Pro Tips: Purchasing Made Easy

What a great time to buy your first home or second home! Rates are the lowest they have been in history. Many institutions are offering rates well below 2%, on a fixed rate.

What does fixed mean?

A fixed rate is a guaranteed rate for a certain period of time (term). Rates can even include 4 or 5 years.

How important is a fixed rate?

A fixed rate gives you unchanging payments for the term you have chosen. Peace of mind is of the highest importance for most, and this fixed rate allows you to budget for other expenses in your life.

What does this mean when buying a home?

With rates as low as they are now, it is most certainly cheaper to buy a home and make mortgage payments, rather than renting. For example, if you are paying $1,000 a month for rent, that $1,000 a month could actually buy you a home for approximately $250,000 - principal and interest payments with only 5% percent down! This calculation is based on the current average mortgage rate, other conditions may apply of course.

If you are wondering how to find out how much you can afford, call your financial institution and get pre-approval. Your bank will let you know how much you can afford, based on your income, credit rating and down payment. If you do not qualify at this time, find out what you need to do to get to your goal. Setting a goal will help you to focus on the future and owning a home. For example, if your credit rating is below the required base line, now is the time to find out how to improve your rating so you can buy in the future. Preparing now leaves out unwanted surprises when you find that perfect home.

Even if you do not plan to buy right away, it is still recommended to get pre-approved now and prepare for the future. It never hurts to have more knowledge of where you stand!

Getting a mortgage is much different than getting credit for other purchases out there. The amount one can borrow is based on what is called a debt servicing ratio. Debt servicing is determined by how much you earn VS. your debt load.

So, if you are looking to buy in the future, making a purchase on something that has high monthly payments may lower your purchasing ability! This is the main reason it’s so important to get in touch with your bank of choice sooner, rather than later, to find out what you can afford. It also gives yourself time to make changes, if needed. Keep in mind that there are certain programs out there offered to help buyers! Some institutions are even offering a 3% cash back on purchase. There are also programs available for folks who may need help with the down payment. The interest rate may be a bit higher, but the program gives you the ability to borrow legal fees and some down payment if needed.

Buying a home is investing in your future. Why throw your money away in rent when you can possibly buy a home? Deb and Michelle both have access to great lenders who will be happy to help you.

Give us a shout if you have questions or need help, our advice is free!

-Deb Cook and Michelle Bailey