The Logistics of Buying Your First Home

The logistics of buying a first home can seem onerous at times. This is, after all, the biggest purchase of your life. It’s a transaction which will ripple through your monthly budgets for the next twenty-five years. It will go through many renewals. There may be ups and downs. But finally it will be worth it.

Approaching Your Mortgage Lender

In order to buy a home, most people require the services of a lender. Before making a bid on a house, it is usually advisable to get a pre-approval on a mortgage. In other words, the lender (usually a bank) will assess your financial situation and agree to lend you a sum of money on certain terms. The sum will be paid back over an agreed period. The most common term is twenty-five years.

Employing a Broker

If you have trouble getting a mortgage from your lender, it may be time to call on the services of a mortgage broker or consultant. A mortgage broker acts independently. They assess your situation and negotiate with your lender on your behalf. With a large working knowledge, not only of the banking sector, but of the housing market, they can steer you towards the best deal possible. They’ll also recommend better offers from competing lenders, something your bank is not in a position to do.

How Good Is Your Credit?

When buying a house or seeking a mortgage, your financial situation and credit rating is very important.  A lot may depend on how much debt you’re carrying and your capacity to pay it off. It is recommended that your debt per month should not exceed 40% of your incomings.  Working with a mortgage broker or consultant, you can work out your monthly housing costs and see how they equate to your income. In general it is recommended that your housing costs per month should not exceed 32% of your gross monthly income. By “housing costs” we refer not only to your mortgage payments but all the associated costs of owning a house such as heating expenses and property taxes.

Thinking about the Future

It is important that you do the math in advance because these are variables upon which your lender will decide whether or not to approve (or pre-approve) your mortgage. A mortgage broker or consultant is useful to have in your back pocket because they speak the same language as your lender. They know when to push hard for a deal and when to back down. Buying a house is a momentous step. Seek the best advice you possibly can.  

Debt Consolidation and Consumer Proposals

As a mortgage broker is Vancouver B.C., we deal with a lot of struggling homeowners. Many Canadians are having difficulty making their household payments and other debts. As the Canadian economy normalizes and picks-up, more and more Canadians are trying to regain control of their finances. Many are succeeding in freeing themselves, but household debt levels remain very high. For many people debt issues are a source of stress, inconvenience and even embarrassment.

Consolidation Loans

There are a range of options for managing personal debt and avoiding bankruptcy. The trick is finding the one that applies best to your situation. One of these options is debt consolidation. This usually means merging all of your debts into one low interest loan payment. The advantages of this kind of arrangement are that you save on the interest rate and have the convenience of one payment.

Of course debt consolidation isn’t for everyone and you should give careful consideration before committing to any kind of financial restructuring. Also, getting approval often requires a good credit standing which you may not have. The types of people who seek consolidation are often struggling financially.

Consumer Proposal

Another option is a consumer proposal. This is where a proposal is made on your behalf to your creditors. This is an official process and must be undertaken by a trustee in bankruptcy. If successful, payments will be reduced to a manageable level and your overall debt burden may also be reduced. Consumer proposals also take the form of consolidations and will merge all your debt into one payment. While this will impact negatively on your credit standing, it will make it easier to make your monthly payments. 

The Canadian House Market Shows No Sign of Easing

Consumer confidence in Canada remains at its highest in four years, as 40% of the population expects house prices in their neighborhood to keep rising. Recent gains in real estate have left Canadian homeowners feeling confident. The decision by the bank of Canada to hold off on interest rate increases has also contributed.

Sales in Vancouver and Toronto Lift Market

According to the Bloomberg Nanos Confidence Index, less than 10% of Canadians expect house prices in their neighborhoods to fall in the next six months. Sales of homes rose by 2.7% in April. The engine of growth was in Vancouver and Toronto. The four month fall in house prices experienced over the winter, now seems like a distant memory.

Neither does construction seem to be easing. Building of new homes increased in April, reaching 194,809 units. While there has been a tightening of mortgage regulations by federal and provincial government, lenders have dropped their rates this year, encouraging more people to get on an increasingly expensive mortgage ladder.

What Will Your House Cost You?

If you are still hoping to get on the ladder, a mortgage consultant can provide somedown-to-earth advice. They will assess your situation, ask you the tough questions and help you to build a coherent strategy. How much money can you afford to spend on your new home? The cost of a home is not simply the purchase price. There are other things which need to be factored in. There are ongoing maintenance and ownership costs. Property taxes for instance. The monthly cost of owning a home should not exceed 32% of your monthly earnings.

Down Payments

For most people in Canada, the biggest monthly cost is their mortgage payment. The cost of a mortgage is dependent on many variables, chief among them being your ability to make a significant down payment as a deposit. In the case that you can’t afford to pay more than 20% of the house price, you will probably need to take out mortgage insurance to cover the loan.

 If you find yourself getting into trouble with payments or if you are uncomfortable negotiating with your bank, a mortgage consultant can ease the process. They can negotiate with the bank on your behalf and advise you where to go for the best features and interest rates. Buying a house may be the biggest financial decision of your life. Don’t take any chances. Seek the best advice you can.