My wife and I are first time homebuyers. After saving for years, we’ve paid off our existing student loans, car loans and credit card debt. We used an online mortgage calculator to get pre-approved for about $600 thousand. What steps can we take to get started? – ON THE HUNT
DEAR HUNT: The first step is establishing your budget. Online pre-approvals and mortgage calculators are a great place to start, but if you’re a serious buyer, you need a professional mortgage specialist. Dig up a few years’ worth of T4 forms, Notices of Assessment, and a job letter from your current employer to get the ball rolling. Each financial institution has slightly different rules, but all will determine what you can afford based on your gross income. Overtime hours and other variables may affect how the bank sees your income since these can cause significant fluctuations not seen in a salaried job where the gross income is consistent.
Run a quick credit check through Equifax or TransUnion if you haven’t yet, but avoid signing up for long-term credit monitoring that isn’t necessary. Typically you need to look for little indiscretions from your college or university days, like an unpaid $150 cell bill that left a scar on your credit rating. Minor slip-ups can impact your mortgage qualification, so resolve these issues to avoid future complications.
With your financing in order, it’s time to map out your purchasing costs. Along with a minimum five percent down payment, earmark at least an additional 1.5 to two percent to cover your home inspection, legal fees, land transfer tax and moving costs. Explore what government incentives or tax breaks may be available for first-time buyers.
Now the fun begins. With your home buying budget established, enlist the help of a qualified real estate professional. I always have my buyers make a wish list of their top ten most wanted features, which we review and rank in order of importance. Ideally, you and your partner should make your own lists, so we know what’s important to each of you.
PRO TIP: Financing is a critical part of the home buying process. Pay off your short-term monthly obligations to increase your purchasing power, and do a credit check early, since minor indiscretions can take some time to repair. It’s not time to celebrate yet, so don’t add any new monthly payments (like a car) that can hurt your purchasing power. Believe it or not, a $250 bi-weekly car payment can reduce your home purchasing power by $100 thousand. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.