Be Ready to Seize the Moment – Tips for First-time Homebuyers
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While some first-time homebuyers may think the first step to home buying is house shopping itself, it’s better to take some preparatory steps before you get deep into the house hunt.
Here are some tips to help you be ready to “seize the moment” when you spot the perfect house:
Tip #1: Save that down payment: The first step in the home-buying process should be to ramp up savings. Remember, the more of a down payment you have, the less you’ll have to borrow. And, if you have at least a 20% down payment, you won’t have to pay mortgage default insurance premiums*.
Also, by saving a good nest egg you’ll be better prepared for the unexpected expenses that come along with a new home, from legal fees and moving expenses to routine upkeep.
You can begin building a down payment by creating a budget and deciding how much you can save each month (Check out Scotiabank's Money Finder Calculator). You’ll see that even $100 per month can quickly grow into a sizable amount over time.
Also consider other options like rounding up your purchases and putting aside your change each time you make a purchase. A banking program like Scotiabank’s Bank the Rest® savings program automatically helps put money into your savings account every time you use your debit card to make purchases.
You may also explore other sources of funding, like the Home Buyers' Plan, a program created by the federal government that allows first-time homebuyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) to put towards their first home.
Tip #2: Now, how much home can you afford? Lenders typically calculate your ability to afford a mortgage based on traditional debt-to-income principles relating to your monthly housing costs, your family’s gross monthly income and all of your other debt obligations, including loans, credit cards, lease payments, etc.
You can get a good sense of the mortgage you could qualify for by trying out a convenient online mortgage calculator, such as Scotiabank’s What Can I Afford? tool.
Tip #3: Be ready to make an offer: Once you've set your savings plan, and determined how much home you can afford, getting a preapproval is the next step. This is important, because if the perfect home comes along, you may need to act quickly, especially in a competitive housing market. With a preapproved mortgage, sellers know that you’re creditworthy, and you have the ability to make an offer right on the spot.
During your discussion with a Scotiabank Advisor, we can suggest a variety of borrowing solutions that meet your needs and provide you with preapproved mortgage financing at an interest rate that can be guaranteed for up to 120 days from the time that financing is arranged.
To take care of these details, sit down with a Scotiabank Advisor to discover financial solutions to help you achieve your homeownership dreams.
* Some conditions may apply.
Call us and let us help. 1-800-472-6842