If you are a first-time homebuyer in Ontario, then you may have a lot of questions. Are your questions leading to more and more questions rather than answers? That’s normal if you’re not seeking answers from mortgage brokers with over 15 years of professional experience in the industry. I, Jodi Habel, am here to guide you through the process and bring you one step closer to your first dream home.
Best Type Of Mortgage For First Time Buyers
Let’s face it, very few people can afford to pay for a house upfront. You need financial assistance to secure the property of your dreams which is why it’s best to familiarize yourself with different options as soon as you begin saving up for it. Second and third-time home buyers typically know their way around mortgages and loans, which is not knowledge that first-time homebuyers possess, and that’s okay!
There are a variety of mortgage and loan options for you to consider as a first-time home buyer especially if you have an optimal credit score at your disposal. Among the most popular mortgage types for first-time buyers are conventional mortgages and insured mortgages through one of Canada’s mortgage default insurers, CMHC, Canada Guaranty, and Sagen.
Mortgages that are not insured by one of the above mortgage default insurers are referred to as conventional loans. Conventional loans require a minimum of a 20% down payment. Typically, conventional loans can be a bit easier to qualify for as you only have to meet the guidelines of the lender. A lower credit score, credit issues, and lower-income are more accepted when you have a 20% down payment or higher. Some lenders, however, ensure the mortgage behind the scenes which you may not be aware of as the lender will pay the default insurance premium, unlike insured mortgages that have less than 20% down payment the consumer is required to pay the premium which is typically added onto the mortgage balance and amortized over the maximum amortization of 25 years. These mortgages still have to follow insurer guidelines.
Insured mortgages can be more difficult to qualify for. This is because not only do you have to meet the lender’s guidelines you also have to meet the guidelines of the mortgage default insurer as well. The mortgage default insurer has tighter restrictions on credit scores, debt to income ratios such as GDS (Gross Debt Servicing- the portion of your income that would service the mortgage payment, property taxes and heat and 50% of condo fees if applicable) and TDS (Total Debt Servicing – the portion of your income the same as GDS, however, it also includes any other debts that you have such as credit cards, student loans, car loans, etc.) The minimum down payment required for a mortgage that is insured is 5%. There are many options that you can use to come up with the minimum down payment such as your own savings, a gift from an immediate family member, sweat equity and it can also be borrowed provided that the debt servicing ratios are still in line with the insurer’s guidelines.
I will help you consider all of your options to find the best mortgage terms and conditions for your specific scenario. Have difficulties with this stage of the process? Get in touch with me for a pro-bono consultation to determine the best first-time mortgage tailored to your needs.
First Time Buyer Mortgage Process In Ontario
Let’s get acquainted with the process of applying for a mortgage and securing your dream home from start to finish. As a first-time homebuyer, it’s vital that you are aware of the process that is involved with your home buying experience. It can be made simple if you are equipped with the right knowledge.
Preparing for Down Payment — Collecting your down payment is something you must consider when initiating the homebuying process. The minimum down payment for a mortgage is 5% provided you meet the default insurers’ guidelines.
Establishing credit score — Having a better credit score might affect your mortgage interest rate, lending possibilities, and the mortgage lenders ready to offer you a loan. This is not something you can fix the night before.
Getting Pre-approved — Pre-approval is not only crucial for first-time homebuyers, but all borrowers, to ensure they remain within a reasonable range of the budget allocated by the lender when going forward with the home buying process.
Purchasing Paperwork — I will be there throughout the entire process even after you’ve secured the mortgage to handle the necessary paperwork.
My job is not done until you have the keys to your first home in your hands.
First Time Home Buyer Pre-approval
Obtaining a fully qualified pre-approval is one of the best things you can do before you start the homebuying process. This will provide you with a clear outline of how much mortgage you qualify for, confirm your source of down payment, confirm your income, and also provide you with feedback on your credit and if any improvements are needed. Being able to shop in your price range and giving you confidence in any offers that you submit are just some of the benefits of being fully pre-approved.
Reach out to me, to make your first-time home buyer mortgage process smooth.