Ready to Get Into the Market? Pre-Financing Considerations for a Confident Home Search

The real estate market seems to have stabilized and you are ready to take the plunge and buy a home.  Your home is typically one of the largest and most expensive purchases you will make, so it follows that you are going to have to do some deep thinking, get organized and approach the process with confidence.

One of the first things you should look into is qualifying for a mortgage.

Talk to Your Bank

Before you start looking at homes with a Realtor, it’s best that you have a conversation with someone at your bank who can talk with you about your current financial situation and how much the bank is likely to extend to you.  They will educate you with regards to the rates and terms they offer.  Pay close attention!  You will want to fully understand the conditions under which the mortgage will be extended and what could happen if you wish to make a pre-payment or terminate the mortgage before the term has finished.

Review Your Other Options

Your bank is ofter a great place to start because you have already established a client relationship.  However, it’s worth checking out what other banks and lenders may offer you as the rates and terms could suit your circumstances better.  You could also work with a mortgage broker who will work on your behalf to find the best rates.  

Gather Your Documentation

Your bank or mortgage broker will provide you with their exact requirements, but you’ll generally need to ensure you have:

    • identification
    • statements from all of your bank and investment accounts
    • proof of income from your employer
    • notice of assessment if self-employed
    • information regarding any other indebtedness/financial commitments

Estimate Your Transaction Costs

When you purchase a property, the price paid for the home is never the only cost that you will incur.  In the City of Toronto, Land Transfer Taxes are significant – on the purchase of a $700,000 home they can add up to almost $21,000.  It’s important to take these into account as you will need to know all the costs that your downpayment and mortgage financing will need to cover.  In addition to Land Transfer Taxes, you may also incur:

    • legal fees
    • title insurance costs
    • renovations/upgrades to the property
    • moving expenses

Understanding your total amount of funds available for the purchase as well as these additional costs allows you to choose a proper price range for your search.

Figure Out Your Running Costs

It’s one thing to afford the house…it’s another thing to be able to afford to continue living there!  After closing, you will have ongoing monthly costs such as:

    • maintenance fees
    • hydro costs
    • insurance
    • property taxes
    • repairs & maintenance
    • landscaping 
    • snow removal

It’s essential that you take a close look at your budget and factor in your mortgage payments, these home expenses and your other living costs – you want to be able to enjoy your home and have some fun too!

I help many people from first time home buyers to experienced investors with the financial aspects of their property purchase.  If you’d like more information or support during your pre-qualification process – give me a call!  I’m uniquely experienced to help you with your finance and real estate needs!

Tara Whitney Hoeg
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