Being a first time home buyer is really exciting, but can also be scary, intimidating, and overwhelming at times. Looking at a home and picturing yourself living there can also be tough. Don’t sweat it though, I’ve helped many first time home buyers through the process from start the finish many times. From figuring out your budget, which mortgage options are best suited to you specifically, getting all the paperwork in order through to getting the stamp of approval from the lender, I work with you each step of the way to help make that dream home your very own.
So, where do we get started?
With a pre-approval for the mortgage you need!
I can’t stress this enough, especially as a first time home buyer, you need to get pre-approved for the mortgage you want before you head off looking at home after home. A pre-approval will tell you just how much of a home you can afford so you don’t waste time looking at homes that are out of your budget, and so that you can make your offer with confidence when you do find the house you want to make an offer on.
What do you need to get a mortgage pre-approval?
- You need to review your finances, your debts, your credit, and make sure you’ve got all your financial ducks in a row. Then, we’ll run the numbers.
- We’ll need copies of your last three pay stubs if you are an employee or your last two or three income tax returns if you are self-employed. If you are buying a home with your partner, you’ll both need to submit these for review.
- We’ll need to take a look at your debts; which means knowing the exact numbers when it comes to your credit card balances, any outstanding loans like student loans, car loans, etc.
- It also makes sense at this point to make a bit of a budget. Work out your actual take home dollars each month, and allocate a dollar amount for groceries, heat, hydro, water & waste (if applicable in the area you’re wanting to live in), house insurance, property taxes, groceries, car & debt payments, gas to get you to work and back, plus a little extra so you can have fun doing a little extra. There’s nothing worse than buying too much of a home, to find out later you’re absolutely stretched to the last dollar and not able to go out with your friends once in a while.
- Lastly, we look at your down payment. This is the money, you’ve saved up or set aside to put down as a deposit on your new home. The minimum amount you can have as a down payment is 5% of the home price. Ideally, you want to have 20% down so you can save on having to pay CMHC insurance (Canadian Mortgage Housing Corporation) which is needed when you have less than 20% of the purchase price as a down payment. You’ll also need to show the paper trail as to where the money came from. For example, you can’t borrow the money from the bank as a loan to use as a down payment for your mortgage (because technically your mortgage is another loan itself), and it would change your debt ratio impacting how much of a mortgage you may be approved for. So, whether you’ve saved it over the last 3 years, you’ve cashed out RRSPs or you’ve recently received an inheritance, we’ve got to show the lender that you do in fact, have the money set aside without changing any of the other numbers on your application.
Preparing to buy your first home in Barrie or the surrounding area may sound like a lot of work right now, but don’t forget, I’m here to help. I’ll outline exactly what you need to gather, answer any questions you have along the way, and help fill in the gaps ahead of submitting your mortgage application so you can get pre-approved for the mortgage you need. And, if we run the numbers and we find that you still need to save a little more, or eliminate a few debts first, as your financial partner, I can help you put a plan in place to get you on the right track to achieving your home buying goals sooner than you might think. Just give me, Darren Robinson, a call at 705-315-0516 and let’s get your mortgage pre-approval underway so you can start your house hunting adventure as soon as possible.