Mortgage Options For First Time Home Buyers


Buying your dream home can turn into a stressful and overwhelming experience for first time buyers. There are just too many things that you have to take into consideration all at the same time. Foremost of your concern is your readiness to make a major investment and your capability to sustain the financial burden over a longer period of time.

One of the first things that you must do is to assess your financial position. You can do this by considering your personal net worth, your total debt and your monthly expenses. Your net worth is the basic information that you will need when you apply for a mortgage. It is also essential to take into account your current credit portfolio as well as your expenses in order to determine how much you can afford to pay for your dream home on a monthly basis.

* Fixed-Rate Home Mortgage

This is the type of home mortgage plans that bear interest rates that will remain unchanged for the entire term of the home mortgage.

* Variable Rate Home Mortgage

This is also known as adjustable rate mortgage. The interest rate of this type of home mortgage follows the movements and changes of prime rates by ICICI Bank Canada.

* Conventional Home Mortgage

This type of mortgage can be equivalent to but cannot exceed 80% of the value of purchased real estate property.

* High-Ratio Home Mortgage

This type of mortgage will only require a minimal down payment which is equivalent to at least 5% of the appraised value of the real estate property. This type of mortgage must be insured with the Canada Mortgage and Housing Corporation.

* No-Down Payment Home Mortgage

First-time home buyers can now have the opportunity of buying a home without any down payment. The CMHC as well as other lending companies are now offering this no-money down option for first-time homeowners. These mortgage plans are offered to home buyers that meet the minimum Beacon score of 600. Home buyers who avail of these privileges shall only be required to raise an amount equivalent to 1.5% of the price of the real estate property to cover the closing cost.

Article Source: