FIRST TIME HOME BUYERS MORTGAGE – 3 CRITICAL FACTORS
Updated: April 29, 2021
Tips!
If you are first time home buyer, looking for mortgage options simply select the scenario that best describes your situation to get to the info faster. Discover 3 major factors which will decide the potential outcome of your next home loan application.
3 FACTORS OF FIRST TIME HOME BUYERS MORTGAGE
For first time home buyers, a decision on a mortgage is among the most important decisions they will ever make in their life! If you are reading this you have decided to move forward, but very likely have many questions about your eligibility, the current market and what to expect. Don’t worry – Paramjit Mortgage Delivery Guy is here to help!
I love working with first time home buyers and gain great satisfaction in seeing how my knowledge enlightens and empowers them. If you are in search of a promising future you have come to the right place. My commitment is to make this process as easy as possible for you.
To begin with, it’s important to understand a few basic principles behind how banks evaluate first time home buyers mortgage, and how your strengths and weaknesses affect your eligibility and prospects. With recent changes to mortgage approval especially the implementation of mortgage stress test it has become harder to qualify for first time home buyers mortgage . In a nut shell bank typically assess the ratio between said income and debts, and approves a mortgage accordingly.
Most home buyers have no idea what their CID profile is yet they go ahead anyway, putting their trust in big banks that may not have their best interests at heart. The only defense against people who may take advantage of you is self-education. Knowing your CID profile is part of this. It gives you agency and that is no small thing for first time home buyers. Agency means power, and with power comes more choices that affect your future!
THIS PROFILE IS MADE UP OF THE FOLLOWING THREE FACTORS:
- Credit
- Income
- Down Payment
CREDIT:
our credit score is made up of more factors than you may realize, and credit card usage is only one of them. Reports on your account can also sometimes be inaccurate and this can really hurt credit score for first time home buyers.
If this is the case it will make you a less desirable candidate and will cost you more, so getting help from a knowledgeable mortgage broker is critical.
SUFFICIENT VERIFIABLE INCOME:
For first time home buyers, sufficient verifiable income is comprised of gross income available for payment of all debts as per lender requirements.
Qualifying income cannot be income derived during probationary periods and must accompany proof of employment such as letters, recent pay stubs, notice of assessments (NOA) or TI Generals. If you are self-employed be prepared to provide a lot more documents including and not limiting to Business financials, bank deposit statements etc.
Keep in mind income requirements depends upon the mortgage product, rate, lender and of course your purchase price. Don’t hesitate to contact us for more information!
DOWN PAYMENT
Basically, the higher your down payment, the lower your mortgage loan amount. This leads to lower monthly payments. Higher down payment alone doesn’t cut it these days. As of March 28, 2020, amid COVID-19 pandemic, the mortgage qualifying rate is set to 5.04%. Every mortgage seeker has to pass the mortgage stress test. which proves the financial strength of the borrowers.
MORTGAGE TIPS FOR FIRST TIME HOME BUYERS
One of the most common mistakes first time home buyers make is to fixate on home mortgage rates, which are nowhere near as important as is commonly thought.This misconception can be blamed on marketing campaigns created by banks and other financial institutions. Looking past the interest rate hype to the bigger picture is critical in maximizing prospects for all first time home buyers.
When mortgage interest rate changes by full 1%, your monthly mortgage payment changes by approx $55 monthly on $100,000 of principal amount.
3 Important Tips For Home Buyers
- Be sure about your financing before you present an offer to buy
- Understand the total expenses on onwing a home. They are higher than just monthly rent you pay
- Always try to get midweek closing instead of Fridayor weekend.
F.A.Q.
FIRST TIME HOME BUYER PROGRAM
This federal government program aka Home Buyers Plan (HBP) allow first time home buyers to withdraw RRSP funds up to $25,000 once with out any income tax on it.
If both you and your spouse/ partner qualifies for this federal government program, you can each borrow up to $25,000.
As long as you or your partner have not owned a primary residence within last 5 years and you are buying this property to live in you may be qualified for home buyers plan (HBP).
YES, you have to pay the rrsp withdrawn under the home buyers plan as a first time home buyer.
As per the plan all first time home buyers should start paying the rrsp loan back from year two onwards.
In general 1/15th of the borrowed rrsp funds under home buyers plan should be paid off every year. Any unpaid amount will be taxed in year 15.
If you buying a primary residnece in Ontario you may qualify for a Land Transfer Tax rebate from provicial government. You may receive back up to $4,000 in taxes you paid when buying your first home in Ontario.
Yes Indeed!
If you are ready to buy your first home in Ontario Canada, You should speak to a mortgage expert who will take time to sit with you, evaluate your situation in detail, gather income and down payment documents and is willing to evaluate your credit details.
Being pre approved has become critical for all first time home buyers since Jan 01, 2018 when mortgage stress test was implemented. Everyone who has purchased a home in past or are first time home buyers has to pass the mortgage stress test.
Schedule your mortgage strategy session with licensed first time home buyer mortgage expert. Those who attended finds it very informative. We are almost certain you will like it. Simply click the link below and send us your availability and we will confirm your meeting time and date.
Mortgage Delivery Guy & Associates
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