Buying your First Home is possibly the single largest investment that you will make in your lifetime, albeit not the last but by all accounts a large one.  

Below you will find a brief summary of some of the most frequently discussed topics.

Affordability

You want to make sure that the home you own is compatible with your financial situation and this is done by comparing your gross income to your total debts.

 Downpayment

This is the sum of money that you raise to put towards the purchase of the home yourself or the equity. The larger the downpayment the lesser your home costs and the smaller the mortgage. Currently most lenders offer insured mortgages with down payment requirements as low as 5%.

 Payoff Sooner

There are a number of options that you employ to reduce the number of years it takes to pay down your mortgage, thus enjoying significant savings. Some of which are: Non-Monthly Accelerated Payment Plan ( Bi-weekly), Pre-Payments and Selecting a Shorter Ammortization Period.

 RRSP and HOME PURCHASES

The Federal Government Home Buyers Plan allows you to use $20,000 in RRSP savings ( $40,000  per couple ) to help with your downpayment. This will however have to be repaid within a period of 15 Years.

 Costs with Buying a Home

The first as mentioned is that of Downpayment, to be considered Conventional 25% of Greater is required, less than this is deemed to be  High Ratio. Than there are closing costs (about 2.5% of base purchase price), a highly recommended other is that of a Home Inspection Fee, this will point out any possible deficiencies, Lawyers Fees, Interest Adjustment, Land Transfer Tax, Property Insurance and Cost of moving are but a few. As well it is important to remember such things initially as Appliances, Furniture and Exterior Items as Fencing and Driveway.

 Amortization

Do I take 10 or 25 years?  The answer is based on your financial situation and affordability, in the long run the shorter the amortization period the greater the savings to you and the sooner to be able to live mortgage free.

 Monthly Costs

The largest monthly expense is the Mortgage Payment, other items such as Property Tax, Utilities and Maintenance are over and above.

 Pre-Approve or Not

This makes a lot of sense for a number of reasons. You will know how much you can reasonably borrow to buy a home, thus it defines a price range for you to shop in, and you can lock in today’s rates and better yet depending of the product if rates go down you automatically get the lower rate for the term chosen and lastly you can make an offer when you find a home with confidence.

 Mortgage Options

This can be somewhat overwhelming but you can basically narrow it down to Fixed Rate and Variable Rate. Fixed means the rate is set for a pre-determined term, thus offering security. Variable the rates is not set thus it can increase or decrease of the term that you have selected. As well there is Open VS Closed,Open allowing full repayment without penalty while Closed sets a time frame withing repayment in full is not permitted without penalty.

 The above is by no means a complete list of all the topics, rather an overview of the most common that arise in conversation with clients. You are advised to contact a Mortgage Specialist to discuss your Mortgage Needs so that you can get into the Dream Home that you deserve!

Source: Mark Busch -- Funds to Go