Buying a house can be a fun and excited journey. However at the same time, it can be a little overwhelming and stressful. Having the right guidance with purchase mortgages can help assure an easy and stress free purchase experience.
Here are nine steps to help you make the best decisions possible when looking to purchase a home.
Step By Step Guide For a Purchase Mortgage
Begin Your Search Early
As early as possible, it’s important to begin educating yourself on the types of homes for sale and the different prices. To do this, you can research online, newspapers and magazines listing homes or drive around your desired neighbourhood. This way you can narrow down on if you would prefer a condo, townhouse, a property with a with a yard, near a school and more. Plus, you can how the prices differ amongst the different types of properties you are looking to purchase.
Find Out How Much You Can Afford
A soft rule of thumb is that a person can qualify to purchase a home price of about 4 to 5 times their annual income. Therefore, with an income of $60,000, that would be a price of approximately $240,000 to $300,000. Depending on a person’s down payment and debts, this price range can of course change.
To truly know what you are pre approved for, it’s best to speak to an Ottawa mortgage broker as they can look at finding your pre approval amount with banks, credit unions and more. Not all lenders use the same underwriting guidelines, so there may be differences from bank to bank and lender to lender.
Learn more: Mortgage Brokers in Ottawa
Get Pre Approved For a Mortgage
Before you start looking at homes it’s important to have your mortgage process underway. This way once a home that you would like to purchase you are ready to move fast as to not lose out. Also you will know if the homes you are looking at are within your budget. A pre approval can also come with a rate held for you which is important in a rising rate environment to protect you against rate increases while you are home hunting.
The pre approval review will be looking at your income, expenses, assets, liabilities, credit score and more. Usually lenders follow the 5 Cs of credit.
Learn more:What is a Mortgage Pre Approval?
Learn more: The five Cs of credit
Find a Real Estate Agent
Having a good connection with your real estate agent is important and depending on how the home hunting goes, you may be spending a lot of time with them. Plus, this will be the person that helps negotiate the home price with you so the stronger they are at communication and negotiation, the better. It is important that your real estate agent is familiar with the type of properties you are looking at and the area of town you are looking in. There are big differences between downtown condos and rural homes and it may be hard for a real estate agent to be an expert in them all.
Learn more: Realtor.ca
Begin Home Hunting and Make an Offer
Now that you are pre approved and have an real estate agent, it’s time to start looking at homes. This can be an exciting part.
Also, this can be the most time consuming part of the process. If you are looking at many homes, it may be hard to remember each one. Having a notebook with you or a checklist to record the details about the homes will be handy.
When looking at the home, try to imagine your daily routine there.Picture your day, from waking up, showering, cooking to watching TV. Can you see yourself doing these activities here? If the answer is yes and the feeling is good, you are on the right track.
Once you have found a home that fits your needs, it’s time to make an offer.
Get a Home Inspection
This is an important step and usually a satisfactory home inspection is a condition of the offer. Your real estate agent will most likely be able to suggest a home inspector that they know is reputable or you can turn to the internet to see who has good reviews. The home inspection will check out the home from top to bottom to make sure there are no surprises.
Learn more: Is a Professional Home Inspector Required?
Contact Your Ottawa Mortgage Broker and Select Your Lender and Rate
Once the mortgage broker knows your final price, down payment, closing date and more, they will be able to narrow in on the best lender and rate for you. The best 5 year fixed mortgage rate and 5 year variable mortgage rate are only offered by lenders to those with an offer in hand and not at the pre approval stage. Plus, the rate and lender can change depending on your down payment, amortization, closing date and more. For example, an insured and an uninsured mortgage may come with a different rate.
Your Ottawa mortgage broker will also be able to help you choose the right mortgage payment preference for your needs. Plus review with you how you would like to pay your property taxes.
Learn more: 5 Year Fixed Rate Mortgage
Learn more: High Ratio, Conventional, Insured, Insurable and Uninsurable
Select a Real Estate Lawyer
Your lender will want to know the contact information of the real estate lawyer you have chosen. This way they know who to send the mortgage package to. Your realtor should be able to suggest someone reputable or you can ask family and friends. Also, you can go online to find someone that is well reviewed.
You typically will meet with your lawyer one to two weeks before the closing date of your purchase to sign all the paperwork. On your closing date you will go back to pick up the keys.
Closing the Purchase
Time for the most exciting step, picking up the final paperwork from the lawyer. And most importantly, getting the keys to your new home.
I hope to be part of this journey with you. I look forward to making the mortgage process fun and educational. Click here to see reviews from other customers I have assisted.
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