First-Time Home Buyers: 5 Must Do’s Before You Buy

Buying a home will be one of the biggest purchases you will make in your life. It can also be a confusing process for first-timers. That’s why, today I will share 5 things first-time home buyers should do before buying their first home.

1) Check your credit score

The better your credit score, the easier it will be for you to be approved for a mortgage. Most A Lenders, such as the big banks, require a minimum credit score of 680.

I usually suggest this as the first step in the home buying journey because it gives you time to improve your credit score if need be.

2) Save for your down payment

The minimum down payment you need is generally 5% of the purchase price for the home that you will be buying.

But it is important to know that:

If your down payment is under 20% of the purchase price, then you are required to pay for mortgage insurance.

Mortgage insurance is an insurance policy that protects the mortgage lender in case of default. It also ensures you get a reasonable mortgage interest rate, even with a smaller down payment. The cost of mortgage insurance is added to your mortgage payments at the start of your mortgage.

3) Budget for closing costs

When you buy your first home, you will be responsible for paying closing costs such as land transfer tax, legal fees and appraisal fees. These costs cannot be added to the mortgage amount you are borrowing.

My recommendation:

I suggest that first-time home buyers set aside 2% to 5% of their purchase price to pay for closing costs.

4) Calculate upkeep costs

First-time home buyers are often so focused on buying a home, that they forgot what comes next!

Home ownership comes with annual costs like mortgage payments, property taxes, home insurance, and maintenance.

Want to avoid being “house poor”?

Money experts usually recommend that you spend no more than 30% of your take home pay on housing costs.

5) Get pre-approved for a mortgage

Before you start your home search, it is important for first-time home buyers to get a mortgage pre-approval.

Here’s why:

A pre-approval tells you how much you can borrow.

It will save you lots of time during the house hunting process by focusing on properties that are within your price range.

It will also give you the confidence to put down an offer when you find your dream home.

Do you want to know how much you can borrow? Contact me for a mortgage pre-approval today!