Real estate is an important investment decision for many Canadians, making homeownership the largest purchase most will make in their lifetime. For first-time buyers, trying to buy a home becomes overwhelming and elusive. After all, if you’ve never done it before, how do you know how to get started? Whether it’s your first time buying or you’re simply looking for a refresher on getting into the real estate market, here are the five steps to buying your first home.
Save Your Down Payment
The rules in Canada are simple, you need at least 5% of your home’s value as a down payment. If you’re looking at homes between $500,000 and $1 million, you’re going to need 5% of the first $500,000 and an additional 10% for the rest of the asking price. If the home’s value is above a million dollars, you’ll need a minimum down payment of 20%.
Try to accumulate the largest down payment possible when purchasing your first home. You’ll have smaller mortgage default insurance premiums, more available equity, and less interest paid overall.
Improve your Financial Health
Take some time paying off any debt you’ve got currently holding with a balance. A line of credit, credit card, installment loan, or other debt can play a major impact on your creditworthiness. Essentially, you need to improve the debt service ratios, which is the formula lenders use to determine how much to lend you.
Look Into Rebates and Grants
Always make sure that you investigate first-time homebuyer programs and grants for Canadians before purchasing your home. These can include the HST housing rebate and the home buyer’s plan. With the ability to withdraw up to $35,000 from your RRSP tax-free, it can help build your house down payment.
Get a Mortgage Pre-Approval
Obtaining a mortgage pre-approval is a quick and easy way to see how much you could qualify for without having to lock in a single lender. It will give you access to the maximum monthly payment of your mortgage, the interest rate currently available to you, and the total purchase price of the home you’re qualified to receive. Check out listings of Townhouses for sale in Brampton.
Find a Real Estate Agent and Start House Hunting
One of the best chances of finding your dream home is with a qualified real estate agent. Make sure you find an agent that specializes in the type of home you’re needing and the city or location you’d like to find your home. Sit down and determine a list of your needed items (how many bedrooms and bathrooms) versus items that would be nice to have (an inground pool). A realtor will use these lists to show you potential homes of interest.
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When you’re ready to leap into the real estate market, having a qualified real estate agent can make all the difference. Make sure you feel comfortable and confident talking about what you’re looking for and be prepared to act quickly in a seller’s market.