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A checklist for buying your first home!

Author: Nicki Pike - Red Deer & Central Alberta Mortgage Specialist

TMG The Mortgage Group


How do you know when you’re ready to buy your first home?

Buying your first home is an exciting time in your life. It may be an investment, a home for your family, or your first bachelor/bachelorette pad. Either way, it’s something to celebrate! But how do you know if now is the right time? Here’s a quick checklist:


   You get excited about visits to bed bath and beyond.

   You want to begin your own DIY projects and frequently visit home depot.

   You want some space to call your own.

   You want to begin investing your money instead of spending it on rent

   You have a stable job with an income that exceeds your expenses every month.

   Your savings account is growing and you’re looking to invest in something.

   You’re ready to dive into adulting full speed!


Sound Like You?

If a few of those sound just like you, then it may be your time to find a place called home! But before you do, there are a few things you need to consider.

Selecting the right property is tough. You want the perfect kitchen, the right lighting, an awesome master bedroom, beautiful flooring and more. And although it’s important to get those just right, it’s equally important to get your mortgage just right. The term, payment frequency, down payment, the rate…. Not as sexy right? But just as important!

Here are the key things to consider when shopping for your dream mortgage.


The Term

This is the time frame you are “locked” into your mortgage for. In Canada, the average term is 5 years. Shorter and longer terms are available. Generally, the shorter the term, the lower the rate. At the end of each term, you will have to renew your mortgage based on the current market. Sometimes longer terms mean a more predictable payment schedule and stability.


The Rate

You can go with fixed or variable rates. Variable rates are quite often lower but involve more risk and uncertainty for you as the home owner as they go up and down as rates go up and down. With a fixed rate, you maintain a steady rate for the full term of your mortgage. Therefore if mortgage rates rise, you are protected, but if they drop, you may be paying more than rates at the current time.


The Down Payment

The minimum down payment required is 5% down. You can choose to put more than 5% down, in fact you can put down as much money as you like, but we do have to confirm where the money is coming from. Money for down payment can come from savings, an RSP if you are a first time home buyer, TFSA/other investments, gift from an immediate family member, or even borrowed (OAC).


Payment Frequency 

This determines how often you make payments on your mortgage. How much you pay, and how often you pay are determined by your payment frequency. There are a variety of options available: Monthly, semi-monthly, bi-weekly, accelerated bi-weekly, weekly, or accelerated weekly. The more often you make payments combined with an accelerated payment, the faster you will pay down your mortgage, and the more you save long term!

Default Mortgage Insurance

When you purchase a house with less than 20% in down payment, something called default mortgage insurance is required.   This default mortgage insurance provides the bank insurance in case you are unable to make your mortgage payments.   There is a cost to you, the homebuyer, for this insurance.  It is a percentage that is charged on the amount of your mortgage, not your purchase price.  The percentage amount is based on how much you put down, so for example, if you put 5% down, your insurance premium would be 4% of the mortgage amount.   If you put 10% down, your insurance premium would be 3.1%.  The more money you put down, the lower the cost of the default insurance.   And if you have 20% down, default mortgage insurance is rarely needed so you avoid this cost.


Poof! You are now educated on the basics of mortgages!

So what now? Here are some other considerations. Lenders typically require that your mortgage payments, property taxes, and utilities be less than roughly 39% or your gross income (The amount before taxes).

Lenders also care about your other debts and obligations. More debt means less chance of approval. Your total monthly debt should be less than roughly 42-44% of your gross income.

Closing costs are another consideration. Typically, when you purchase a home you also incur additional expenses such as moving costs, home inspection costs, property tax adjustments, and lawyer fees. You will want to save up about 1-1.5% of the purchase price for these fees.

As for broker fees, don’t worry! Typically, the cost of my services are covered by the lender (on approved credit). They pay brokers for bringing your business to them. Which is great because working with a broker typically saves you money as well. Since I have access to a variety of lenders, you have more options and we are able to shop around for the best rate, term, frequency and overall product that will help you meet your goals.


Self Employment

If you are self-employed, it can be tricky to know what you qualify for since your income may not be the same from month to month. No worries! I have tons of experience with small business owners and may be able to help you qualify as well!

Take the first step & get in touch!

So you are ready to learn more?! Great! One of the best things you can do is pre-qualify for a mortgage. To get the process started you can give me a call (403) 391-2053, you can send me an email, or you can download the MyMortgageConnect app by TMG. This app allows you to shop for properties, calculate your mortgage affordability, open a conversation with me, and apply online all in one place. This keeps your mortgage application smooth and fast. Download it here: https://apple.co/2Cfr60Z or apply online at www.mortgagewithnicki.com


Customer Testimonials


Nicki always goes above and beyond. She is 100% committed to getting results. I would recommend her to anyone. She builds relationships, it’s not just business. She is so patient and answers all my questions.

Betty Desjarlais

Super patient worked with me for 3 years, actually went the extra mile to sort out an issue with my equifax. Even advised me against buying a house under my financial situation at the time. When it came to the purchase she was available and answered all my questions would recommend to anyone.

Cam Sieben

We were so thankful to have Nicki helping us every step of the way as we purchased our home. She was very knowledgeable and was always efficient and kept in constant communication with us along the way. We would definitely recommend Nicki to anyone needing a mortgage!

Danielle Cook