Purchasing your first home is truly one of the most exciting and rewarding moments in life; regardless of whether you’re buying an apartment, townhouse, rancher or two-story family house. Not only is buying your first home an amazing accomplishment that comes with a great sense of freedom and security, but it is also a great step into the real estate market and can provide you equity and a leg-up towards future expansion.

As amazing as it is to be a first-time home buyer, it is important to remember that this is likely the largest financial decision you will ever make. There are a few questions you can ask yourself to make sure you’re ready to take this incredible leap!

1. Are you financially stable?
2. Do you have the financial management skills and discipline to handle this large of a purchase?
3. Are you ready to devote the time to regular home maintenance?
4. Are you aware of all the costs and responsibilities that come with being a homeowner?

If you’ve decided to take the plunge, you need to start by figuring out what you can afford. A great place to start is my app – My Mortgage Toolbox – which you can find on my website. This tool can help give you an idea of what you can afford, so you can start preparing your budget and down payment!

The minimum down payment on any mortgage in Canada is 5 percent but putting down more is beneficial whenever possible as it will lower the amount being borrowed. However, if you can only afford the minimum that is perfectly okay! Just remember, if you are putting down less than 20 per cent to purchase your home, default insurance will be mandatory to protect the investment.

Once you have your down payment, you will want to go through the pre-qualification and pre-approval processes for mortgage financing. Now this process is NOT a mortgage approval, but it will give you a head start and allows you to lock in at a particular rate and term (for up to 120 days) while you shop! While temptation will be to start looking at the very top of your pre-determined budget, it is important to remember that there will be fees, such as mandatory closing costs, and a little wiggle room is always a good idea.

As your dedicated mortgage professional, I can help you through the mortgage process. From pre-qualification to pre-approval to secured financing, I would be happy to lend my expert advice to your situation. I can also help you track down the best mortgage product, and rates, for you.

In addition, I have many contacts in the industry and would love to connect you with a realtor who will be your advocate while showing you homes and ensure that you do not encounter any hidden roadblocks.

When you are ready to take the next steps, feel free to contact me. I would be honored to help you get started on your home ownership journey!

Sincerely,
Kim

For the past year, the number of people looking to buy homes outside of the city has skyrocketed. Many want more space and are looking to rural properties, so I wanted to pass along some information to you!

Before you dive into country living, there are a few things you should know:

Check The Zoning: When it comes to buying rural property, it is important to check how the property is zoned. This is vital as zoning will determine how you are able to use the land, as well as what types of buildings are allowed and where they can be located. Is the property zoned as “residential,” “agricultural” or perhaps “country residential”? Depending on the zoning, it could affect the lenders available to you and what you qualify for.

Property Boundaries: Once you have determined how a property is zoned, it is important to look at the land. Getting a survey early in the process will help you mark the exact boundaries of your property to avoid future disputes. This is also a good time to get an appraisal done on the land and its value.

Considering the Land and Your Mortgage: What many people don’t realize is that land has a drastic effect on qualifying for a mortgage and what you can borrow. In fact, most lenders will mortgage: 1 house, 1 outbuilding and up to 10 acres of land. If you have a second building or extra land that is being purchased, you will need to consider additional funding on top of your typical 5% down payment.

Water and Sewage: When it comes to rural living, many people draw water from private wells and utilize septic tanks for sewage. To ensure everything is safe and in working order, it is a good idea to have an inspection done on the septic tank and water quality as a condition on the purchase offer. Due to the nature of these properties, be advised that inspections may cost more than it would in the city, but it is important as lenders may request potability and flow tests.

Coverage Matters!: When it comes to rural properties, there are two types of insurance that you should consider: Home Insurance and Title Insurance. Home Insurance will protect you from any loss or damage to buildings on the property, whereas Title Insurance will cover you for unpredictable or undetectable issues that can affect rights of ownership such as errors in the survey, errors from the lawyer, encroachments, unregistered easements or other encumberances.

If you are still thinking about purchasing a home in a rural area, I would be happy to help you determine your options. I know several realtors who specialize in rural properties and I can also help ensure you understand any differences in the mortgage process and qualifying that come with rural purchases.

Sincerely,
Kim

Ok, so you’ve gotten a pre-approval to buy a home! You are excited and ready to start shopping. But slow your roll… there are specific requirements that you must continue to meet until your closing date, or you risk the lender denying to forward your loan.

1. Change in Employment Status or Income
When you apply for a mortgage, you will need to show proof of employment and income. This includes not only how much you earn, but a history of employment that should go back at least 2-3 years. Your mortgage application was approved based on the employment information you provided and any change in this information may impact your ability to qualify for the same loan amount. If the lender doesn’t think you can still afford to make the monthly payments in the pre-approval, then your application will need to be recalculated.

2. Applying for Additional Credit
Your credit score is used to help determine the rate and amount you are qualified to borrow. The higher your credit score, the better rate you will qualify for. With that in mind, this is not the time to finance a new car or apply for a new line of credit or personal loan. This will impact both your credit score and your debt to income ratio and could cost you your pre-approval.

3. Missing Bill Payments
As I mentioned, your credit score and debt to income ratio are major factors in determining the mortgage loan amount you can borrow. Paying your bills on time is one of the most important factors in maintaining a healthy credit score and debt to income ratio. Your credit score decreases and debt ratio will change when payments aren’t made as agreed upon and the lender will see you as a higher risk of default. I mean, if you aren’t making your bill payments, why would you make your mortgage payments? Paying your bills on time is one of the simplest ways to ensure the pre-approval is maintained.

4. Change in Spending Habits
You may think that this is a good time to start shopping for new furniture for your new home. However, an increase in your spending during this time can change your debt to income ratio, and can cause a lender to revoke the pre-approved amount. It is important to not change your spending habits drastically during your pre-approval. Is racking up additional credit card debt worth losing your dream home?

The bottom line is that a mortgage pre-approval doesn’t mean your loan is in the bag. Any of the above factors can give the lender pause and concern about your ability to repay your loan and then you’ll be left starting the approval process over and likely getting less desirable terms.

Sincerely,
Kim