Buying a home is one of the most important and exciting decisions you may make. The process to buy a house can be daunting, but with the right professionals by your side, the excitement will surely outweigh the stress. After determining that you’re financially ready to buy a house by evaluating your financial situation and figuring out how much you can afford, there are a few core things you need to get in order before you buy a house.
Getting Mortgage Pre-Approval
A pre-approval will come from a lender and is your first step in qualifying for a mortgage. Lenders will perform a credit check and verify your employment during the pre-approval process. Determining how much you can spend on a home is a valuable result from getting pre-approved. This is where a lender will discover the maximum amount of money they will lend you as well as the interest rate they will charge to lend you this amount.
Pre-approvals also tell you the monthly payment required for the maximum mortgage they can provide you. Depending on the lender you receive a pre-approval from, they can lock you into your pre-approval between 60 and 120 days to allow you the time to find your dream home and make an offer.
Pre-approvals are important in the buying process because they demonstrate to the seller that you are a serious buyer and it gives them some peace of mind that you can afford the home and are likely to go through with the purchase. In the case of multiple offers, a pre-approved buyer will usually be preferred by the seller over someone who is not pre-approved. This is your first step to buy a house in 2019!
Saving Up for Your Downpayment
Though you are most likely borrowing the money you require to finance your home purchase, you’ll still be required to provide a down payment. A down payment is a sum of money you must put towards the purchase of a house, which will be deducted from the purchase price allowing your mortgage to cover the remaining sum of the purchase.
For conventional mortgages, a minimum of 20% of the price of the home is required as a down payment. There are other options for down payment amounts, such as applying for a high-ratio mortgage in which you’ll be required to put as low as 5% down. In the case of a high-ratio mortgage, you’ll require mortgage loan insurance which will protect the lender in the case that you are unable to pay your mortgage payments. CMHC is a mortgage loan insurance provider in Canada and they will charge you an insurance premium between 0.6% and 4.5% of your mortgage in exchange for mortgage loan insurance.
Working with the Right Professionals
The people you work alongside during the process of buying a home will make all the difference in the world for how you experience the process and how successful your purchase will be. Several key professionals are highly recommended when purchasing a home such as a real estate agent, a lawyer and a mortgage broker.
The professional who will be with you before, during and even after the home buying experience is your real estate agent. A real estate agent helps you find the perfect home for you and your family. A good agent will have your absolute best interest at heart.
Negotiating a purchase is most likely not your strong suit if you’re not an agent yourself, so you will need a skilled and experienced real estate agent to write your offer, negotiate the price of the home and negotiate all of the conditions of the purchase that are in your best interest. A real estate agent with experience will be able to provide you with ample information not only about the home itself, but about the area, the possible issues you may face after purchasing the home and how the home will appreciate over time. If there is one professional you should be the most choosy about before beginning your home purchasing process, it’s your real estate agent.
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If you are seeking advice on buying a home in the Ottawa area, or have more questions for us, we are happy to provide you with helpful guidance and support. Email us at info@buyandsellottawa.ca or call us at 613-590-3036.