How To Fund Your First Home Purchase
Few of us have enough in the bank to go out and buy a home in cash, learn more about funding your first home purchase in this article. We work hard, save and then we finally reach a point where we think we are ready to buy. You may have just received a big raise, were given some money from your wedding or you received an inheritance. This is enough to make you seriously consider buying now instead of renting.
For most of us, buying a home includes taking out a mortgage on the property. The payments on your mortgage will often be around the same amount as your rent payment, but the property is yours to do with as you wish. If the value goes up, you can sell and keep the profit.
Working With a Mortgage Lender
When you visit a mortgage broker or a bank for a mortgage, take proof with you of what you own in the way of assets. Stocks, bonds, savings and RRSPs are all pluses for you when you are applying for a mortgage. Lenders look for stability and tangible assets as proof of your reliability.
Don’t move your money around, change jobs or increase your debt at this time either. Lenders look for a predictable credit history and a reasonable debt load. Keep your balances on credit cards and your line of credit as low as possible at this time.
When you are shopping for a mortgage, a mortgage broker is a great advantage. Brokers have access to many lenders and work for you, not the lender. Banks are out to maximize profit while a broker only gets paid if the home buyer is happy. The reason visiting a broker is so advantageous is that they know mortgages and can help you to figure out which mortgage is right for your personal needs. They are also well-informed about the housing market, recent trends and have industry-specific information that can help you to make a good decision.
Get Pre-Approved
Once a good match has been found, a broker can get you pre-approved and lock in the rate for you too. They know what fees are involved so that you don’t have any unwelcome surprises down the road.
The interest rate isn’t the only consideration when you are looking at mortgage products. Often times the terms are the deciding factor. You may want to be able to make lump sum payments on your mortgage or the ability to get out of your contract without having to pay a huge penalty when you sell. Brokers work for you for free and know the mortgage business well.
Taking Over an Existing Mortgage
Not all homes need a new mortgage either. If you have a substantial down payment you may be able to “assume” an existing mortgage. This normally means that you must qualify just as you would for a new mortgage. The existing mortgage stays on the property. This is helpful at times as the interest rate may be lower than what you can get now. That shaves thousands of dollars off the interest you will pay on the mortgage. Sometimes sellers will also “carry” the mortgage. A legal agreement is then made where you pay them and not the bank.
Use a licensed real estate agent to find out if you are in a position to do this and to help you investigate all the other possibilities available to you. The seller pays the commission for the Realtor, not the buyer.
Even if you go to your bank and are turned down for a mortgage there are still avenues available to you. A good mortgage broker will be able to shop around and find you a loan based on your circumstances. While the bank can only offer you a mortgage if you fit their strict criteria. Every lender has different requirements for their mortgages. Brokers have access to lenders who are willing to lend to those with less than pristine credit files or to those who just don’t quite made the grade as far as the banks are concerned.
Want to find out more on how a mortgage broker can match the perfect loan for your specific requirements? and help you fund your first home purchase. Contact us today and speak one of our mortgage professionals.