Easy Habits to Help Save for Your First Home

FIRST TIME HOMEBUYERS

first time home buyer

At YourMortgageNow.ca, we are always ready to answer any questions you may have about buying your first home in Saskatoon and area. But for some people, saving to buy their first home may seem daunting and they don’t quite know where to start. Here are some great money-saving tips to get you started:

  1. Set a long-term goal: “I want to buy a home by the age of 30” or “I want to buy a home within five years of graduation from college”.
  2. Determine how much you can afford: Be realistic about where you want to live and what type of home you will likely be able to afford. Consulting a financial advisor or mortgage professional early on will put you on the right path to fulfilling your goal.
  3. Create a budget: Keep track of all the money that comes in and all the money that goes out. Balancing expenses against income will help you determine what, if any, adjustments you need to make to your spending habits in order to build savings.
  4. Pay yourself first: Open a separate savings account and deposit a set amount of money every month through an automatic withdrawal from your paycheque or other bank account.
  5. Live on cash: Every pay day give yourself an allowance in cash to get you through to the next pay day. If you don’t have cash handy you might think twice before buying something you don’t really need.
  6. Build your savings account: Live off your day-to-day earnings and make the most of every unexpected inflow of cash. If you work overtime or receive a bonus, put that money right into your savings account.
  7. Party at home: Going out for dinner, clubbing or a movie can really add up on your monthly expenses and kill your budget. Host movie nights or potluck dinners at home and see your savings grow.
  8. Earn extra income: Sell unused items online through sites such as eBay, Craigslist or Kijiji; take on a second job; work part-time and summers if you’re a student.
  9. Open an RRSP account early on: The Federal government’s Home Buyer’s Plan allows you to withdraw up to $20,000 from a Registered Retirement Savings Plans (RRSP) for a down payment on a first home. Consult with a financial advisor or mortgage professional to grow you investments wisely.
  10. Do your homework: Before making any big investment or purchase, do some research. Avoid spending on impulse or emotion. If it sounds too good to be true, chances are it is.

Happy Saving!

Wes Will Mortgage Broker Devin Cristo Mortgage Broker

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Mortgage Advice Buy a Home Sooner to Build Equity

It can be very beneficial to buy a home you can afford sooner rather than later. A home allows you to build equity and with every mortgage payment you make each month, you are building equity in a place of your own – unlike a rent payment.

Mortgage Advice Buy a Home Sooner to Build Equity Equity is the difference between the value of a home and your outstanding mortgage balance. The longer you stay in your home (and the more mortgage payments you make), the more equity you’ll have. Unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.

Once you’re a homeowner, the payoff can be great. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens. An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.

Here are some ways you can use the equity in your home:

  • Pay off other debts with higher interest rates (like credit card debt)
  • Renovate or repair your home – build a new room or put in a swimming pool
  • For important life events – a wedding, dream vacation or university tuition
  • Purchase a second home or vacation property
  • Emergencies – like a serious illness

Investing in a home can have a significant payoff over time. And the sooner you begin, the sooner you’ll start building equity.

 

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Are you a first-time homebuyer?

Purchasing your first home is one of the most exciting experiences you will have in your life, and is one of the largest purchases you will ever make. The act of homebuying involves considerable sacrifice in order to save up for the deposit and finding a home to suit your needs. While everyone is generally on a different path, knowing what the average first-time homebuyer in Canada looks like can certainly help in knowing whether you are ahead of the game or slightly behind.

The Average First-Time Homebuyer in Canada

If you are in your twenties, thinking about homeownership should definitely be something on your mind. While it may not be something you can afford to do for a number of years, starting to plan immediately will help you. The average first-time homebuyer in Canada has three unique characteristics:

  1. They are generally in their late 20s. In a study conducted by BMO in 2013, which surveyed 2000 first-time homebuyers, the average homebuyer was determined to be about 29 years old.
  2. They buy a home valued at $316,100 on average. This number is different in major cities, such as Vancouver where the average is $506,500, Toronto at $408,300, Calgary at $363,400 and in Montreal where the cost is less than the national average at $237,900.
  3. On average, a first-time homebuyer in Canada has $50,576 to put towards their down payment. This means that the average homebuyer has about 16% of the cost of the home, meaning they need to insure their mortgages with an insurer like Genworth (as mortgage insurance is required when a buyer has less than a 20% down payment).

The Average First-Time Homebuyer by Province

Homebuyers are vastly different based on the province they live in. The average home prices compared to the average amount spent by first-time homebuyers in a province helps to illustrate the cost of living and affordability in each of Canada’s provincial regions.

  • The average home in Atlantic Canada is $212,622, while the average first-time homebuyer spends $204,400.
  • The average home in Quebec is $263,661 while the average first-time homebuyer spends $222,300.
  • The average home in Ontario is $423,691, while the average first-time homebuyer spends $358,400.
  • The average home in Manitoba and Saskatchewan is $275,104 while the average first-time homebuyer spends $226,100.
  • The average home in Alberta is $407,540, while the average first-time homebuyer spends $364,700.
  • The average home in British Columbia is $611,688 while the average first-time homebuyer spends $430,300.

Other First-Time Homebuyer Statistics

The study also found out some interesting statistics related to first-time homebuyers.

  • About one third (30%) of all first-time homebuyers are expecting some assistance from their parents or other members of their family with their purchase. In both Montreal and Vancouver, these numbers are significantly higher at about 40%.
  • 60 per cent of potential first-time homebuyers have had to delay their plans to buy, with close to 40 per cent of those people saying that the increasing cost of real estate has been the main reason for the delay.
  • Most first-time homebuyers (60%) set a fixed budget with a maximum amount they would want to spend on their home, but a third of them would be willing to spend more if they found a dream house outside of their set budget.

The question you need to pose to yourself is – how prepared are you? If you already have a larger deposit saved, perhaps you can invest in a slightly better property. If you are behind the average, consider services like Genworth’s down payment options.

Source: Genworth. Statistics for this post derived from BMO First-time Homebuyers Report unless otherwise stated. The poll was conducted by Pollara between January 24th and March 6th, 2014. 513 first-time Canadian homebuyers 18 years of age and older were polled. As a guideline, a probability sample of this size would yield results accurate to ± 4.3%, 19 times out of 20.

 

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

 

First Time Home Buyer: Saving Money!

Want to be a First Time Home Buyer?

You’ve been saving money to buy your first home for so long and it’s one of the most significant purchases you’ll make in your life. But with all the details and parties involved, it’s easy to get confused or blindsided by hidden costs and fees. We can help – here are some tips to ensure you get the most for your money.

  1. Resolve credit issues before applying for a mortgage
    Your mortgage rate is partially determined by your consumer credit score, so fix what you can before you apply. Even little things like late payments or errors on your record (it happens!) can jack up your mortgage payments.
  2. Budget wisely and save for a down payment…even if it means waiting a little longer to buy
    It’s hard to be patient, but a decent down payment means more reasonable payments, saving you thousands over the duration of the mortgage.
  3. Shop around for mortgage rates
    Don’t assume the offer made to you by your bank or broker is set in stone. It will vary, especially if you make it clear that you’re comparison shopping! Closing costs and fees can also be negotiated – use them as bargaining chips.
  4. Don’t take listing prices at face value
    Found something you like? Research house values in the neighbourhood to be sure you’re dealing with a fair price. Your real estate agent can help, but you can also search for nearby listings online or attend open houses in the area.
  5. Use your RRSPs
    In Canada, first-time homebuyers can take advantage of a federal government program called the Home Buyers Plan (HBP) which allows you to take up to $25,000 from your RRSPs, tax-free.
  6. Don’t be scared to low-ball your offer
    New buyers can be timid when it’s time to buy, but unless you know you’re headed for a bidding war, low offers can be countered. So you may as well give it a shot!
  7. Make your offer contingent on closing dates
    It’s easy to overlook small details like closing dates in the rush of making an offer. But don’t risk the cost of paying for temporary accommodation and putting items in storage if you run into last minute changes.
  8. Get a list of fixtures and fittings included in the sale
    Check the details to avoid opening the door to your new home and finding it stripped of light fittings, cables and appliances. Also, pay attention to what you’re paying for: the seller may list the price they paid for an appliance, but from how long ago? Would it be more cost-effective for you to exclude it from the offer and buy a new one?
  9. Review your closing statement carefully
    With all the details that go into buying a home, it’s not unusual to find mistakes in the fine print. Be sure you check the math prior to closing, so you don’t overpay based on a simple clerical error.
  10. Opt for bi-weekly mortgage payments
    Paying monthly means that you make 12 payments per year. But if you pay half that amount every two weeks, you’ll make 26 payments, which means you’re paying down your mortgage faster.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Buying a House With a Friend is Becoming the New Trend!

With house prices rising, it can difficult to afford a home on your own. You and a friend might be in the same situation and feel that if you pool your resources, you can invest in a home instead of throwing your money away by paying rent. What all parties have to realize is that this is a business partnership and should be treated as such.

What is involved with Buying a House With a Friend

Before you buy, it is important to look at the big picture and answer these questions:

  • Are my friends in a stable financial situation? Can they afford to split mortgage payments, utilities and come up with their share of a down payment? Ask them straight out, to avoid any issues in the future.
  • Do we share the same values? Are you both neat freaks? Couch potatoes? This can lead to tension as unlike a traditional business you are living with each other. People are used to doing things a certain way, are you ready to compromise?
  • Does everyone agree that this is an investment? Eventually, people’s lives change, they meet someone, relocate for a job. Have you talked about what will happen to the property when one person inevitably needs to sell their share?

Now that you have decided that this deal is going to work, you have to look at getting a mortgage. Is everyone involved going to be listed on the mortgage? All parties will have their credit ratings looked at and generally the person with the lowest credit rating will set the bar as to what a mortgage will be approved for.

After all of these questions have been answered and you have decided to go forward it is recommended that you find a lawyer. Once again, treat this investment as a business arrangement. Sit down with legal council and have a written agreement compiled that includes things such as:

  • Who will cover the down payment, property taxes, bills, and repairs when they are needed.
  • What will happen to the home if one of the owners is killed or incapacitated.
  • When can someone sell or leave the partnership? Do they need to give notice? Can the other partners buy out their share?

Sitting down with a lawyer will make sure that everyone fully understands how situations will be handled as they come up.

The last thing you may want to talk to your new business partner about are the house rules. Set out guidelines regarding pets, parties, noise and guests.

Purchasing a home with a friend can be an excellent way to start building your equity. As long as all of the people involved have been upfront with each other, there should be no surprises along the way to jeopardize the partnership. Let us help you when it is time to apply for that mortgage. We are here to answer any other questions that you may have when planning on buying a home with friends.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

How Much is Enough to Save for a Mortgage?

When should you start to save for a mortgage?

The challenge today is saving for a sizable deposit for a down payment and closing costs. Credit scores are critical, but so are income and assets when you are applying for a mortgage.

Home buyers are required to have at least 5% deposit of the home purchase price, although if you don’t want to purchase default insurance, then you’ll need at least 20% for a conventional mortgage.

There are several benefits to waiting until you have enough for a down payment of 20% or more before you purchase a home.

  1. Reduced mortgage payments
    The more you put down on your home upfront, the smaller your mortgage payments will be. That could help your monthly budget. More important, you could save thousands of dollars in interest in the long run. For example, on a 30-year mortgage at 5% interest, putting an extra $10,000 into the down payment will save you $9,325 in interest payments over the life of the loan.
  2. Lower interest rate
    Lenders often offer better interest rates to borrowers with a lower loan-to-value ratio, or the percentage of the purchase price that you’re financing. An increase in your down payment lowers the ratio and reduces the risk to the lender that you will be unable to pay your full loan balance. Lower interest rates can also save you money over the life of the mortgage.
  3. No mortgage-insurance fees
    If you want to contribute a smaller down payment than the traditional 20%, most lenders require that you take out mortgage insurance. This insurance protects the lender in case you cannot pay your mortgage.
  4. Instant Equity Building
    A significant down payment builds instant equity in your home. A 20%t down payment immediately puts equity into a property when you purchase it.

So, if you’re a first-time home buyer, how do you save for a down payment?

As a first-time buyer, you’ve got other things to consider, including:

  • Your rental costs. (Are they higher or lower than your potential ownership costs?)
  • Alternative uses for your down payment money. (Can you get a better return by investing down payment funds elsewhere?)
  • The size of your emergency fund. (Home ownership comes with a laundry list of unexpected expenses.)
  • Your economic stability and future earning power.

There are several ways to piece together a bigger down payment. You can:

  • Cut your spending and reduce your credit card limits. You might want to consider asking your credit card company to reduce your overall limit as this will help boost the overall amount lenders will be willing to offer you.
  • Get rid of debit! Carrying high levels of debt will reduce the overall amount lenders will be willing to offer you for a mortgage. Demonstrate to the lenders that you have responsibly made repayments on your credit cards.
  • Sell old, unwanted items.
  • Tap into the bank of mom and dad. Gifts from parents get a lot of young people started as home owners.
  • Borrow from your RRSP under the Home Buyers’ Plan (HBP).
  • Apply tax refunds and bonuses.
  • Get rid of one car in a two-car household.
  • Postpone a vacation for 18 months or more.
  • Get a second job. Working a couple nights a week at a part-time job only puts extra cash in your account. It also decreases time and opportunity for you to go out and spend unnecessary money.
  • Use municipal first-time home buyer grants when applicable (like this one in Saskatoon).

There are ways we can help you plan your down payment. Give us a call today at (306) 244-7755 or visit www.www.yourmortgagenow.ca

What Do You Miss Least About Renting?

homeownerIn this day of low interest rates, the temptation to buy a home versus renting one is higher than ever. While it’s true that home ownership isn’t an ideal choice if it’s going to leave your house poor, or if you’re not ready to settle down in one location, there are definitely a lot of positives involved for those willing to take the plunge. Below are some things many clients appreciate most about home ownership. 

1.  Forced savings

While some people are good at saving their extra income, others are not. For the less-than-savvy savers among us, home ownership can be a great thing, as it’s forcing you to sock away money every month. Instead of paying someone else’s mortgage, you’re paying off your own – and building equity in the process.

2.  The freedom to make the place “yours”

When you own your own home, you’re not stuck with someone else’s choice of paint colours, flooring or fixtures. How you customize your home is only limited by your imagination – and, maybe, your savings account.

3.  The desire to keep your place nice

Even though you live there, when you rent a place it’s never really quite yours. While you may want to keep it nice and presentable, if something major goes wrong – or if you crack a tile here or there – it’s not that big of a deal because someone else will pay to get it fixed and, if they don’t, you can always move into a nicer place without much of a hassle. When you own, you always have resale in the back of your mind. This motivates you to deal with potential issues before they become major (costly) problems, and upkeep your home so you have less headaches should you eventually decide to move.

4.  Freedom from crazy landlords

If you’ve rented for a while, you’ve likely come into contact with a landlord or two who wasn’t quite, well, ideal. One of the biggest perks to owning your place is you don’t have to answer to anyone – but, on the flip side, you have to handle all of those household issues on your own. Still, it’s a small price to pay for freedom.

What do you like most about owning your own home? Or, if you’re in the market for buying your first home, what will you miss least about renting?

How Long Does My Pre-Approval Last?

The first step in your home buying journey should be to obtain a Pre-Approval.

Pre-Approvals are great for two reasons.

1. A Pre-Approval will give you a clear understanding of how much you can afford to buy. More so by talking with us, you will get a better understanding not only of how much you are pre approved for, but more importantly how much you can afford.

2. Pre-Approvals not only help you determine what price range you should be shopping in, but they also come with an Interest Rate Guarantee.  This means that for the period that your Pre-Approval lasts (usually 120 days) you are guaranteed the lowest rate offered by the lender. If rates go up, you still have the same rate you were Pre-Approved with. If rates go down, then you will get the lower rate.

What You Should Know About Getting Pre-Approved

– Pre-Approvals come with no obligation and are completely FREE

– You are guaranteed the lowest interest rate for 120 days

– It only takes 10 minutes to fill out the Pre-Approval application. You can even Apply Online.

What Do Lenders Look For?

A Pre-Approved mortgage is based on the information you provide on the application. The lender is assuming without verifying that the information you provided are accurate and verifiable.

Lenders typically will look at 5 main factors when reviewing a mortgage Pre-Approval:

1. Who You Are

2. Your Employment History

3. Your Income

4. Your Credit History

5. Your Debts

What a Pre-Approval Doesn’t Do

It is important to note that while we strongly recommend getting Pre-Approved for a mortgage, it is not a substitute for a mortgage approval.  You should be wary about waiving any financing condition on a Purchase Agreement in lieu of having a Pre-Approval.

The reason for this is while a Pre-Approval will tell you what you can afford based on a number of factors it does NOT take into account the actual property you are purchasing. Lenders have guidelines for properties that must be met regardless of how well qualified you are as a borrower.

Also keep in mind that Pre-Approvals do not require any documentation to prove your income or other information that you used to apply. While you may earn enough to qualify for the mortgage if you are unable to confirm this information in a manner which is acceptable to the lender your Pre-Approval won’t matter very much.

The bottom line is to work with a Mortgage Associate who will make sure your needs are being met. This will make your experience much more enjoyable!

If you have any questions about Pre-Approvals, please give our office a call at (306) 244-7755 or email us today.

How The Mortgage Process Works

Understanding the process involved in obtaining financing for your home is important. As Mortgage Professionals, we handle everything from your pre-approval to securing the best mortgage rate that works for you.
Our mission is to make this process as simple as possible. Let’s take a closer look at the steps involved and educate you with the information behind them.

Step 1 – How Much Can You Afford?

Before you begin to look for a home, you should have a clear picture of what you can afford in terms of price, down payment, fees, and other expenses.

Consider the cost of living in the home. How much will it cost to heat monthly? What about the monthly cost of insurance, electricity, water, maintenance – painting, repairs etc.? If you are considering buying a condominium, how much are the monthly management fees? How will they affect your ability to carry on a mortgage?

Predicting the cost of living in a home compared to living in an apartment can be difficult. There is a rule of thumb to help you estimate the difference between the two. Take the value of the home you are considering and multiply it by 3 per cent. Then divide that figure by 12. In our example of the $290,000 home, the monthly cost using this formula would be roughly $725 in addition to mortgage and taxes.

Before you find the home of your dreams, make sure you can afford it first!

Step 2 – The Mortgage Application

A typical mortgage application is not very complicated. We are looking for some information about you and whoever is going to be on the mortgage with you. You will need to provide your SIN (Social Insurance Number), employment information – how much you make and how long you’ve been there, where you live and how long you’ve lived there, how much debt you have, what your credit is like (past and present), and your financial net worth. All of your information that is relayed is strictly confidential and is 100% secured.
Once you have filled out our mortgage application, you will be asked to sign two consent forms that allow us to update and review your credit bureau.

You can apply online today using our Online Application Form

Step 3 – Let’s Get You Pre-Approved!

Your pre-approval is generated from a lender. A lender provides the financing for your mortgage, often bank or financial institution. At Mortgage Link, we have access to over 20 Lenders to find you the best mortgage rate that fits your needs.

Check out our Lenderspage to see some of the companies we are associated with.

Your Mortgage Application will then be submitted to a lender for pre-approval and may require more information on your financial situation.

Arranging a pre-approved mortgage is one of the most important steps in the home buying process. It not only protects you in the event of an interest rate increase for up to 120 days, it also provides you and your Realtor with a price range for looking at homes. With a mortgage pre-approval, you can shop with confidence.

Step 4 – The Approval

Many confuse the terms “Pre-approval” and “approval”.  If you are pre-approved for a mortgage, yes you may go shopping for a home – but it doesn’t mean that you are guaranteed a mortgage!

The approval is supplied by the lender when all of the information we relayed to the lender is verified!  For example, we will have to supply the lender a letter of employment and a paystub to “verify” that you make what we’re telling them.

Certain different conditions of verification will be called upon for the different information that we supply the lender. We will communicate with you with what documentation the lender requires to approve your mortgage application.

Be prepared to submit the following documents:

  • Job Letter – A letter from your employer (on company letterhead) stating your wage amount, guaranteed hours, state date and position, name and title of person signing the letter.
  •  Two Most Recent Paystubs
  •  Last 2 year’s T4’s
  •  Last 2 year’s NOA’s (Notice of Assessments)
  •  Child Tax Benefits (if applicable)
  •  Down Payment Information
    •  3 Months Bank Statements showing proof of down payment in your account(s)
    •  Signed Gift Letter and Deposit of Gift into account
  •  Photo Identification
  •  If Divorced:
    • Signed Separation Agreement
    •  Divorce Decree
  •  Current Mortgage Information (if applicable)
  •  Debts Paid
  •  Lawyer Information
  •  MLS Listing of Property
  •  Signed Counter Offer
  •  Accepted Offer to Purchase
  •  Signed PCDS (Property Condition Disclosure Statement)

*There may be more information the lender will require and it is in our hands to update you on any outstanding conditions required. We prepare your documents for the lender and it is critical this information is taken care of as your mortgage will not be funded if the lender does not receive any outstanding information prior to possession date.

As long as you are prepared to submit your information, the easier the process will be. Once your mortgage is approved, you will sign a Mortgage Commitment outlining your mortgage product and rate. You must review these documents prior to signing and make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate.

Step 5 – The Closing

Once all the conditions are verified, the lender will package your mortgage and send all information to your lawyer.

The lawyer will work on your behalf to review the following:

  • The Offer to Purchase
  • The Mortgage Commitment
  • Any potential encumbrances, liens, easements, restrictions, encroachments, or other claims registered on the title.
  • Contact the lender to arrange transfer of funds

You will meet with the lawyer shortly before closing date to review and sign closing documents. On closing day, your lawyer and the seller’s lawyer will exchange documents, funds, keys and register all documents on title. There are also several fees associated with obtaining a mortgage and transferring property ownership which you will be expected to pay at closing.

After reading this, we hope you now understand your key role as the borrower. You’ll submit your information and any necessary documents, look for your new home, and we’ll take care of the rest!

Contact us today if you have any questions, or visit our website for more information.

Is Buying a New Home One of Your New Year’s Resolutions?

 

If you’re not already a homeowner, maybe this will be the year that you make the change over from renter to owner for your own good. Owning your own home gives you more freedom of choice and also sets you on the path to financial security.

With rates at an all-time low, there’s never been a better time to purchase real estate.

The decision to purchase your first home is one of the biggest and best decisions you could ever make. After all, a home is the largest (and most emotional) investment most people will ever make. So, how do you know if it’s the right time for you to buy your first home?
  • There is never a wrong time to buy the right home. The key is finding a good buy and taking the time to carefully evaluate your finances.
  • A home purchase is an important step in the path to long-term wealth. Purchasing your own home is a great investment that provides specific financial advantages, including equity buildup, value appreciation potential and tax benefits. It’s also an automatic savings plan that you cannot get from renting!
  • Here’s the most important rule for keeping your stress to a minimum: you don’t have to know everything. Your Real Estate Agent is ready to help you through every step of the process.

Call us today at (306) 244-7755 to set up an appointment for your Pre-Approval! Have questions? Email us at devinandwes@yourmortgagelink.ca.

If you’ve been thinking about real estate for a while New Year’s is a great time to make a final decision and set a goal for yourself. You know how quickly time can pass. When you make 2013 the year that you finally purchase your own property, you’ll be able to sit in your new home on New Year’s Eve 2013 while making new resolutions for the year 2014.

Visit our website for our current rate specials: www.www.yourmortgagenow.ca