Would You Like To Stop Renting and Own The Home Of Your Dreams?
If your answer is yes, then you’re in good company. All of us, given the chance, would like to fire our landlord and own our own home. We all know that we can build our equity and net worth much faster if we own rather than rent.
The question is, how? Well, before we answer the “How”, let’s talk about the “Why”.
Here are just a few of the major lifestyle and financial benefits of owning your own home:
- More space and convenience.
- Less noise, more privacy.
- The ability to make improvements and decorate your home to suit your own taste. And the money your spend doing so benefits you …not your landlord. In fact the doing the right renovations can make your home worth more than you paid for it…sometimes a lot more!
- No more rent. Why pay your landlord $7,000 to $18,000 per year and end up with nothing to show for it? Part of every mortgage payment goes towards paying down your mortgage…making you a little richer every month!
- Build equity. Look at history and you will see that Real Estate has always been one of the best investments. Your home is like a savings account for your future needs, and as property values increase, your equity and net worth grow even faster!
I know what you’re saying: “This all sounds great, BUT …
- … where am I going to get the money for a down payment?”
- … who’s going to approve me for mortgage financing when money is so tight?”
- … how am I going to afford mortgage payments when I can barely afford rent?”
You’re absolutely right. There are challenges to buying your own home. This is why you need the services of some real estate experts to help you through the process.
We specialize in helping people just like you buy their first home! We are realtors, mortgage agents and property managers. We understand all the intricacies of this process. As your Trusted Real Estate Advisors, we can show you how to buy with little or NO money down and almost NO closing costs.
How Much Money Do You Need to Buy a House?
To buy a house you need money for two things; the down payment and closing costs. The down payment is the money you put towards the purchase price of your home, usually out of your own pocket. Closing costs are the money you pay out for things like a home inspection, appraisal, legal fees and Land Transfer Tax. So how much do you need?
The Down Payment
Saving for a down payment can be one of the biggest barriers to home ownership. Mortgage lenders recognize this dilemma and many now offer new products with low down payment options. Five percent down payment mortgages, meaning 5% of the price of the home, are commonly available.
There are many ways to find or save for a down payment, consider various sources of income such as:
- Save your tax refund
- Use funds from your RRSP under the RRSP HomeBuyers Plan
- Gifts from a relative
- Take a second job
- Check out government programs
No Money Down Mortgages
There are some banks and mortgage companies who will actually give you the entire down payment. Yes you read that right! You can buy a home without a down payment!
Lenders will typically ask that you prove that your have 1.5% of the price of the home you are buying in the bank to pay for closing costs. So if you are buying a $200,000 house you will need to prove that you have $3000 in the bank over and above your down payment. However …we have some lenders who have a more flexible policy and we can get you approved with less than 1.5%.
Getting Pre-Approved For a Mortgage
We could also have called this section “How Much Can I Spend on a House”. This step will not only tell you how much you have to spend on a house but also give you an idea of how much of a down payment you will require as well as closing costs.
Before you begin looking for a home you should get pre-approved (not pre-qualified) for a mortgage. There is a big difference between the two.
Getting a Pre-Qualification is easy. You just call us, provide some basic financial information over the phone, then wait a few minutes while we calculate some things and then we can tell how big a mortgage you “could” “potentially” qualify for. We make assumptions about your credit history and we rely only on information you tell us about your income and debts.
A Pre-Approval, on the other hand, involves verification of the information. We will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Then we will check your credit record to see how well you have managed your finances. If we then feel that we can get your approved for a mortgage we will submit this to one or more lenders who will give us a pre-approval based on the information provided.
A Pre-approval will let you know exactly how much you can spend on a home purchase BEFORE you start your search. A pre-approval in hand also makes you a more attractive buyer when you are ready to make an offer on a home. Home sellers are more likely to accept an offer from a buyer who can demonstrate the ability to secure financing.
Oh …by the way…we provide this service free of charge.
Use a Buyer’s Representative
The Realtor who has their name on the sign represents the seller; they do not represent you as the homebuyer. You can have a Realtor represent you by signing a Buyer Representation Agreement with them. This levels the playing field by ensuring that your are represented by a trained professional as well.
The Buyer’s Representative can disclose things they may know about the seller or the home, which they would not be able to if they represented the seller. They work for you, not the seller.
Best of all you do not pay their commission – the seller does.
As Realtors we can act as your Buyer’s Representative and protect your best interests. Our service is almost always free to you as we normally get paid out of the commission the seller agreed to pay to their agent to sell their home.
Get Educated on the Home Buying Process
Many mortgage lenders, non-profit organizations, and even Realtors offer homebuyer education classes to prepare you for homeownership. Classes normally run about one to four hours and cover the basics of home buying. Some of the topics covered are “How to Apply for a Loan”, “Finding the Right Realtor”, “Making an offer on a Home” and “The Advantages and Responsibilities of Home Ownership”.
However, the quickest and easiest way to get educated about the entire home buying process is to select a Mortgage Advisor and Realtor who offer unbiased professional advice with your best interest in mind. We believe that our number one job as a Realtor and Mortgage Agent is to educate our clients. Educated clients generally make sound decisions and become our happiest and most satisfied clients. As Your Trusted Real Estate Advisors we will be there to educate you about everything involved in buying and owning your new home.