Mortgage Financing Real 101 Episodes

Mortgage Financing for First Time Home Buyers

In this episode of Real Estate 101: The Home Buying & Selling Show, Realtor Joe Terceira welcomes back Mortgage Broker Tracey Brock of Dominion Lending Centres to discuss mortgage financing for first time home buyers.

What is the Minimum Down Payment and What Expenses Can First Time Home Buyers Expect?

One of the first questions that first time home buyers have to consider is what will their down payment be. Most first time home buyers purchase homes below $500,000. In this case, the minimum down payment is 5%. In case the price is over $500,000, the home buyer will have to pay additional 7% for every additional $100,000.

If the home buyer was not able to save enough for the down payment, they have some options available to them including getting a flex down payment for $10,000 to $20,000 and using a proportion of this money for the down payment, or getting money from family members.

When it comes to expenses, first time home buyers can expect a number of them including title insurance, land transfer taxes, lawyer fees and more. Since these expenses can accumulate, home buyers should keep a 1-2% buffer of the purchase price.

Title insurance differs from default insurance in that it protects both the home buyer and the lender. Since title frauds are common in Canada, it is better to get title insurance to protect both you and the lenders.

Credit Score Considerations for First Time Home Buyers

Contrary to what many people might think, no credit is actually just as bad as bad credit. Rule number one regarding credit is “pay your bills”. A lot of first time home buyers are younger people, who often don’t have enough “training” when it comes to using credit cards and sometimes find that their credit score is too low. If you have only one credit card, the lender will want to see some other source of payment history (car insurance, cell phone bills), even if your credit score is really high.

On that note, it is essential to have a track record of at least two years (24 months) without missing a payment.

Should You Get a Fixed or a Variable Rate Mortgage?

Fixed mortgage rates are usually a better option for first time home buyers, since the rates don’t increase or decrease and this provides peace of mind. Most mortgage brokers, including Tracey recommend fixed rates since this way you’ll know exactly what your mortgage payments are going to be. When you are ready to start taking more risk, then a variable rate mortgage is the next best option.

Watch this episode to learn more about first time home buyer financing.

For more information on mortgage financing contact:

Tracey Brock

Website: http://www.traceybrock.ca/

Phone: 416.788.6207

Looking to Buy or Sell Real Estate in the GTA?

Visit: http://joeterceira.com/

Joe Terceira / Sales Representative

THE JOE TERCEIRA TEAM

Phone: 647.494.0244

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