Are you ready to move out of your parent’s house and set out on your own? Mortgage payments in Canada are getting higher by the day. They’re projected to go up by 30% within the next few years.
That’s why it’s a good idea to start preparing before you buy your house. Save for the downpayment, closing costs, and any emergencies. Be sure to pay off your debts before you begin searching around for a mortgage, and don’t forget about the 25% rule.
These are only a few financial tips that every first-time home buyer should take to heart. Check out this guide to learn more.
Pay Off Your Debts
You need a decent credit score to begin the house-buying process. If you’re too far in debt, you won’t qualify for a mortgage.
If you’re okay with doing things the slow way, you can use the snowball tactic. List off your current debts from smallest to largest. Make the minimum payments on the bigger bills and put the rest of your finances toward the smallest one.
Once you pay off the debt source that’s occupying the top of your list, move on to the next one and do the same thing. You should finish paying your debts in about 24 months this way.
You can also go to kingcash.ca to apply for online loans and no credit check loans. If you’re approved, you can use the money to wipe some of your current debt clean. As long as you make the payments on your King Cash loan, that should help your credit score go up.
Start Saving ASAP
When buying a home, there are a lot of financial hurdles you’ll have to prepare for. The first is the downpayment.
If you have a good enough credit score, you can get away with paying about 3% down. Granted, 3% on a $300,000 house is still about $9,000.
Once you find a house that you love and negotiate a price with the seller, it’s time to pay the closing costs to finalize your mortgage. Depending on the size of the loan, that could tack on thousands of dollars.
If you’re moving from your parent’s house to a new home, you’ll need to buy furniture. There’s also a chance that you’ll have to spend extra cash on repairs.
To make sure you’re financially stable to handle all these expenses, it’s wise to begin saving up sooner rather than later.
Get a Preapproval
A pre-approval is a letter from a lender stating how much money you can borrow to buy a home. It’s recommended to get a pre-approval letter before you begin shopping around. If you don’t, you risk falling in love with a house you can’t afford.
Having a pre-approval letter in hand also gives you more buying power. It shows the seller that you have the money you need at the current moment to buy the property.
The smallest delay in your mortgage could cause you to lose the home of your dreams. If you already have a pre-approval, you’re less likely to run into setbacks.
Use the 25% Rule
Just because you can get a $300,000 mortgage, doesn’t mean you should. If you can’t afford your monthly payments, you’ll be met with foreclosure in the future.
When calculating how much house you can afford, use the 25% rule. The total cost of your mortgage, HOA fees, property taxes, and homeowner’s insurance shouldn’t exceed 25% of your total monthly income.
Understand Needs Vs. Wants
As a first-time homebuyer, you may not have enough savings to buy a house with every feature you want. Splurging on a pool or beautiful outdoor kitchen will most likely put you out of your budget.
Keep your expectations low and make a list of your needs and wants. Keep in mind that as long as a house has everything you need, you can use a King Cash loan to invest in the upgrades you want later.
Work With a Real Estate Agent
Navigating the world of homebuying on your own isn’t recommended. You should always hire an experienced real estate agent.
Once you give them that list of your needs and wants, they’ll set to work finding a place that fits your criteria. They’ll also schedule home viewings and guide you through the closing paperwork.
Don’t Skip the Home Inspection
A house that looks perfectly fine to the naked eye could hide critical problems. That’s why you should never skip out on the home inspection.
A professional can spot issues and help you avoid making a bad deal. If you still want the home despite the number of things that need to be fixed, you can negotiate with the seller. They might be willing to go down on the price.
Be sure to attend the inspection. As you walk around, you can ask questions and learn more about the house you’re about to buy. If you can’t attend the inspection, you should at least read the report.
Financial Tips Every First-Time Homebuyer Should Take to Heart
Shopping for your first home can be a huge money toll. If you’re not prepared, you may not be able to get a mortgage.
You need a great credit score and a hefty downpayment. There’s also the matter of closing costs and buying your furniture. We hope that you’re able to use these financial tips to save up for the place of your dreams.
Can’t afford your moving expenses? Fast loans in Canada can help! Contact us to learn more about King Cash.