Buying a home for the first time can be challenging and overwhelming. I’ve worked with many home buyers over the years – many of them being first-time home buyers. Together we worked to address their concerns, so don’t worry, I’m here to remind you that you’re not alone.
If you’re facing challenges or simply have questions about your home buying journey, you can simply ask me. As my clients say, “Just ask Daisy.”
First-time home buyer? Your questions answered
1. Are you ready financially?
It’s important to figure out how much money you have available before you start house hunting. The more you know about your current financial situation the better prepared you’ll be to meet with your mortgage broker.
2. How much can you afford?
How much are you currently spending? Consider the following expenses: household expenses, loans and debts, entertainment expenses and savings and donations.
3. What are the upfront costs?
The upfront costs you’ll need to cover to buy a home are: the down payment, home inspection, insurance costs, land registration fee, property taxes, utility bills, legal expenses, potential repairs or renovations, moving costs and HST.
4. Do I need 20% for my down payment?
In general to purchase a property, the minimum down payment is 5% for a property value of $500,000 or less and 10% for any amount above $500,000.
Keep in mind that when a loan’s over 80% of the lending value of a home, that’s considered a high-ratio mortgage. This means the down payment is less than 20% and it’ll likely require mortgage loan insurance.
When a home loan is equal to or less than 80% of the lending value this requires a down payment of at least 20%, which is known as a conventional mortgage and doesn’t require insurance.
5. How much do I need to make to buy a home?
This is one of the first questions I get in consultations. Knowing the income you need to make and money you need to set aside is crucial.
Nowadays, the average price of a home is around half a million dollars and this varies from region to region. This means that you’ll need a down payment of $25,000 and a household income of $97,000 before you can buy one.
6. Do I need to get pre-approved or pre-qualified for a mortgage before I start looking for a home?
It’s a good idea to get pre-approved or pre-qualified for a mortgage before you start your home search. Getting pre-approved will help you narrow down your options.
A pre-approved mortgage will let you know how much you can afford, what your interest rate will be and what your monthly payments will look like. However, getting pre-approved is not a guarantee or final approval yet. The property still has to be evaluated to ensure the price and the conditions are acceptable to your lender.
Final word: Ask away!
The best piece of advice I can give is to do your own research and ask questions. The more knowledgeable you are, the better you can plan and prepare. In turn, you’ll be feeling more confident and less worrying.
Daisy Raouph is a trusted mortgage broker and financial security advisor with over 30 years of experience. She can help answer your questions and steer you in the right direction. Dealing with numerous lenders, she can provide you with competitive mortgage rates and products that’ll be most accommodating to your needs.