The current financial crisis and resultant reluctance in lending and borrowing, in unison with steady and high property prices, are squeezing first time buyers and leading to substantial increases in the rental market. Indeed, research indicates the that the number of first time buyers in the market is currently the lowest it has been for almost a quarter of a century. Getting your foot on the property ladder has never been more daunting, and perhaps difficult, particularly for first time buyers.
So, what can potential first time buyers do? And what is the best advice and information for those that are averse to renting and want to purchase a house?
Before you begin shopping for a home, it is always best to know what you can afford. Never rely on your own opinion of what you can afford. A visit to a reputable mortgage broker can help clarify the limits you should be aware of before you begin shopping. This is also a great time to consider applying for a pre-approved mortgage. Since the home loan industry is always changing mortgage guidelines, it is difficult to ascertain if you are qualified for a mortgage without first completing an application. By getting pre-approved for a mortgage first, you are removing the guess work from the equation.
A Pre-approval will let you know how much of a down payment will be necessary to purchase your new home. Being already approved will not only make an offer more attractive to sellers, but the purchaser can shop knowing exactly what they can afford. It just makes sense to know what amount is available before making an offer that you cannot afford. A mortgage consultant can give you all the details of a mortgage, so a person can shop with confidence.
For many first time buyers, the hardest part of obtaining a mortgage is obtaining the money for a deposit. Depending on the house prices in the area this can amount to tens of thousands of dollars and was traditionally roughly at about 10% of the property value. Nowadays, it is not unheard of for mortgage lenders to ask for double before they accept a mortgage. Ask the mortgage consultant about any programs that are available for down payment assistance. It may be best to find out about these programs before the visit, and if possible get qualified before a mortgage is set. The appointment will be an easier one if everyone is prepared.
Mortgage lenders will fully audit your credit rating and financial viability and well base the maximum they will lend to individuals based on this and of course salaries and any other regular forms of income, such as dividends. Most customers do not know what items are on their credit report until it is too late. By submitting a mortgage loan application first, if there is any negative or incorrect information on your credit report, you will have time to take care of it and repair the mistake. Most credit repair companies take up to 45 days to correct inaccurate information. It can take up to 3 to 6 months to get up to date with the correct information, so by starting the Pre-approval process first, if there is an issue, you will have a comfortable amount of time to fix the problem.
In addition to the costs for a credit report, the purchaser may sometimes be asked to pay for inspections and appraisals for the home they are putting an offer on. A purchaser should be prepared to pay for these things, before the house is purchased. It is important to have the funds available if needed.
Seeking help and information from an independent mortgage adviser will give you expert advice on the maths and numbers behind the product and can also inform you of mortgage products from lenders that are not made public, but only through such independent mortgage advisers.
By getting pre-approved for a loan before making an offer, you are letting the seller know you are a serious buyer. If there are multiple offers to buy a property and one offer has a Pre-approval letter, the seller is more than likely to accept the offer with the Pre-approval letter. By being a pre-qualified buyer, you set yourself apart from those who wait until the final moments to get approved for a mortgage.
By talking with a mortgage loan consultant and getting pre-approved today, you will have a better understanding of where you stand in your house buying process.
The Canadian Equity Group Inc was formed by a group of mortgage professionals in December of 2001 with the vision to expand the mortgage market and to be a front-runner with major banking institutions. We predict very soon that more than 75% of all mortgages in Canada will be placed through the services of a mortgage broker. If you want to find the best mortgage rates, visit us online today!