First-Time Home Buyers in Vancouver Need a Plan
If you’re a first-time home buyer in Vancouver, you’ll need a solid plan to make your dreams come true.
In the Greater Vancouver area, as of May 2017 the average price of a detached home is $1,830,956. In the Langley, BC area the average price of a detached home is $794,213. First-time home buyers face significant challenges in today’s market.
How Much House Can You Afford?
As a first-time home buyer, you need to figure out how much house you can afford. What size mortgage do you qualify for? There are many factors you need to consider to make this decision.
Your income is a primary consideration. Lenders will almost always look at your income when determining how much money they will lend to you for your mortgage. Lenders look at the affordability of a house based on your income. The debt to income ratio’s are scrutinized closely by the lenders and the mortgage insurance companies which include CMHC, Genworth and Canada Guaranty.
Your employment history and credit history also factor into your goal to be a first-time home buyer. Reliability and stability are both key. Having a good credit score and payment history will allow you to qualify for the higher mortgage size compared to a lower than average score and missed credit payments. To maximize how much you qualify for be sure to make all your credit payments on time and avoid going over the maximum limits of credit cards and line of credits. It is ideal to keep the balances under 75% of the maximum limit.
Saving for the Down Payment
The down payment is often significant financial hurdle for first-time home buyers. With less than 20% down payment, a home buyer must tack on insurance premiums to their mortgage which is an added expense, but this makes buying a home with as little as 5% down payment possible! Over and above the down payment there are closing costs, such as legal fees, property transfer tax, property tax and other adjustments, potential appraisal costs. Your home buying team, mortgage broker and realtor, will help educate you on what applies to your home purchase.
Meet with Your Mortgage Broker
Meet with your mortgage broker and start the consultation process. Your broker will ask pointed questions about you, your current situation and what you want to achieve. Your broker will help you understand the market and how much house you can afford. As a first-time home buyer, you’re going to have lots of questions for your broker about the market and the mortgage process. Your broker wants to educate you about the steps you need to complete.
First-time home buyers should get preapproved for a mortgage. You can find out how much home you can afford to buy and see how much your payments might be. Your broker can take your information for the application over the phone, online or in person.
Once your mortgage application has been received the broker will start the loan approval process immediately. All lenders will like verification of the information you have given and we like to get that out of the way upfront.
Work with Your Real Estate Agent
Start working with your real estate agent. Your agent knows the market and where to look for the right home. As a first-time home buyer, you don’t want to waste your time looking at the wrong homes. You want to focus on the homes that meet your needs. Your realtor will know where to look. They have the neighbourhood knowledge. The agent also knows the market conditions and what’s selling. They can work with you on price and what you’re willing to offer. They negotiate on your behalf and work for their commission.