Are you buying a home for the first time? Finding a home that meets your vision and budget can be stressful. Without professional guidance, you may end up making the wrong choice. If you’ve been dreaming of buying your own home, you must understand its pros and consider your financial stability before investing.
Home buying doesn’t just come with purchasing costs, there are many other expenses, including taxes, legal fees, repayments, and more. To ease your home-buying worries, here are a few things you must keep in mind:
1. Down Payment Rules
A down payment is the amount of money a home buyer pays upfront for a property they want to buy. It is required by law to pay a down payment of at least 5% of the purchase price for homes under $500,000 and 10% for homes over $500,000.
In case, your down payment is between 5% and 19.99%, you will be required to pay mortgage default insurance, which typically ranges between 2% and 4%.
2. Credit Score Requirements
Your credit score is the second most important aspect a mortgage broker considers when getting you approved for a mortgage. A good credit score means easy loan approval whereas a bad credit score means lesser chances of getting approved and higher interest rates.
A credit score from 300 to 900 can help you get approved for a home loan by first-time home buyer lenders in Surrey while banks require a minimum credit score of 680 for approval.
3. Get Pre-approved For Mortgage
Getting pre-approved for a mortgage is the third most important thing to consider. Before starting your search for a perfect home, get yourself pre-approved by a Surrey mortgage broker. This will allow you to make a genuine offer to a seller.
To determine the amount and interest rate you’ll be pre-approved for, a broker or bank will look at your credit score, income, and outstanding debts.
4. Understand Your Affordability
By adding your pre-approval amount to your down payment, you can get a clear idea of what the = maximum purchase price will be. Using all your pre-approved amount and down payment to make an offer is not a good choice.
Since there are many other costs associated with home-buying transactions, it’s best advised to make all financial decisions with utmost care and patience.
5. Know First-time Home Buyer Grants
To make home ownership more affordable, the Canadian government provides many incentives and grants to first-time homebuyers. Some programs are unique to the province you are planning to buy a property. Here’s a list of programs a first-time home buyer can apply to save thousands of dollars:
- First-time Home Buyer Incentive
- Home Buyer’s Tax Credit (HBTC)
- Home Buyers’ Plan
- GST/HST New Housing Rebate
- Provincial Programs
If you are looking to buy a home and apply for a mortgage, make sure you know the ins and outs of the mortgage process. To help you get easily approved for any sort of loan, rely on Sandhu & Sran Mortgages. We have proudly helped hundreds of first-time home buyers like you in getting approved for a residential mortgage in Surrey.