When you start planning of purchasing your first home, finding the right property is not the only thing that might prove difficult. Understanding how the whole property purchasing process works in Kitchener is vital. Furthermore, determining how this property will be financed with your first home mortgage is of extremely high importance.
Let’s see the steps you need to take in order to make your first big financial move – buying a home in Waterloo or Kitchener in Ontario.
Save Up a Handsome Down Payment
There are many places that offer cash-back mortgage products that will cost up to 5% of the value of the property. When you venture out to purchase property in Ontario, the best practice is to save a minimum amount of at least 5% for your initial mortgage down payment. The mortgages that have cash-back abilities are generally allotted to clean credit reports with high scores and willingness to pay a good amount in interest to avoid the down payment. The bigger your down payment is, the more likely it becomes for a lender to agree to finance your acquisition.
You should always remember that saving up to 20% as down payment or more can help you avoid mandatory Canada Mortgage and housing Co. mortgage insurances which will help you save thousands in interests and fees over time.
Think of Your Budget
The biggest step in this process is calculating how big of a mortgage you can afford on long term basis. Coming up with a budget will help you keep track of how much you will be spending monthly, this can be an effective start to determining what finances you have left at the end of each month.
Calculate a Maximum Mortgage Payment
Use calculators to actually understand and see how much you can afford at the time of your first mortgage home financing so that there are no mishaps in these matters once you are deep in the process.
Getting pre approved can help you obtain much lower interest rates for up to four months along with a lender accordingly with your financial condition. A preapproval is written contract or commitment from the lender that states the maximum amount of mortgage they are willing to lend at a certain interest rate. You are not obliged to follow through whit preapprovals, but it is very comforting for the buyer at the time of making an offer on the property of their choice. The rate holds will simply depict the highest interest and mortgage rates they offer; if the interest rates lower down within 30 days of the sale, the buyer will receive an accordingly lower rate. You need to do proper research and learn the differences between being pre-approved, approved and pre-qualified so that there is no confusion later on.
Make Offers Conditional on Financing
Once you have been pre-approved, shop for the property of your dreams. You’ll have enormous amounts of comfort when you know what you can afford and feel confidently prepared for this life changing event. Even if you have been pre-approved for mortgage, it’s always a good idea to make your offer conditional on financing. Neither you nor the lender has any obligation to follow through and if the situation changes like an increase or decrease in income, the pre-approval will no longer remain valid.
If you have any mortgage-related questions, we recommend Rosanna Congi. Rosanna has been a mortgage broker in Kitchener-Waterloo for over 20 years and regularly works with our clients. You can contact Rosanna at 519-500-3010 or by visiting her website here.
If you or someone you know is buying or selling a home in Kitchener, Waterloo or the surrounding area give us a call at 310-SOLD. Or click here for a FREE Market Evaluation of your home.