First Time Home Buying, do it right!!!

Home buying is becoming a group effort thanks to growing opportunities for family members to help new purchasers enter the market.

The real estate market can be exciting place, but it can also be a bit daunting - and particularly so for new homebuyers who may still be in the process of establishing a good credit rating or starting a career. In fact, buyers wan

ting to enter the housing market generally face two major obstacles: securing a down payment and qualifying for financing.

In this article I will briefly explain how to secure a sufficient down payment and establish a good credit score.

As tempting as it may be to start cruising open houses and sifting through MLS listings, homebuyers need to make a visit to a qualified mortgage broker their first priority. It is extremely important to get pre-approved before shopping for a new home, it gives homebuyers an idea of what they can afford and if there’s anything they need to improve on before getting financing.

The first priority of any businesses is gathering enough capital to begin operation or leverage. Homeownership is no different. Even thought there are still options of getting a 0 percent down payment mortgage financing, it is better to gather minimum of 5 percent down payment of the home’s total purchase price.

Note: If you are self-employed under new mortgage rules, minimum down payment requirement is 10 percent.

But the greater the percentage you put down, the lower your mortgage insurance premium will be – making maximizing your down payment a cost saving solution over the long term. And thanks to the federal government’s Home Buyer’s Plan, Canadian residents can tap into their RRSP’s to supplement their cash savings and boost their down payments.

The Home Buyers Plan allows first time buyers (or those who have not owned a principal residence at any time within the past five years to withdraw up to $25000 from their RRSP, up to a maximum of 50 000 per couple. The money withdrawn can serve as all or part of the down payment on a home, and participants have 15 years in which to reimburse their RRSP. There are a few restrictions, including requirements that the purchased home be owner-occupied and that the RRSP must be repaid with minimum annual payment of one-fifteenth of the withdrawn amount. At Home Mortgage Advice we can help determine whether the Home Buyers Plan is a viable option for you, and through our network of trusted financial planners we will setup a proper RRSP plan to prepare you for the home buying.

For homebuyers lacking their own resources for a down payment , they can receive help from family in the form of a gifted down payment. Be aware that lenders may require the use of theirs specific gift letter form, together with a proof of money being deposited in the homeowners account. There are can be more requirements, depending on a lender, that’s why it is important to chose a right lender for your specific situation. A knowledgeable mortgage broker will help you with this task.

In the next issue we will be talking about importance of a good credit score and will give a few tips how to keep your credit clean. So stay tuned!!!