Buying A Home? Get Educated & Organized!
Although mortgage debt is often called ‘smart’ debt, it doesn’t have to be long term debt. A home purchase is one of the most important financial decisions that most Canadians will make in their lifetime, and getting mortgage ready can help set you on the path to growing equity and getting mortgage free faster. Here are FIVE tips to help you get off on the right foot in your home buying journey.
Before you start shopping for a home – and long before you consider putting an offer in on one – build a realistic budget. Remember that home ownership involves costs beyond the monthly mortgage payment, utility bills, property taxes, and home upkeep. Consider your desired lifestyle. Build a mortgage plan that makes sense so you don’t have to compromise the lifestyle you want!
Your dream home may be priced too high for your financial budget, so a more modest home might be the right option. Ease into the real estate market with confidence, knowing you have the flexibility to build your equity as funds permit. It’s so much easier, and cheaper, to build equity with funds as you have them than it is to refinance to take your equity out because you need extra funds to maintain your lifestyle. You can take advantage of today’s low interest rates to pay off your home quicker and use the equity from the home you buy today to buy your dream home later on.
A Mortgage Agent will work with you to sort through all of your mortgage options and get the right combination of mortgage features, privileges and rate that is best matched to your needs. The right mortgage goes beyond just the rate –it’s important to also consider term, prepayment options, refinancing penalties, restrictions, and fees.
There are additional costs that come with buying a home – legal fees, land transfer tax, reimbursements, appraisal, home inspection, title insurance – so you’ll need to have some extra funds set aside to cover these costs. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs.
A mortgage is the largest debt you will probably ever take on, and paying it down faster can mean large savings on interest costs over the long-term. Get in the habit of making lump sum payments whenever possible, and consider making accelerated bi-weekly payments as a way to decrease the life of the loan. Learn about these strategies as you get mortgage ready so you can build a feasible plan to help you pay your mortgage off faster and shave thousands off of your interest costs.
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