If you are a recent college graduate, you might think that buying a home is still many years off, but that's not necessarily the case. If you dream of homeownership, even as a young adult, there may be some hurdles you'll need to jump over to meet your goal, but it can be done. Before you begin searching for a home; however, it is essential to educate yourself on the process. After all, education is the key to success, and the more you know, the more easily you'll move through the process.
1. Understand the Market
Do your research on the market and your mortgage options before you begin searching. A well-informed borrower is a good borrower in a broker's eyes. As a young graduate, you'll have some hurdles to jump through to qualify for a mortgage. A limited credit history and a limited work history are hurdles to homeownership, but there are ways to get creative with this history. Research government programs to better understand what you qualify for, and how to apply for the programs.
2. Educate Yourself About First-time Homebuyer Programs
First-time homebuyers also have some grant options. Many provinces offer down payment assistance to stimulate flailing markets. In short, a grant is a government program that offers first-time buyers money towards their down payment. In some provinces, these grants have no fees attached to them and offer forgiveness if the homebuyer keeps their home and mortgage current for five or more years. Each province has different grant programs and requirements for grants, so it is essential to educate yourself on your option in the province you intend to buy.
3. Meet with a Broker
Meet with a mortgage broker before you set your heart on owning a home soon. Many people, whether young families or single, recent graduates, jump right in and begin looking at houses they think they can afford. It is always best to meet with an expert to get a better idea of what you can afford, and whether your current finances and history will allow you to borrow money from a lender. A good mortgage broker can also give you some options if you are not considered an ideal buyer at the moment.
4. Ask the Tough Questions
Don't be afraid to ask questions. Asking questions throughout the process will ensure you understand everything that goes into homeownership and the repayment process. Don't be scared to ask a mortgage lender to explain something to you more than once. After all, you'll be responsible for the repayment of the mortgage, so you'll want to ensure you fully understand the terms before jumping in. If you feel comfortable bringing another person with you during your meetings, please do so. A current homeowner can be invaluable as a resource.
5. Get Organized
Prepare your documentation. Mortgage companies will want to see a lot of tax and income documentation to figure out whether you are a quality borrower. Your credit history is not enough information, so it is best to be as prepared as possible. T-4s for the last two years, two years' worth of tax returns and banking statements for the last two months are required documentation in many provinces. Mortgage lenders will look at your T-4s to gain an understanding of your income and income trajectory and will look at bank statements to get an understanding of how you manage your money on a monthly basis.
While these tips are a great jumping-off point for recent graduates interesting in buying a home, there is plenty more that goes into first-time homeownership. Ask questions before you make a final decision and educate yourself on the process. Owning a home is a big step and one that you shouldn't take lightly, whether you are a recent college graduate or a family of four.
For more information contact me Sandy Sussman your Barrie, ON Mortgage Broker today!