The transition from living at home or renting, to homeownership has many obstacles for millennials, today. In fact, many people may feel like homeownership is a dream that is out of reach for them in today’s current real estate market.
But all hope is not lost! By asking yourself these four practical questions, you too can be on your way to buying your first home.
1. Are you shopping within your means?
As a first-time home buyer, it is important to shop within your means. Even if you qualify for a sizable mortgage, there’s no rule that says you have to use the full amount. At this stage, your goal should be to start building equity. If you want a property but you can’t afford it, then you shouldn’t buy it.
2. Are you budgeting your finances?
If you’re seriously thinking abut buying a home, then you have probably started budgeting for your down payment and monthly mortgage payment. But don’t forget to budget for your property tax, insurance, closing costs, and utilities. Not to mention, your living expenses once you’ve moved into your new home.
3. Do you have enough saved for a down payment?
In Canada, most mortgage professionals will advise you to make at least a 20% down payment on your property to avoid paying homeowner insurance. However, this is not always possible, especially if you don’t want to delay your first real estate investment. A 5% down payment is the minimum amount you must put down.
4. Will you be using a Mortgage Broker?
Shopping around for a mortgage can be a complicated and confusing process. It used to be that if you wanted to finance a mortgage, you went right to your bank. These days, more and more Canadian’s are turning to a mortgage broker to help them find the mortgage product that is right for them. A mortgage broker will compare rates from the major banks as well as non-traditional lenders. They will then match you with the best interest rate and lending terms available on the market.