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Guide for First-time home buyers in Canada
- Tyler Juell
- June 14, 2022
- 7:50 pm
- 4 Comments
Table of Contents
Real estate has many moving parts, And each transaction is unique in the same way that every drop of water in a snowflake is unique. The process for a first-time home buyer can be daunting overwhelming, and intense; however, it doesn’t have to be.I remember buying my first home, and I’m so thankful that the realtors I’ve worked with before I was licensed were incredible people. They offered guidance and wisdom and helped it be a smooth process all the way through. I’m going to share some tips and tricks for buying your first home in hopes that it’s a positive experience like mine was.
When am I Ready to buy My First Home?
It’s a big step; when do you know you are ready? It takes money to buy a house, and it’s in your best interest to get your finances in order first. A major of this blog answered some of those questions and will help prepare you.
How Much Do I Need For a Down Payment.
What is a down payment? A down payment is a percentage of the money you put down on a real estate purchase. In Canada, the minimum amount you can put down for a down payment is 5% of the purchase price, so in a $400,000 house, you have to put a minimum of $20,000 down. A small addition to this is after The purchase contract is signed, you have to give a smaller deposit which is part of your down payment; this is typically three to $5000, depending on the overall price of the property. House is closer to 3/4 of 1 million or million dollars typically Have a $10,000 deposit. There are many ways to save to get a down payment; being disciplined in your monthly budget, picking up a side job or an evening job. I worked a side job for many years, and I still do today. I teach music lessons. There are tons of ways to make money on the side to save up for a down payment: snow removal, manual labour jobs.
What is a Mortgage? How to Prepare for a Mortgage.
You’re most likely going to need a loan to purchase your first house. That loan is called a mortgage. That is a loan that you pay back over the next 25 or 30 years. It is typically from a banker or financial institute, which is often referred to as the lender in the real estate world. You can get a mortgage by going to your local bank, or you can meet with a mortgage broker who will shop around for the best rates for you. I love using mortgage brokers and have always used a mortgage broker on all of our purchases. I’ve used the same fantastic broker over the last six years, Tanya Rogalczyk, and she has done a tremendous job.
How do I get my first Mortgage in Canada?
A bank needs to be confident that you will pay the loan back to them monthly or biweekly. They will ask you many financial questions; such as how much money you make, how much debt you have, and how secure your job is. In most cases, banks are looking for a secure job for a minimum of 2 years. This gives them confidence that you can hold a job and make your mortgage payment. One of the best pieces of advice I can give is to get preapproved on a mortgage before you start shopping around for houses. This means meeting with your bank or mortgage specialist and answering all the financial questions.
How Do I Find Out What Mortgage Amount I Qualify For?
Want to know how big of a house you can buy? Going through the pre-approval process will help determine how much money you can spend on a house. Banks typically look at your income and will not lend you a mortgage that exceeds a monthly payment that is greater than 30% of your income. That means if you have an income of $8000 a month, the bank is not going to a loan you a mortgage where your monthly payment is more than $2400 a month.
What Affects My Mortgage Preapproval?
Having debt can negatively affect your mortgage preapproval. Whether it’s a car loan payment, credit card payment or student loan, those are all debts that factor into what you can get for a mortgage. Because you already have financial obligations to pay for these debts every month, a mortgage lender will factor that into how much they can lend you. The less you have, the more you can make towards a mortgage payment. I highly recommend getting rid of car payments, student loan payments and credit card payments before you start shopping for a house.
How Will I Know What My Monthly Mortgage Payment Is?
Budgeting. There are all sorts of excellent mortgage calculator apps that are free and easy to use. I highly recommend using one. It will factor in what your monthly mortgage payment is, what your utilities, property tax, and home insurance is as well. You want to make sure that you’re comfortable with what your monthly mortgage payment will be in addition to what you will pay for property taxes, utilities, insurance and other home expenses.
How Do I Decide What kind of House I Want To Buy?
I advise going through the pre-approval process before you start dreaming about what kind of house you can own. It would be a shame to fall in love with a $400,000 house when you can only afford a $300,000 house. With that being said, take some time and dream about what kind of lifestyle do you want to live. Do you want a bright open concept with lots of natural light, do you like lots of small cozy nooks in your house, do you want to live in a condo and have some of the expenses of owning a house taken care of by a property management company? Do you want a garage? Do you want it attached or detached from the house? What sort of moments do you want to create in the house that you live in? Can you see yourself entertaining guests in your kitchen? Can you see yourself having morning coffee in the living room? Do you feel comfortable in your master bedroom? Do you enjoy mature trees in a big yard? Do you want low maintenance on yard care? There is no such thing as a perfect house, but you can’t find a house that does meet most of your needs.
How Do I Decide What House to Buy?
Everyone makes decisions differently. Some are thinkers so are feelers. Some or emotional, some are logical. I know for myself, depending on the type of house I’m buying, I’ve made decisions totally differently. The first home we bought had a legal suite in the basement and we were going to rent it out. We knew that this wasn’t our forever home and that we were going to live here for the next 2 to 3 years. This was more of a logical decision for my wife and I because we needed to make sure that the numbers worked. When we bought our third home, we knew that we would be living here for the next 8 to 10 years. That was a lot harder of a decision for us because we knew we wouldn’t be moving for a while, and this would be a house where we would be raising our kids. We eventually found a beautiful older home in Morris Rowe in red deer that had been mostly renovated, and it backed onto a large green space and had a very large yard. Perfect for our two little kids.
How Do Choose A Realtor In Central Alberta.
This might be a little bit shocking, but Realtors are people just like everyone else. Every realtor has a personality and strengths and weaknesses, and there are parts of the real estate industry that they will excel at in other parts they may not excel at. Some realtors may be incredibly organized and provide lots of market information. Some realtors might be very relational and make the buying process incredibly fun. Find one that suits your needs and is someone you enjoy working with. You need to find a realtor that is trusted and has a good reputation. Check out the google business page or Facebook page for reviews. Most people find realtors through people who have used a realtor and had a good experience with them.
Why You should Choose Me As Your Realtor?
Since we are talking about using a realtor, this is probably a good place for me to talk about why I would love to be your realtor. One of my most fundamental values is that people are cared for. Everyone one of us has incredible value and importance. It is my number one priority to help my clients utilize real estate to accomplish their bigger goals for their lives. Whether your dreams are to find home where you can make memories with the people most important to you, selling your current property to the right buyer for the right price, or finding just the right property to build your dream business, I am committed to helping you reach the goals and dreams you have for your life through real estate. When it comes to Real Estate, your dreams are important to me and I consider it an absolute honour to help you find not just a property, but the place that will help your dreams for your life become a reality. If you need to contact a Real Estate Agent in Central Alberta, contact me! If you are just browsing, you can find homes for sale in Central Alberta through my listing IDX. .
Major life hack. The Mortgage helper.
Buying with house with a mortgage helper. This is the best piece of advice I could offer any first-time home buyer, especially a young couple that’s newly married. Imagine 25 or 30 years down the road in your marriage. Your kids are graduating high school and moving on to college and the house you first bought that had a basement suite, is now completely paid for! It was primarily paid for by the renters that you have had in there over the years. The house you bought for $350,000 is now worth over $400,000 and that 5% down payment that you worked so hard for has now returned back to you in hundreds of thousands of dollars. Being a landlord has had its challenges, but he stayed committed to the process and as retirement is just on the horizon in the next 10 or 15 years, you just sold that first home you bought and now have another $400,000 that you can use to invest and set your self and your family up for the future. All your hard work paid off.
I hope these tips on buying your first home were helpful. I am happy to answer any questions you have, and if you are in the central Alberta area, I would be honoured to work for you!
4 thoughts on “Guide for First-time home buyers in Canada”
Thanks for your blog, nice to read. Do not stop.
Thanks for your blog, nice to read. Do not stop.
Thanks so much Mark! Happy to connect and answer any more question you may have!
Everything is very open with a really clear clarification of the challenges. It was really informative. Your website is extremely helpful. Thank you for sharing!