You have poured over online listings, determined your “must have” home features and scoped out the market in your town. But are you really ready to become a homeowner?
You are, says Stuart Levings, Genworth Canada’s chief operations officer, if you’re doing these five essential things.
1) Saving at Least Five Percent for a Down Payment
Mortgage insurance programs, like Genworth’s Homebuyer 95, let first time buyers purchase their first home with as little as five percent down. Setting up a savings plan and budget can help you save that five percent sooner. “In absence of doing that, as we all know, money finds a way of leaving your wallet,” Levings says.
2) Budgeting for Extra Fees
Having your down payment set aside isn’t enough. “You also need to think about the costs of closing on a home, which can often run up to three percent of the cost of the home,” Levings says. Those extra costs could include title insurance, legal fees and a home inspection fee.
3) Doing Your Homework
Unless you already work in the world of real estate and mortgages, home buying education must be self-taught. You’ll need to understand the process and legalities of working with a real estate agent, making an offer, securing financing, closing a home and getting insured. Exploring helpful online resources such as centummortgagechoice.com will help you find tips, mortgage calculators and useful information.
4) Building a Good Credit Score
A low credit score can affect your ability to buy a home “quite severely because there is a minimum score required,” Levings says. According to Canadian government regulations, 600 is the lowest score you can have to qualify for a mortgage. But Levings warns “many insurers will not even go that low depending on other criteria, such as the amount of money you’re putting down, because the more you put down, the less risky you are in the eyes of a lender.” He recommends going into a home search with a credit score of 650 or higher. A solid history of paying debts such as a car lease and credit card accounts with limits upwards of $1500 can boost your score.
5) Getting the Right Advice
“You need to deal with a professional realtor and mortgage broker,” Levings advises. “Brokers are a good source of information for your mortgage options.” A financial planner can also help you create a realistic budget and save for that down payment.
Source: Jaclyn Tersigni, Genworth.ca