Over the last 18 months, the Canadian real estate market, particularly in Toronto and Vancouver, has experienced a modest correction of about eight to 10 percent. Despite this minor decrease, the housing industry continues to be a seller’s market, and it is expected to remain that way for the next couple of years, or at least until there is a boost in supply.
In addition to skyrocketing housing prices, young people need to contend with rising interest rates, tightening credit standards, and the fear of rejection by mortgage lenders. This doesn’t necessarily bode well for today’s generation of homebuyers.
When this occurs, many people will turn to mortgage brokers. But it doesn’t mean that this will immediately bolster your chances of either being accepted for a mortgage or getting your hands on the best mortgage possible.
In fact, mortgage brokers wish first-time homebuyers would know a few things before consumers apply for a mortgage or initiate the process. Everything from home insurance to taxes, there are many elements of buying a home – it’s a lot more than getting a key to the front door.
That said, here are five things every mortgage broker wants first-time homebuyers to know:
1. Know the Rules About Down Payments
The rules pertaining to down payments have changed in the last few years.
Under the federal government’s new measures, here is what you must know about down payments, otherwise you could be in for quite a surprise:
- A home with a maximum price-tag of $500,000 requires a five percent down payment.
- A home with a price-tag between $500,000 and $1 million requires a five percent down payment on the first $500,000, plus 10 percent of the remaining balance.
Got it? Let’s hope so. Mortgage brokers are frustrated when homebuyers don’t know this.
2. A Sudden Change? Let the Broker Know
Let’s face it: life happens.
You can lose your job. You can get sick. Your child suddenly needs a new set of teeth. Your automobile has been in a severe wreck. All of these things cost money, which will inevitably eat away at your finances.
Whatever the case, it is important to contact your mortgage broker immediately. Any sudden changes can impact your mortgage application and overall quest to owning property.
3. There Will be a Myriad of Costs
Many first-time homebuyers are astonished by the amount of fees, charges, and costs associated with buying a home. Legal fees, property taxes, closing costs, and even mortgage fees are some of the monetary aspects you need to grapple with. It will cost more than just paying a mortgage.
4. Never Lie on Your Application
Lies will always catch up to you, and they often hurt you more than they help.
Once you fib on your application, it increases your chances of being rejected for a mortgage. Whatever your situation may be, it is imperative to refrain from lying either on your application or to the mortgage broker. These professionals are there to assist you, but if you’re stretching the truth or espousing a downright lie, then they can’t be there for you.
5. Be Sure to Have a Team in Place
Before you get the entire ball rolling, you need to have a team in place. These are professionals who can guide you every step of the way and ensure that everything is smooth and quick.
Who should be on your team? An attorney, a mortgage broker, a real estate agent, a home inspector. This is just for starters. If you think there is anyone else who can help you, then definitely seek them out right away.
Mortgage brokers want Canadian homebuyers to know a lot more about what they’re getting themselves into. It may seem simple at first – being approved for a mortgage, move in, and pay off your mortgage in 20 years – but it is a lot more complicated than that. Plus, you need to worry about being accepted in the first place and receiving a mortgage that suits your terms.
Do you research, be honest, and get ready because this is the biggest purchasing decision in your life. Are you ready for homeownership?