5 Tips for a First Time Home Buyer
You just graduated from high school, and you moved away from home. You’re renting from a nice middle aged couple. Rent is cheap, utilities are included. You think this is great! Fast forward 10 years. You’re graduated from University and you’ve been working at the same office for 6 years and you’re renting the same house, from the same couple. Rent is still cheap and utilities are still included. Perfect! But is it? Your parents are on you to buy a house, because why help someone else build their equity, when you can build your own. This scares you, because you have NO idea where to start. Here are 5 tips to help you prepare to be a first time home buyer.
1) Build Your Credit
There are a few ways to build your credit. These include but are not limited to:
– Opening a bank account
– Paying your bills on time
– Get a secured credit card
– Get a retailer credit card(ex- Hudsons Bay Card, The Brick Card)
– Apply for a small loan
When it comes to loans, make sure to ask your lender if they’re registered with the credit bureau.
2) Save for the Down Payment
A down payment is a necessity when it comes to buying a home. You can put as much as you want down, as long as it is AT LEAST 5% of the purchase price of the home. Give yourself enough time to save up this amount, and if you can’t or don’t have quite enough, it doesn’t hurt to ask a family member to help. But remember, that money has to be in your account for at least 90 days before you can use it for a down payment.
3) Lower Your Debt Service Coverage Ratio
Lowering your debt service coverage ratio could improve your chance of getting a mortgage greatly. This goes as simple as trading your current car payment for a lower one.
4) Save for the Closing Costs
There are a few more costs than just the down payment to save up for. A few of these other costs that you will need to save up for include but are not limited to: a home inspection, legal fees, and creating a Sask Power and Sask Energy account (if you do not have on currently).
5) Look for Functionality and Resale
It’s your first home. We know you want everything, but most of the time, everything isn’t in your budget. Look for the functionality and the resale value of your home. Look for updates on the big ticket items, such as your furnace, windows, and shingles. Every other aesthetically pleasing renovations can be done on your time and your money, so when it comes to resell, YOU’RE reaping the benefits of the renovations and you didn’t pay for someone else to renovate your home right out of the gate. If you buy finished, you will have less opportunity to build equity.
These are just a few tips to point you in the right direction. One thing we can say for sure is, before looking at homes, be sure to talk to a bank and they can help you get started. We sat down with our friends from RBC to bring you the know-how on where to started. For more information check it out https://youtu.be/TCjbbi–4Rw
Once you’ve figured out your mortgage situation, give us a call; we will be sure to help you out with all of your buying needs!
Happy buying!