Home Financing Basics
The home financing process actually begins long before launching the search for your first home or investment property. Unless you are in the enviable position of being an all-cash buyer, the journey to home ownership starts when you first build a good credit history.
Potential lenders need to see that you can handle the responsibility of borrowing money and paying debts in a timely manner. While it may seem fiscally prudent to refrain from accumulating debt as a young person, you will need to demonstrate a positive credit history prior to financing the purchase of a home. A good credit score will result from the timely repayment of car or student loans. When it comes to credit cards and other forms of revolving credit, make all payments on time and avoid “maxing out” on the available credit line.
Congratulations if you are a young person with a good credit history looking to buy your first home. Now it is time to visit a mortgage professional and decide on a budget. If you have not yet established a positive credit rating or have credit problems, a mortgage professional can still help you with financial advice and credit repair tips to get you on the road to home ownership.
One of the first things you will need to discuss is the source of your down payment funds. Most lenders will insist on a minimum down payment of 5% from your personal savings, RRSP or a documented gift from a friend or relative. It is best to have the money in easily available and verifiable funds. Your mortgage professional will obtain and review your credit report and will need evidence of your income and employment history. This may come in the form of paystubs, tax returns and perhaps, a letter from your employer. The lender will tell you exactly what is needed to issue a pre-approval letter on your behalf. This pre-approval will aid you in establishing a budget number for your home search and give sellers the confidence they will need to proceed with you once you find a home.
A mortgage professional can help you estimate closing costs and advise you on the type of loan best suitable to your unique set of circumstances. Depending on the size of your down payment and the length of time you plan to remain in the home, they will recommend either a fixed or variable rate loan. While variable rate loans are usually slightly lower than fixed rates, in choosing a variable rate loan, you assume the risk that the interest rate may increase during the term of the loan. If you do not plan to stay in the home long, a lower, variable rate loan is often an excellent choice.
Real estate financing can be confusing. Interest rates and lender requirements are in a constant state of flux. The smart thing to do is to sit down with an experienced loan officer as the first step on your journey to home ownership.
Do you need to move to celebrate the changes that are happening in your life? Let me serve you in helping you make the move to the place or home that reflects where you are in life’s journey! I will listen to your needs and use my knowledge and expertise to make this a smooth transition to the right place for you to call home in Calgary. Contact me at 403-708-5873, ajames16@gmail.com, or www.allisonjames.com and let’s get on with your journey!
About Allison James
Allison James has been a realtor® since 1999 with Century 21 Bamber Realty Ltd. in the changing Calgary real estate market. A Century 21 Centurion Award 2007 recipient and a member of CREA and AREA, she specializes in residential real estate and has her designations as a Seniors Real Estate Specialist and a Certified Condominium Specialist. These designations testify that she has the expertise and resources to help her clients make a smooth transition to the next step in their life journey. She enjoys helping her clients as they move through many of the same stages of life that she, too, has experienced. The fact that the majority of her business comes from past clients and/or referrals from satisfied clients speaks volumes about her dedication to the high quality of service that she offers her clients to meet their Calgary and surrounding area real estate needs. She is a mother of four who are all on their own now, and a grandmother of eight. Besides helping people buy or sell real estate, she loves spending time with her family, being active outdoors, traveling and meeting new people, photography, playing the drums, reading, scuba diving, listening to music, learning new things, and nurturing her spiritual growth.
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