5 Mortgage Terms Edmonton Mortgage Borrowers Must Know

Is this your first time purchasing a home? It might be difficult to find a house that fits both your needs and your budget. You might make the proper decision if you don't get expert advice. Before making an investment, you should think about your financial security and comprehend the benefits of owning your own property. 

There are other additional expenditures associated with owning a home, such as taxes, legal fees, repayments, and more. Here are some key mortgage terms you must be aware of in order to alleviate your concerns about purchasing a home:

1. Guidelines for Down Payments 

A down payment is the sum of money that a buyer of a home must pay up advance for the property they wish to purchase. A down payment of at least 5% of the buying price of a home under $500,000 and 10% of the purchase price of a home over $500,000 is mandated by law. 

You will have to pay mortgage default insurance, which often varies from 2% to 4%, if your down payment is between 5% and 19.99%.

2. Requirements for Credit Scores 

The second most crucial factor a mortgage broker looks at when approving you for a mortgage is your credit score. A high credit score makes loan acceptance simple, while a low credit score increases the likelihood of approval and raises interest rates. 

While banks require a minimum credit score of 680 for acceptance, first-time homebuyer mortgage brokers in Edmonton can assist you be approved for a home loan with a score between 300 and 900. 

3. Obtain a Mortgage Preapproval 

The third most crucial factor to think about is getting pre-approved for a mortgage. Get pre-approved by an Edmonton mortgage broker before beginning your search for the ideal house. This will enable you to present a seller with a sincere offer.  

Your income, credit score, and outstanding obligations will all be considered by a broker or bank when determining the amount and interest rate you will be pre-approved for.

4. Recognize Your Financial Capability

You can determine the maximum purchase price by adding the amount of your pre-approval to your down payment. It is not a wise decision to make an offer with your entire pre-approved amount and down payment. 

It is best to approach all financial decisions with extreme caution and patience because home buying transactions come with a lot of additional expenses.

5. Check Grants for First-Time Homebuyers 

The Canadian government offers first-time homebuyers numerous grants and incentives to lower the cost of home purchase. Certain programs are exclusive to the province in which you intend to purchase real estate. A first-time home buyer can apply for the following programs to save thousands of dollars:

• Home Buyers' Plan

• GST/HST New Housing Rebate

• Home Buyer's Tax Credit (HBTC)

• First-time Home Buyer Incentive

• Provincial Programs 

Conclusion

Make sure you understand every step of the mortgage application process if you want to apply for a mortgage and purchase a home. Rely on Sandhu & Sran Mortgages to make it easy for you to be approved for any kind of loan. We take pride in having assisted hundreds of first-time homebuyers just like you in obtaining approval for a residential mortgage in Canada.