Buying real estate for the first time is very exciting. Most people are anxious. This is normal. However, being aware of all the costs associated with purchasing a home is a good first step towards minimising your stress.
1. Know your Credit The first thing a lender is going to look at is your credit score. Credit scores in Canada range from 300 to 900, with the higher numbers indicating a healthier financial record and less of a risk to the lender. Good credit scores start in the low 700s; the higher they are, the easier it will be for you to get a loan. Your interest rates are also determined by your credit scores, with the best rates going to those with scores over 760. Your credit score not only impacts your ability to get a loan, but it also impacts your options when renting a home or purchasing a cell phone. Maintaining a good credit score is essential to your financial well being.
2. Understand How Mortgages Work Get familiar with the mortgage laws, structure and options. That way, you will be able to decide on the right loan and lender — crucial to your home buying success. It's up to you to determine which lender is best for your needs, and it's always a good idea to have at least a bit of background about the loan process before you talk to a lender.
3. Get Pre-Approved When you meet with a mortgage broker or banker, you want to ask them to pre-approve you. Pre-approval is an underwriting of your file and will help you identify how much you can actually spend on a house. You will have to provide your income documentation, credit and many other personal and financial information in order to underwrite your file.
4. Closing Costs Most expenses begin when you have signed the paperwork. Closing costs include:
Home inspection costs can range between $400 - $1000
Home insurance costs vary depending on the age of the roof, structure and neigbourhood
Property transfer costs depends on the market value of your home
Buying your first home is a huge step. While it can be a bit overwhelming if you are unprepared, there are places like the Thornhill Wealth Forum where you can get free advice and network with professionals who can guide you.