Hunting for your forever home – it’s a big deal!
Especially in Victoria, the search for and all things involved with buying a home can be daunting.. to say the least.
With things to consider like qualifying, pre-existing debts and even your down payments, there is much to mull over before making the plunge on your very first home-purchase.
Luckily, there are some great and helpful resources when it comes to making huge life decisions such as this. Mortgage planner Elizabeth Prins of Mortgage Designers at Mortgage Architects has given us some great insider info on how to be better prepared to celebrate home ownership!
Also, Facebook group Black Is The New Red has become a go-to for all things financial – chat with experts, discuss amongst friends and know that you’re not alone in the (sometimes confusing!) world of money.
Whether you’re on the hunt for new digs, already have your down payment saved or are even just thinking about buying, here are 8 tips you should know:
1. Multiple credit-checks can affect your credit score – but not if you use a mortgage broker!
When applying for credit, your score will decrease with every hard check. One of the benefits of working with a mortgage broker, though, is that they only pull one report and shop many different lenders – saving your score and a lot of hassle! They work on your behalf, not the bank’s.
2. Speaking of, having a blemish free credit history is important
Ideally you’ll have no late or missed payments, and no going over your limit. A score of 680 or higher is preferable, although it is possible to get a mortgage with lower score than this.
3. The higher the credit score – the better!
Your credit score dictates which mortgage products you qualify for and the percent of monthly income needed to service your mortgage payment, monthly heat and property tax payments, as well as other debt payment obligations.
4. You’ll need a “stable income”
If you’re an employee, you must have permanent status at work versus on being on probation. If you’re self-employed, you need to show the lender you have adequate income to meet your financial responsibilities. Generally, at least 2 years of tax returns are required as proof of income.
5. Down payments have some rules
Whether your down payment comes from savings, investments, a gift from a family member or is even borrowed, there are some rules surrounding how much it needs to be. Purchases up to $500,000 require a down payment of 5%. If the value is between $501,000 and $999,999, the minimum down payment is 5% for the value up to $500,000 plus 10% of the balance. For properties over $1 Million in value, minimum down payments defer from lender to lender.
6. It’s best to keep your income and savings high.. and your debts low
Because debts and qualifying for a mortgage are dependent upon monthly payment commitments, sometimes it makes best sense to strategically pay certain debts before others or increase your down payment. Meet with your mortgage broker (aka mortage planner) ahead of time to strategize and make your plan!
7. Pre-qualifying is a thing!
When you’re house-hunting, it’s good to ensure you are shopping in the appropriate price range – this is where pre-qualifying comes in! It’s always good to do this at the very least 3 or 4 months before you begin to house shopping, but earlier is never a bad idea.
8. It’s always best to consult the best in the biz!
From financial coaches, accountants, mortgage brokers and realtors – there are people out there to help in every step of the way! Some mortgage brokers work with their clients for several years before they purchase. It’s all about setting goals and making plans happen!
Purchasing a home can be complicated, so taking care of things ahead of time that will help you out in the long run definitely helps! With professionals like mortgage planner Elizabeth Prins to walk you through the important steps leading up to become a home-owner, you can be prepared to dive right in.
Don’t forget to join Facebook group Black Is The New Red for more financial advice and discussion – because every little bit helps!