Would You Like To Stop Renting and Own The Home Of Your Dreams, Without Breaking The Bank?
If your answer is yes, then you’re in good company. All of us, given the chance, would like to fire our landlord and own our own home. We all know that we can build our equity and net worth much faster if we own rather than rent.
The question is, how? Well, before we answer the “How”, let’s talk about the “Why”.
Here are just a few of the major lifestyle and financial benefits of owning your own home:
- More space and convenience.
- No more rent. Why pay your landlord $7,000 to $18,000 per year and end up with nothing to show for it?
- Less noise, more privacy.
- Tax advantages. When you own, you can write off thousands of dollars in mortgage interest every year. But when you rent, your landlord gets the tax advantages—at your expense!
- The ability to make improvements and decorate your home to suit your own taste.
- Build equity. Instead of lining your landlord’s pockets, your monthly payments create equity in your home. This is like a savings account for your future needs, and as property values increase, your equity and net worth grow even faster!
I know what you’re saying: “This all sounds great, BUT …
… where am I going to get the money for a down payment?”
… who’s going to approve me for mortgage financing when money is so tight?”
… how am I going to afford mortgage payments when I can barely afford rent?”
You’re absolutely right. There are challenges to buying your own home. Which is why you need the services of a mortgage expert to help you through the process. As your local expert, I can show you how to buy with as little as 5% money down and minimize closing costs. Since I have access to a full range of mainstream and specialized lenders—who are very familiar with the needs of the 53% of homebuyers who are first timers—getting you approved for financing won’t be an issue. With such a wide range of mortgages to choose from, I can set you up with innovative financing that makes your monthly payments more affordable. And remember, even if your payments end up slightly higher than the rent you’re paying now, you’ll still save money because of the tax savings you get every year!
As a first time buyer, it’s only natural that you’d be nervous about taking this big step. But relax, I’ll guide you through every step of the process.
People fear what they don’t understand. A good example is the purchase of a home. The average consumer knows very little regarding the home buying process. Between finding the right house, making sure it won’t fall apart the day after it is purchased, and finding the best financing, it is no wonder that so many people are afraid to purchase their first home.
Buying a home is one of the most important financial decisions an individual will make. For a first-time homebuyer, the decision to purchase a home can be daunting. It will represent a major step forward as the individual/family will potentially be assuming its largest financial responsibility. As with any major decision, it is important that everyone, especially first-time homebuyers, take full advantage of the information and training that is available so they clearly understand the home buying process.
Before beginning the search for your dream home, it’s important that you do your research and become more fully informed. Here are seven tips to get you started:
STEP 1: Visualize Yourself as a Home Owner
Before starting your house search, allow yourself to imagine what it will be like to be a homeowner. For most people, homeownership can be one of the most significant financial turning points in their lives. Imagine, living in a Home of Your Own! A fenced yard for the kids…A garage for your car…Enough room for all your stuff… On a quiet street…Privacy…Comfort. The advantages (tax benefits, pride of homeownership, financial investment) far outweigh any drawbacks.
STEP 2: Pull Your Credit Report
Your credit history is one of the first things a lender will look at in making a decision on your loan. CLICK HERE to view our guide on how to obtain a credit report. Review it carefully to be sure all the information is correct. If you find discrepancies, you should work with the credit agencies to resolve them.
STEP 3: Determine How Much Money You Have for a Down Payment
Saving for a down payment can be one of the biggest barriers to homeownership. Mortgage lenders recognize this dilemma and many now offer new products with low down payment options. 5% down is the most common minimum, however with a few lender products you can put as little as 3% down using cash back from the lenders. For less than 5% down you will need to have pretty good credit. I recommend coming up with at least 5% down as the cash back type products ofter carry a higher interest rate.
There are many ways to find or save for a down payment, consider various sources of income such as:
• Save your tax refund
• Savings Bonds
• Borrow from parents
• Checking/Savings Account – put the same amount away every paycheck and watch it grow
• Gifts
• Borrow against equity in second home
• Hold a garage sale or sell items on eBay
• Ask the seller to give it to you
• Take a second job
• Check out government programs
STEP 4: Choose the Right Lender for You
The mortgage broker vs. banks and mortgage companies. A mortgage broker has many different banks, savings and loan companies and mortgage companies that they “broker” their loans to, something like a stockbroker or independent insurance agent.
Since a mortgage broker does business with lots of banks throughout Canada, they can:
- Send the loan to many different underwriters
- Shop for the best rates and programs
- Save you money by not charging loan origination fees
- Find you a mortgage that suits your choice of downpayment
STEP 5: Get Pre-Approved for a Mortgage
Before you begin working with a realtor, see your mortgage professional and get pre-approved (not pre-qualified) for a mortgage. This will not only tell you how much you have to spend on a house but also give you an idea of how much of a down payment you will require. Getting a pre-qualification letter is easy. You just call your mortgage professional, provide some basic financial information, then wait a few minutes for the pre-qualification letter to come through your fax machine. Getting a “pre-qual” from a Web site is just as easy. Enter some information, click “submit” and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification the additional due diligence is exactly why the pre-approval carries more weight.
Most lenders will provide this service free of charge. Pre-approval will let you know exactly how much you can spend on a home purchase BEFORE you start your search. A pre-approval in hand also makes you a more attractive buyer when you are ready to make an offer on a home. Home sellers are more likely to accept an offer from a buyer who can demonstrate the ability to secure financing.
STEP 6: Consider Using a Buyer’s Agent
Most real estate agents represent the seller; they do not represent you as a homebuyer. There is a fairly new type of real estate agent called a “Buyer’s Agent.”
The buyer broker can disclose things to you about the seller (or the home) that they would not be able to if they represented the seller. They work for you, not the seller.
You do not pay their commission – the seller does.
The buyer broker can disclose things to you about the seller (or the home) that they would not be able to if they represented the seller.
If a real estate agent will not offer you a buyer brokerage agreement, ask “Why Not”. . .or better yet, find another agent!
STEP 7: Get Educated on the Home Buying Process
Many mortgage lenders, non-profit organizations, and even realtors offer homebuyer education classes to prepare you for homeownership. Classes normally run about four hours and cover the basics of home buying. Some of the topics covered are “How to Apply for a Loan”, “Finding the Right Realtor”, “Making an offer on a Home” and “The Advantages and Responsibilities of Home Ownership”. The quickest and easiest way to get educated about the entire home buying process is to select a mortgage advisor and realtor who offer unbiased professional advice with your best interest in mind.
In Conclusion:
When you choose the right mortgage professional, with you’re best interest in mind…
• You can find ways to get out of the “trap” of paying rent.
• You’ll be confident that you made the right decisions about your mortgage.
• You’ll be at ease knowing that nobody rushed you into the wrong mortgage program because you had to apply for your mortgage within 3 days of signing your purchase agreement. Is 3 days long enough for you to make a decision that could last for 30 years?
Your desire to own a home, combined with my knowledge, will increase your chances dramatically.
Well, I hope I got you thinking.
You probably have some questions.
As we wrap up, you may be still be wondering…
What’s the next step?
We can give you a detailed analysis of how much you will save by owning instead of renting.
Please give me a call while this is fresh on your mind and you are excited about the possibilities.
Even if you are skeptical, which is only natural, a phone call can’t hurt.
The worst that you will do is spend a few minutes learning.
The best you can do is have “peace of mind” and save yourself lots of money.
Feel free to give me a call today at 905-835-5559 or if you prefer email: mark@mortgageloansontario.ca