First time home buyers will face a lot of new experiences and stresses, but when they buy their first home, they are overcome with excitement and happiness!
The process of buying your first home is a big task. You have to have a good understanding of where you want to live, the prices of each home in different areas of the city or town, and find options that fit within your budget. Before you look for your first home, here are a few things you need to know in order to make the process a lot easier.
One of the first things you should do when buying your first home is to seek out a financial advisor, whether at a bank or a mortgage broker, to find out the dollar amount your mortgage can be pre-approved for. There are many factors that go into what you can get pre-approved for, including how much you have saved for your down payment, your credit score, your weekly income, and the type of home you want to buy. If you don’t get pre-approved before buying a home, you the risk of not being able to put a favorable offer on the home you want.
One of the biggest steps in buying a home is to save up for a down payment. Everybody in your family has told you this, but nobody really explains it properly!
It’s ideal that you should save up at least 5% of the price of the home if the price is under $500,000. Five percent is considered the bare minimum, so you should save up more money if you are able to. Saving up more money will decrease the amount you have to pay for your mortgage. Let’s say you save up 25% of the cost of the home when you get a mortgage, it won’t be a high-ratio mortgage. That means you won’t pay for high-ratio mortgage insurance.
It’s never too early to start saving for your down payment. If you have any credit card debt, pay it off as soon as possible and start budgeting for your everyday life. Save money by searching for sales on the things you need, and be smart with buying luxury items. If you don’t need that new computer or video game system, wait for it to go on sale! Use the money you save for your down payment, it’s a big investment but it’s worth it.
Buying a home is more than just saving for a down payment and getting a mortgage. You have to factor in legal and property transfer fees, moving costs, buying furniture, and paying for utilities/internet. It’s recommended that you need to save up an additional 2% of the price of the home to help cover these unexpected costs. It will also give you a bigger buffer with your money when you start saving again.
These are just some of the things you should know when purchasing your first home. If you have any questions buying your first home, the team at Progressive Real Estate in Winnipeg is more than happy to help you through the home-buying process!