To Do List for First-time Home Buyers

 

House

 

GET YOUR CREDIT SCORE AS HIGH AS YOU CAN
Pay off credit cards and only use 10% of your limit moving forward. You can sell large things, but don’t make any major purchases (like a car). Don’t cancel any lines of credit and don’t open any new lines of credit. Stay current on all of your bills and remember, no major purchases!

SAVE
You’ll need money for the down payment (if you need to), inspection, and closing costs (eg:lawyer fees, taxes, etc.)

CHOOSE A REAL ESTATE AGENT
A good real estate agent will guide you through the next steps so that you don’t make any errors.  It’s also important to have an understanding of how your real estate agent is going to market your property (i.e. email, social media, MLS, etc).

CHOOSE A LENDER
If you don’t already have one in mind, your real estate agent can provide a list of preferred lenders. The lender runs your credit and gives you mortgage options and estimated rates. The lender also calculates how much you can spend on a house  based off of your debt to income ratio.

DECIDE WHAT FEATURES ARE IMPORTANT AND VISIT HOMES
Make a list of features most important to you before you start looking. Your real estate agent will book showings for houses that match your list. Visit the homes and take notes and photos.

NARROW CHOICES
Make sure to test the commute, consider resale value for the home, and finally make a decision!

MAKE AN OFFER
Offers are often contingent on many things, including, home inspections, financing, and insurance. Your real estate agent will help you decide what conditions are important in your purchase.

FINAL WALK-THROUGH AND CLOSE
Make sure the house is the way that it should be, as this is your final moment to speak up if something is wrong. Bring your closing money to the lawyer, and get ready to sign paperwork!

MOVE IN
Congrats and enjoy your new home!

Concerned about the new Mortgage rules?

If you’re looking into the option of buying a house, you probably already know that the Mortgage Rules have changed recently, and you’re probably concerned.

 

What is this new rule anyway?

“Effective October 17th all high ratio buyers will have to qualify at the benchmark rate for all terms.”

 

And just what does that even mean?

It means that you’ll have to qualify for a higher interest rate than what you’ll actually end up paying, which will reduce the dollar amount for which you’ll qualify.

Dominion Lending Centres gives this example:

“… a home buyer currently qualified to purchase with 10% down for a mortgage of $527,000. After October 17th, this home buyer would qualify for a $420,000 mortgage. This equates to a 20% drop in buying power. (All things being equal in terms of property taxes, income, debts, etc).”

 

So what do we do?

In this situation, you have a few of options:

  1. Make up for the shortfall with more money down; or
  2. Add another person to the mortgage to help qualify; or
  3. Purchase a lower priced property

But mostly…talk with your Royal LePage REALTOR® and your mortgage professional about your options.

 

So what’s the purpose all this?

Well, the new mortgage rules will likely reduce the risk of a housing crash.  The government and the banks are looking out for own interests in keeping the housing market going, but in looking out for their own, they’re also looking out for yours.  Qualifying for a lower amount might just put less stress on your wallet.  That can’t be too bad.