Are you a young house hunter?  If so, it is time to get your finances in order and align ownership dreams with market realities.  Buying a home is one of the biggest decisions you will make, but are you financially ready?  As a first-time homebuyer, here are 10 key questions you need to answer before starting the home buying process:

1. When should you start preparing?  Remember you will need time to do your research, get things in order and make any necessary changes.  This could include saving more money for a down payment or raising your credit score to collecting additional paperwork for a lender.  If you are entertaining the thought of purchasing your first home, we would suggest beginning preparations at least 12 months in advance prior to making an offer on a home.
2. How much can you realistically afford?  Based on your down payment, income, existing debt, regular expenditures, and other key financial information, you will need to determine how much you can afford to pay every month and the price range that works within your budget.  This is where working with a Mortgage Professional starts to come into play.
3. What is on your wish list and how flexible are you?  Have you heard the story of the couple that fell in love with their dream home, even though it wasn't within their financial reach?  It unfortunately doesn't end very well.  Before you start viewing homes, it is a good idea to decide what is truly important and a "must have" versus what is "flexible" and could perhaps be added at a later date.  Are those marble countertops a deal breaker?
4. Should you get pre-approved?  Absolutely YES!!  We can't stress enough how important this is, especially in today's housing market.  You will know how much you will realistically be able to spend, the seller will know that you are a serious buyer and you will be protected if rates should rise as you are "locked in" for 120 days.
5.  Do you know what your credit score is and why it is important?  Your credit score is comprised of five factors: payment history, outstanding credit balances, credit history, type of credit and inquiries.  When combined, they result in your credit score.  The higher your score is the more mortgage options will be available to you.  Aim for a score over 680.
6. What kind of documents will you need?  Be prepared and collect the following before you visit your Mortgage Professional: your most recent pay stub if you are salaried (different criteria is required depending on how you are compensated), a letter from your employer confirming how long you've worked there and your rate of pay, if you are self employed, the last 2 years T1 General Tax Returns and 2 years Notice of Assessments and a 3 month bank transaction history to show you have accumulated the amount of money necessary to make the down payment, closing costs and legal fees.  Other documentation may be requested by the lender.
7. What is most important to you when getting a mortgage?  There is SO much more than just rate to consider when getting a mortgage.  Do you see yourself moving or starting a family within the next 5 years? Yes? Maybe a shorter term is better for you.  Would you have trouble sleeping at night knowing your mortgage payments could increase?  No?  Then think about a variable product.  Are you planning on doing any renovations to the property?  Yes?  You may need a Purchase Plus Improvements mortgage.  These are just a few things to think about when looking at mortgage options.
8. How much of a down payment will you need?  There have been several new rule changes that have come into effect recently.  For homes with a purchase price less than or equal to $500,000 the minimum down payment is 5%.  
9. Do you know about closing costs?  It is very important to budget for these costs when planning your finances.  These costs will vary, but could include: Land Transfer Tax, Appraisal Fee, Legal Fees, Home Inspection, Home/Fire Insurance, Prepaid Costs (to reimburse the seller for any taxes or bills they have paid in advance), Tax on Mortgage Insurance and Title Insurance.  If you are buying a brand-new home, there could be associated costs for items that were not quoted in the original price including upgrades or paving and landscaping fees.
10. Did you remember to factor in those "extras"?  Before the big day, budget for all the last minute things: $100 or more to rent a van or a few hundred for professional movers, $50 to $60 for a locksmith to rekey your locks, any additional furnishings that you might need and don't forget those cleaning supplies.

Tip - Don't forget to make a note that you may be eligible for a tax break under the federal First-Time Home Buyers' Tax Credit the year after you have purchased your home.  You could receive up to $750 in tax relief to help offset your closing costs. 

Ready to get started?  Find a trusted and knowledgeable Manitoba Mortgage Broker at One Link Mortgage today!  We are here to help.