Whether you live in Edmonton or one of the surrounding communities, there are some things that you should know when buying a home for the first time. As a home buyer for the first time, you may feel overwhelmed at the beginning of the home buying process.
You, no doubt, have many questions and may not know where to begin. This is why we have compiled a list of tips and suggestions that outline the process and answer many of the most common questions asked by first-time home buyers.
Save Up For The Down Payment
Before you even begin, it is best that you save as much money as possible for the down payment. Home buyers reap huge benefits when they are able to place a 20% down payment on their home. The larger the down payment, the lower the interest monthly mortgage payment.
Additionally, if you obtain a loan and are not able to cover the entire 20%, you may be required to purchase mortgage insurance. The insurance payments will be added to the total monthly mortgage payment. So, save yourself some money and save up as much as possible for your down payment!
Know Your Budget And Understand Your Limits
As a home buyer, it is best that you seek the help of a qualified loan professional and get pre-qualified for a loan. The consultation will help you outline any debts that you have and establish a price range for your home.
Although the lender does not check your finances at this time, you will have a better idea as to what you may be pre-approved for down the road. Once you have a pre-qualification in place, it is best that you evaluate the monthly payments and consider expenses such as property taxes, home insurance, and mortgage insurance (if applicable.)
Understanding what your total monthly payment may be will help you comprehend the real constraints of your budget.
A pre-approval is different than a pre-qualification in that this is the step where you will actually have an approved loan from the lender. Unlike the pre-qualification, this time the lender will consider your monthly income, your job stability, and your total monthly expenses.
Not only does a pre-approval mean you’ll be taken more seriously, it also means you’ll know what you can afford ahead of time. This will help you reduce the amount of time spent looking at homes that are not within your budget and you’ll avoid disappointment. On the other hand, a pre-approval may also mean you can afford more than you thought!
Secondly, a pre-approval may help you gain a lower interest rate on your new home, which can help you save thousands of dollars down the road.
Talk to the Professionals
Working with a qualified builder or builder representative is of the utmost importance. They will be able to answer any questions you have and do their best to accommodate your needs. As a first-time home buyer, this step is all the more important. The expertise of the builder will prove invaluable when understanding what to expect in your prospective new home.
Do a Walk Through
This cannot be stressed enough. Do not skip the walk through with the builder. After all, you are making one of the most important decisions of your life. This will let you address any concerns you have regarding the aesthetics, functions or warranty pertaining to the home. This is also the time where the builder can answer any of your questions.
Be Prepared for the Closing Costs
Congratulations, you have made it to closing day! Closing the deal is the final step in the home buying process. This portion of the transaction includes a great deal of paperwork, a home appraisal, and a title search. The home appraisal is required by lenders to help protect the interest that they hold in your property.
With the closing, you can expect to encounter a number of fees and costs for the title search, loan origination, and home appraisal. When approaching a home purchase, make sure to budget for the closing costs. You may expect that the closing costs to be approximately 2% of your home's total purchase price.
As a first-time home buyer, approaching a home purchase can seem complex at times. However, if you keep in mind the tips listed above and work with a trusted builder, you will be in a great position to find and purchase the home of your dreams.