Buying a home for the first time can be a very challenging task. The process and procedures can seem to be disorienting. The real estate and mortgage vocabulary can be unfamiliar. The amount of paperwork needed to close a mortgage loan and real estate transaction could be overwhelming. And the amount of money needed to be put together to purchase a home can be intimidating. Following, is some advice to make the process as stress-free as possible:

Figure out how much you can afford.
Falling in love with a house you can’t afford can be heartbreaking. Avoid disappointment by figuring out your price range before you start looking.

1. Decide how much you have available for your down payment. The Home Buyers Plan allows you withdraw up to $25,000 per person from your RRSPs.

2. Keep in mind the closing costs. Clothing costs include appraisal cost, insurance, legal fees, home inspection costs, land registration and land transfer fees, moving expenses. Speak to your real estate agent, mortgage specialist and the lawyer to get all the necessary numbers. Make sure there are no surprises or shortage of money on the closing date.

3. Your monthly housing expenses (mortgage, taxes, heat, and half of your condo fees) shouldn’t exceed 32% of your monthly income. Make sure your total monthly obligations are not over 40% of your income.

4. Get pre-approved for your mortgage. An experienced mortgage professional can help you to define exact price range of properties you can afford.

Figure out what type of home is right for you.
How many bedrooms do you need? Bathrooms? Do you need a home office? A garage? Eat-in kitchen? Sit down and make a list of necessary and desirable features to have. Be realistic about the features you can’t live without. Consider your lifestyle, your stage of life and your future plans. Are you planning on expanding your family, if so, you might need extra bedroom for new family members.

Decide where you want to live.
Choosing a right area is just as important as choosing a right house. Do you want live a busy city core? Or you enjoy quiet place in the country? Do you want to walk to work or are you okay with a longer commute? Do you need to be close to good schools? Work place? Shopping?

Start looking.
Go to open houses. Visit mls.ca. Check the classifieds. Drive around neighbourhoods you like looking for-For Sale signs. Talk to your real estate agent about your needs and start looking at properties.

Choose a team that will guide you through your first purchase.
Put together the right group of experts to help you buy. Start with a mortgage specialist, then look for a reputable real estate agent, a lawyer, a home inspector and an insurance broker. I will be happy to recommend people you can depend on.

Make an offer.
You’ve found your dream home–it’s time to make an offer. Your real estate agent will help you prepare an offer, and will present it to the seller, who will either accept it or make a counter offer (which asks for a higher price or different terms). You can accept or reject the counter offer. If everyone agrees, the home is yours. If not, you can make another offer, or you may have to keep looking.

Get a mortgage.
Once you have a Purchase and Sale agreement signed, you need to obtain financing.  Speak to your mortgage specialist about mortgage options available to you. Decide whether you want fixed or variable rate, both have its advantages and disadvantages.

• How much pre-payment are you thinking of making?
• Would you prefer to pay off your mortgage sooner and save money on interest paid to the bank?
• Or would you rather have lower monthly payments and longer amortization?

Customize your mortgage to suit your situation best. What payment frequency suits better your income flow? Your mortgage broker can guide you through your options and help to save the most money in the long term.

Sign legal documents and receive you keys!

Before you start planning the renovation of your house it is good to know what renovations can add the value to your house and what renovations won’t affect it. There are a few home renovations that can provide good return on the money spent.

Renovated Kitchen
If you ask any real estate expert what the best upgrade that provides the greatest return is, the answer will always be the kitchen. Whether it is refreshed cabinet fronts and new hardware or full kitchen renovation with all new appliances and flooring, the buyers are going to love it.

Bathroom Upgrade
Bathroom renovation is second favorite in increasing your home value. The studies show that sellers are getting return of 75 to 100% on each dollar spent for bathroom renovation. Choose showerheads, faucets, sink and counter top and benefit from return on your investment.

Fresh Painting
Buyers looking to purchase their dream home find it quit difficult to picture themselves in poorly maintained houses. Paint that’s old, faded, cracked or peeled can give people negative feelings about a house. Freshly painted interior as well as exterior can do wonders when it comes to appealing to potential home buyers.  Although not any color choice can look appealing to new buyers. Give a preference to light and neutral colors when you painting your house.

Finished basement
Finishing a basement in your house can give you a double bonus. Not only will a finished basement provide a lot more living space, with room for an entertainment area, a playroom for the kids or a home office, but a well-finished basement will add value to your house when its time to sell. However, you shouldn’t expect to get back every dollar you spend.

Energy efficiency
Energy efficiency is one of the real estate factors that proved to positively affect home resale prices. More and more Canadians want to control and reduce their monthly energy bills. Upgraded heating and air systems can provide immediate savings on your energy bill. Upgraded HVAC looks very favourable in eyes of potential home buyers, what results in increased selling price and faster sale.

If you’re considering making home renovation, but are unsure about how to pay for it, talk to a mortgage specialist. There are many options to finance your home renovations that will allow you to benefit from an improved home value in the future. An experienced mortgage specialist can find the best solution to your unique financial situation, so you can relax and ensure you are in good hands and everything will be taken care of.

When we go to auto dealership to buy a car, we all know the cheapest doesn’t mean the best. We look at different features of the car, comparing design, safety, and automakers. The perfect fit to our needs is our main priority. The price comes second. But when it comes to mortgage, consumers seem to be concerning only about the price (the interest rate). But is the mortgage rate everything?

No, mortgage rate is just one of the factors that should be considered. Similar to car shopping, consumers should carefully look into all product features that come with a low interest rate. But consumers argue that mortgages are all the same, this is not the case. There are over 20,000 different mortgage products available today on the market. Each one comes with completely different features and different conditions. Therefore, it is extremely important for consumers to understand, what they are choosing.

Summarizing main differences, here is what you should be looking for:

1. Amount of Penalty: Look carefully in the commitment the lender offers you, what is your penalty going to be if you break your mortgage before the term is over. Even though, you can be tempted to sign for the mortgage with extremely low rate but very high penalties, justifying it as if you weren’t going to sell your house within next 3, 5 or 10 years. Remember, life is unpredictable sometimes, and you do not want to put yourself in a blind alley situation.

If one of the penalty options is Interest Rate Differential (IRD), ask your lender how they calculate it, ask what their current posted rate is.  Different lenders have different ways of calculating it. Posted rates can vary significantly as well. Make sure you understand all the differences.

2. Pre-payment Option: Pre-payment option is how much more you are allowed to pay back other than scheduled periodic payments.  Some lenders allow higher pre-payment options than the others. It may seem not important to you at this moment. But in the future you may get a promotion and be looking to pay off your mortgage sooner in order to save money on the interest payments.

3. Agreement terms: Look for other agreement conditions. Is there any financial “trip lines” that may work unfavorably for you in the future. Is there terms that you do not understand, or terms that concern you? Seek for advice if you don’t understand the conditions.

When you find a deeply discounted mortgage rate, talk to a mortgage specialist. They can help you find the right combination of a low rate and the options you need to purchase the home and assist you in understanding all the terms of your contract, so there won’t surprises for you in the future.

As you drive around the city, you see signs with mortgage rates that seem too good to be true. Those are usually variable rates. They are usually half a percent lower than fixed ones. What are the differences between those two? And what would be right for you?

Fixed-rate mortgage guarantees that your payments are fixed for the term of the mortgage, which offers you stability and peace in mind. If you are a type of person who can’t sleep at night, concerning if tomorrow the Prime Rate will change, than fixed rate is the solution for you. You can plan your budget with confidence for next three, five, ten years. Fixed rate would be a great option for young families who just had kids and cannot afford having sudden surprises in near future.

Also, due to mortgage rules changes, locking in for five years or longer allow you to borrow more. Why? If variable rate doubles tomorrow, you have to be able to afford higher payments. The lenders, when they calculate how much you can qualify for, always prefer to leave a room for such changes. Therefore, you are being approved for lesser mortgage amount than if you went fixed root.

Variable rate mortgage means your mortgage rate will change in according with your lender’s Prime lending rate, which in turn tracks the Bank of Canada’s benchmark rate, and will typically be quoted as Prime minus a specified percentage. Regardless to what some experts will tell you, it is impossible to predict how your rate will vary in the upcoming years. Therefore, variable rate is a good option for people with high risk tolerance and people who can afford higher monthly payments if interest rate changes.

If the uncertainty of a variable rate is going to be anxiety inducing, you are not alone. Many Canadians prefer the certainty of a fixed-rate mortgage. They know exactly how much they will pay over the term of their mortgage, and they can plan accordingly with no financial surprises.  However, a variable rate mortgage in a stable market where the Prime rate doesn’t change can save you money. Your best option is to have a mortgage broker help you decide which financing best meets your needs and then shop over 50 lenders to get the best solution for your unique situation.