sellers often use their agents as well, but, as a buyer, you shouldn’t rely on what the seller’s agent is telling you. Instead, get a professional on your side that has your best interest in mind. To find a real estate agent, you can start by consulting with family and friends, and then you can take your search online to see the agents that work in the area that interests you the most.
Coverage for the people who matter most
A mortgage is a significant financial responsibility, and if something happens to you, it can pass on to the people who mean the most to you. Unlike mortgage default insurance, our life insurance plan protects your family from covering the cost of a mortgage after you pass away. Mortgage life insurance provides your loved ones with a completely tax-free benefit that can be used in any way they wish, including paying off any remaining mortgage debt and keep your home safely in the family.
Interested in discovering your mortgage life insurance options? Get your free quote now to get started, and our team of advisors will be more than happy to help you find a plan that works for your needs and budget.