Tips For Financing Your First Home

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If you are thinking about buying a home for the first time, you might not entirely know how to go about it. You definitely don't want to end up paying more than you have to or more than you can afford. Here are some tips for financing your first home so that your mortgage remains manageable.

1. Get Pre-Approved Before You Start Looking at Other Lenders

Go to your bank and ask them to pre-approve you for a loan. This is important because it will allow you to decide how much money they are willing to extend to you. You can use this as a baseline both for when you are looking at houses and when you are looking for other lenders. You want to get an idea of the amount of money you can afford to spend on a house. Keep in mind that banks and other lending companies will often say that you can afford more than you might be comfortable with. Feel free to stay within your comfort zone.

2. If You Don't Have a Ton of Money for a Down Payment, Look for a Green Home

If you don't have a ton of money for a down payment, consider purchasing a home that is considered to be green, or energy efficient. If you can find one of these that suits your other needs, the Canada Mortgage and Housing Corporation will be able to help you finance your house with a down payment of only 5%.

3. Lock in a Mortgage Rate When Choosing a Lender

When you are deciding which lender to choose, lenders are going to be throwing rates at you. These rates might be very appealing and you will choose the lowest one in order to make sure that you are not paying an overwhelming amount of money in interest. However, the period between when you choose a lender and when your financing begins is a period when the markets could shift or the financial status of the lender could change, resulting in the lender not being willing to offer you the same rate as before. You will just have to take whatever rate the lender is currently offering.

To avoid this, make sure that you sign a contract with the lender stating that the offered mortgage rate is the one that you will be getting when your financing actually begins and that the rate will not change the entire period during which you are paying off your mortgage.

For more information, talk to a company that specializes in residential financing, such as Kingsway Investment Ltd.   

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13 April 2016

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