Common Mistakes Made By First Time Home Buyers
The real estate market is always evolving and changing especially in today’s climate. For that reason, we always suggest borrowers make sure they have a team of professionals (lawyers, real estate agents, mortgage agents, etc.), especially a mortgage professional to help them through the process.
Here are some of the common mistakes people make when starting their homebuying process and some pointers to keep in mind.
1. Not getting pre-approved before house shopping
The first step in your home buying journey should be sitting with a mortgage professional to determine how much of a house you can afford, not contacting a realtor to see houses. Sitting with a mortgage professional first will also help you get prepared and give you insight into the other steps involved with buying a home. When you are going through the process of finding the right house, you must get pre-approved so you know what you can afford. The amount you are pre-approved for is what you would communicate to your realtor so they can better assist you with finding the right houses that are within your budget.
2. Not saving enough of a down payment
Ensuring you have enough of a downpayment to purchase a home in the price range you want is very important. The minimum downpayment is 5% on homes with a purchase price of up to $500,000, and 10% on any amount over $500,000.00 up to $999,999. Not sure how much of a downpayment you should be saving for, contact a mortgage professional so they can go through the numbers with you. Or try using an online mortgage calculator to get an estimate. Keep in mind putting down less than 20% of a downpayment means you will need to have mortgage loan default insurance, and that cost will also be factored into your mortgage amount.
3. Forgetting to save for closing costs
You should aim to save about 1.5% - 2% of the purchase price of your home for your closing costs. If you only save enough for your down payment and not for your closing costs, you’ll be short money when it’s time to close.
4. Not preparing for the mortgage process
Documents are the primary part of the mortgage approval process, you have to show the lender income documents such as job letters, pay stubs, T4’s, notice of assessments, etc., to be approved. You’ll also need to show proof of down payment with bank statements, and if you have an existing mortgage, you’ll have to show current mortgage statements and property tax bills. Ensuring you have all the current documents on hand and ready to go will make the process that much smoother.
5. Not knowing your credit score
Before sitting with a mortgage professional or deciding to get started on your home buying journey it’s important to pull your credit yourself and see what’s on it. Doing this before it’s pulled by your mortgage professional helps ensure if there are any errors, collection items, or debts to be paid so you can address them before starting the process. Having a good credit score allows you to have access to better options and great rates. But don’t be discouraged if your score isn’t the best, reviewing it with your mortgage broker will help you to determine the best route to take.
If you are looking for a mortgage broker in GTA, Ontario, get in touch with Canadian Tailored Mortgage Solutions. With about three decades of industry experience, we worked with clients from all walks of life and assisted them so they could get their dream house or an investment property. Additionally, we understand their requirements and create tailored options that would match their need so our clients can get the right deal. Other than having a very efficient team who is always available to assist, we provide great rates and a quick turnaround time. If there are challenges with paperwork or any other processes, we are always open to helping and solving the issues in any way we can. If you are looking for a better understanding of the services that we provide, please click here. If you think that we can assist in any way possible or want to get in touch with us, please click here.