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Thinking of buying a home in Edmonton? Here are some things to consider first:
Before you do anything, you need to figure out if you can afford it. Look at your monthly expenses to see how much money you have left over after paying bills and other expenses. There’s no real set rule on what you can afford, because everyone’s situation is different – it also needs to line up with your lifestyle. Some people will be ok with bigger payments for a house they really want, while others want a smaller payment that leaves them with more cash for other things in their lives – it comes down to you, and your goals.
Next, think about your down payment. This is the amount of money you pay upfront when you buy a home. Most buyers need at least 5% of the purchase price as a down payment. If you don’t have enough saved up, some lenders offer mortgage options where you can borrow your down payment or receive it as a gift from a relative. Just make sure you can prove that the down payment is your own money. Every situation is unique, so you’ll need to ask your mortgage broker what options are available to you.
If your down payment is less than 20% of the purchase price, you’ll need a high ratio mortgage and mortgage insurance. This can cost anywhere from under 1% to more than 3% of the purchase price. This type of mortgage is usually only for your primary residence – meaning that you would need to live there.
You also need to have deposit funds ready to go when you make an offer to buy a home. These funds are typically part of your down payment and will need to come out of your account when you have an accepted offer. There’s no rules to how much you need to offer as a deposit – but it is pretty common to see it range from around 3-5%.
And don’t forget about closing costs, which are separate from your down payment and deposit. They can include lawyer fees, property tax adjustments, and title insurance, among other things. It’s a good idea to budget a couple thousand dollars extra for closing costs.
If you’re planning to buy a condo, keep in mind that you will also have monthly condo fees. Not all condo fees cover the same things, so these fees can vary.
Just because you’re approved for a certain mortgage amount doesn’t mean you should spend that much. You want to have some wiggle room in your budget for unexpected expenses or if you’re out of work for a period of time.
And finally, check out the real estate market conditions. If it’s a buyer’s market, that means there are more properties for sale than buyers looking to buy, so you might be able to get a good deal. If it’s a seller’s market, there are more buyers than properties for sale, so you might end up paying more. And if it’s a balanced market, supply and demand are equal, so you can expect more stable prices.
Once you’ve had a close look at your own situation, and you’re ready to move forward, the next step is starting your Pre Approval. A mortgage broker will be able to help guide you through this process and give you a better idea of where you’re at, and what you can qualify for. If you don’t qualify, they can also help you understand the steps needed to get qualified.
If you’re ready for the next step, you can then start your pre approval process.
And as always, if you have any questions about this first step, please feel free to ask – I’m here to help!