Imagine having to pay your next house $ 10,000 too much because you had incorrectly filled out your purchase offer. Worse, imagine being taken by surprise with a house whose entire basement needs to be redone, without any legal recourse. The kind of renovation that can easily climb to $ 15,000 and more. This type of situation can happen if you are misinformed. In this article are some points that you absolutely must know before buying your first home so that the transaction proceeds as smoothly!
Estimate your ability to pay for the purchase of a house
Note the title of this paragraph, it is about its ability to pay, not its ability to borrow. These are two very different things. Payment capacity is based on your budget. Borrowing capacity is based on what the bank can lend you. You might be tempted to think that if the bank wants to lend you $ 400,000, you will be able to make the monthly payments. Think again, some banks are very generous in their loans. What they take into account in their calculation is above all their profit.
Getting your first mortgage lender can be difficult. I said earlier that some banks were generous in their mortgage loans. And the reverse is also true, some banks are cautious when it comes to lending money for the purchase of a first home. Above all, don’t be discouraged by a refusal. Even if it is the bank with which you have been doing business for several years. Another bank that calculates risk and profit differently may well accept you. As an indication, some banks do not like self-employed workers, workers without permanent status, properties with income, down payments of less than 10%, workers who have a new job … other banks will have no fear of lending to these same customers. In other words, if your bank says no, a new bank would probably be very happy to count you as a new customer.
Facilitate financing with a mortgage broker
Receiving a bank refusal is never pleasant. You have to disclose your salary, debts and assets to a banker. Besides being a long process, it can be daunting. If you don’t feel like exposing your financial situation to several bankers, I suggest you consult a mortgage broker. The latter knows the banks and their preferences very well. He will be able to study your particular situation and send it to the bank which prefers your type of file. So you only have to report on your finances once. Plus, the mortgage broker is paid by the bank, so you won’t have to pay it.
Reserve your mortgage rate in advance
Even if you plan to buy your first home in just 3 or 4 months, it is a good idea to start shopping for your mortgage immediately. Indeed, it is possible to book a mortgage rate up to 120 days in advance with a pre-approval. This is to your advantage because if the rates go up, your rate is already booked. So you will get a lower rate than the market rate. On the contrary, if the rates fall, you will have the right not to use your reserved mortgage rate and to take the market rate which is the lowest. In other words, you never lose out on booking your advance rate!
We hope you can find your first home easily with these tips!