How would you feel if you are finally able for buying a home: ecstatic, wonderful, superlative?
One of the hurdles in purchasing your new home is funding and, most of the time, you will find yourself asking the question, “Could I really afford this house?”
Our blog will focus on buying your first home and giving emphasis on how you should go about it. This is going to be a short one but rest assured that we will make this read an informative material worthy of your time.
Main Requisites of Buying a Bome Explained
Most obviously you have already created a list of must-haves and must-dos to kick-start your house buying plans. Some of these can be, but are not limited to, the following:
a. Making regular trips to your favorite DIY store
b. You have saved money for your initial down payment (this is a MUST!)
c. You have a stable job with money regularly coming in
d. You settled all your bills (or a majority of them) on time
e. You already hired (or have) an interior designer
With these fulfilled, you are now ready to proceed with your house purchase. But how would you go about this?
Leave that to us because we will show you key elements you need to understand in preparing yourself to purchase your dream house:
- Term – this is usually the time allocated by your mortgage agency or lender by which you are expected to pay your loan in full. This is directly proportional to your interest rate – that is – the shorter the term, the lower the rate.
There are some lenders, however, that would do the opposite. They do this because they want to maximize their investment (borrowed money) and earn a considerable amount of interest from it.
Be extra vigilant with this condition if ever this is present in your mortgage agreement.
- Rate – this is related to our first requisite. There are two types of rates you will contend with: variable rates and fixed rates. The former increases over time while the latter is locked and does not increase over time.
One thing to remember, though: regardless of rate type, this can increase depending on the present economic conditions so you have to be liquid always.
You don’t want to be in a situation where you are redacted to be under bad credit home loan interest rates due to failure in paying your monthly amortization on time.
- Down payment – one thing you need to know up front is that down payments follow a schedule. For a 5% down payment minimum, your house should be below $500,000.00 while the remaining 10% is for the remaining portion.
A down payment of less than 20% comes with inclusive CHMC insurance. On the other hand, a down payment of more than 20% does not come with requisite insurance.
Overall, the down payment is calculated based on your mortgage agreement aside from the specifics presented beforehand.
- Payment frequency – this refers to the timeliness of your payments which are normally amortized into monthly installment payments or whatever is stipulated on your mortgage contract.
Make it a point to follow your amortization schedule so that you can qualify for a better private home loan agreement should your need arise in the future.
Other Requisites to be Consider for Buying a Home in 2021
There are still a number of important requisites to take into consideration when you are planning to buy your house and these are the following:
- Housing costs – most lenders will require that your housing costs are lower than 39% of your gross income. This will ensure them that you are still able to pay your monthly amortizations on time and you won’t be a risk to them.
- Unsettled debts – this is already a given: no lender will risk extending credit to anyone who is irresponsible with his/her finances. Make sure your dues are dealt with and have ended prior to your plan to buy a house.
- Realtor fees – your house seller normally manages this fee unless your buyer-seller agreement indicates otherwise.
- Closing costs – these are miscellaneous costs that add up to your initial cost like home inspections, moving expenses, lawyer fees, etc. Lenders normally like to ascertain that you have 1.5% of your house purchase price ending up as your savings so that you can cover these closing costs.
You can always seek assistance from any reputable private mortgage company to help you deal with these miscellaneous expenses that can put you in trouble if not managed properly.
It is an achievement to buy your own house. Nothing can ever compare to the joy and excitement of moving into your new home in a better-looking environment. Your key is for you to know the essential requirements that cover your house purchase so that you can plan ahead.
Any shortcomings you encounter during the house buying process can be alleviated by a professional mortgage agency that will help you every step of the way.
Simply understand what we have presented above and you will never experience any hassle or blunder in your house purchase.
We are your dedicated financial company that helped 96 clients materialize their dream homes in Canada. Our vision is to help families build, develop, and/or improve their homes for them to live conveniently and comfortably.
Call us at 416-825-0142 or send an email to email@example.com to learn more.