Spring is here, and it promises a season of bright colors, florals and new beginnings. Since it’s also the season of home buying, this would be the perfect time to give your home a little—
First Time Home Buyer The Financial Aspect
So you want to buy your first home and you have started wondering what it will take financially.
First you want to take your monthly expenses into consideration and then you want to start thinking about a down payment. A down payment is usually a minimum of 5% of the purchase price. Anything less then a 20% down payment is considered a high ratio mortgage. High ratio mortgages come with a few more stipulations such as the need for mortgage insurance. Mortgage insurance premiums will range from under 1% of the purchase price to more than 3% of the purchase price. If your down payment is 20% or more of the purchase price, you will not need mortgage insurance.
Another financial aspect of buying a home is having a deposit ready. When submitting an offer for your perfect home you need to keep in mind that a deposit usually accompanies the offer. Your deposit typically forms part of your down payment.
Closing costs are another important aspect of buying a home. Closing costs are separate from your down payment and deposit and need to be budgeted for as well. Closing costs include Lawyer fees, title insurance, moving costs, property tax adjustments, home insurance etc. For closing costs you want to budget a couple thousand dollars to make sure you have enough to cover everything.
If you are ready to start the buying process or if you have more questions about the financing aspect of buying a home, please speak to your bank or a mortgage broker. I have an excellent team of mortgage brokers my clients have used in the past and I would be more than happy to put you in touch with one of them.
On my next blog we will delve deeper into what you need to know as a first time home buyer. In the meantime if you have any questions about buying your first home, please don't hesitate to give me a call.