Buying A Home In The GTA And Finances
By: Alfred Martinelli

Buying A Home In The GTA And Finances

Tags: GTA Homes, GTA real estate, GTA homebuyers, mortgage, finances

Dealing with finances when buying a home can be confusing for the average GTA homebuyer, so it is highly recommended to explore all the steps you can take to keep your finances in check and make it easier for yourself when you decide to take out a mortgage. Here are a few tips that can help you start off your home buying process on the right foot. 
 
CHECK YOUR CREDIT HISTORY 
The mortgage process starts with going to a lender’s office, but before you do so, make sure to check your credit report on your own. In that way, you will be able to review your credit history, evaluate your finances and check if you need to improve your credit rating before applying for a mortgage. 
 
Also, credit reports sometimes contain mistakes that don’t benefit you. If you notice any inconsistencies, you can report the errors and have them corrected before the lender gets a chance to see the incorrect version. 
 
 MAKE SURE TO GET MORTGAGE PREAPPROVED 
A mortgage preapproval (read more about it here) makes the home buying process much smoother and easier for every homebuyer, given that it provides a basis for the price range you can afford. With a preapproval, you will not lose valuable time and energy on homes that may be out of your reach. It also gives you an advantage over homebuyers who shop without a preapproval, given that GTA sellers, in general, favour preapproved buyers over the ones without one. 
 
A preapproval allows you also to put down a (conditional) offer directly, while someone without a preapproval has to wait for their preapproval to go through.  
 
CHOOSE THE AMORTIZATION PERIOD THAT SUITS YOUR NEEDS
Amortization periods differ for a reason, and longer amortization periods may incur more interest over the years, but going for the shortest you can afford is sometimes not the best idea- especially if it is going to affect your lifestyle tremendously. You should be able to live comfortably after making your monthly mortgage payment, so make sure to figure out how much money you need to still be able to enjoy the little perks of life despite the mortgage costs. 
 
 UNDERSTAND HOW FIXED AND VARIABLE RATES DIFFER 
Fixed rates are usually what most GTA and Canadian homebuyers go for since they offer more security over the long mortgage life. Mortgage payments with fixed rates remain the same regardless of the volatility in the market. A lot fewer homebuyers will opt for the slightly more affordable but riskier variable rates since they are subject to the changing market conditions. But, many homebuyers believe that the variable rates increase monthly mortgage payments if/when the interest rate rises, while the truth is that they only prolong the amortization period. Your payments stay the same with the variable rate, with the only difference that more goes towards interest and less to the principal amount, which extends the mortgage life. 

 DON'T NEGLECT CLOSING COSTS
Generally, closing costs comprise around 1.5% of the purchase price, which is not exactly a small amount of money, so make sure you are aware of all the fees (mortgage processing fees, legal fees, taxes, etc.) in advance and try to account for those costs in advance to avoid unpleasant surprises. 
 
Buying a home is a unique experience for every homebuyer, whether they are a first-time homebuyer, a mover upper or downsizer. Transitioning to a new home is always exciting, and to do it right, homebuyers need to consider multiple factors. The best way to be on the safe side is to work with a real estate agent. I always strive to help my clients make an informed decision and find a home that meets all their needs. Click here to find out more about what you can expect from working with me or contact me
 

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