First-Time Home Buyer’s Guide
Buying your first house may appear to be a challenging endeavour. Because of this, our guide will help you comprehend each step of the process, beginning with creating a budget and ending with signing the paperwork for your first mortgage.
BENEFITS OF OWNING A HOME
The decision to own a home comes with a greater number of obligations, but it also presents opportunities for your family and your money.
- There is a chance that the value of your home will increase.
- You can accumulate equity in your house, which you may then put toward paying off debts for home improvements, educational costs, and other costs.
- Because it is your own property, you are free to make any changes to it that are commensurate with the way you choose to live.
- If you have a mortgage and pay property taxes, you may be able to deduct those payments from your taxable income.
To get started you need to:
- Shop for a home in your price range.
- Show sellers and agents that you’re a serious buyer.
- Track your application’s progress through closing
FIND A HOME
Find a Home in Your Budget
You can find a property that is within your price range and meets your requirements by using a Home Insight Planner:
- Create different affordability scenarios for a home purchase depending on the information of your current budget.
- Obtain an accurate picture of your spending patterns and make necessary adjustments to your outgoing money in order to locate a mortgage that is affordable for you.
- You should conduct a search for properties that fall within your price range and then save the ones that you like as part of your individualized summary of the costs of owning a home.
- View current mortgage rates and obtain information on the various mortgage products that can help make buying a home a reality.
BENEFITS & COSTS OF HOME OWNERSHIP
Let’s break down the costs and benefits of owning a home.
Costs of Home Ownership
- Monthly mortgage payment
- Your down payment – as low as 3% of the sale price
- Closing costs – typically 3% to 5% of the loan
- Taxes & insurance
- Repairs & maintenance
- Homeowner association dues or assessments
While these costs will vary from home to home, you’ll want to know what they are before making a final purchase offer.
Benefits of Home Ownership
- A home offers a stable place to start or grow a family, stronger ties to a community, along with greater privacy
- Your home is your own, and with that comes the ability to make changes as desired to reflect your personal lifestyle
- You can increase your net worth by building equity through:
1) monthly principal reduction payments
2) your home potentially increasing in value over time
You may be able to deduct your interest and property tax (consult a tax advisor to further discuss)
HOME BUYING BASICS
Explore the fundamentals of buying a home.
Learn about the basics of home buying, and the different mortgage types, and calculate rates
- Calculate affordability.
- Familiarize yourself with terms and processes.
- Understand the basics of home buying.
HOW MUCH HOME CAN YOU AFFORD?
Before you purchase your first home, there are important things to do and know.
Know how much you can afford
Depending on how much you have saved for a down payment, your monthly mortgage payment shouldn’t be more than 28% of your salary, and your overall debt shouldn’t be more than 36% of your income. However, the debt ratios might be flexible depending on the type of mortgage you pick.
You can calculate your monthly housing budget by taking your total income, then subtracting:
- Fixed expenses (car payment)
- Variable expenses (credit cards or utilities)
- Monthly savings
The result is the money you could have available to budget for housing.
Maximize Your Credit Score
Your ability to obtain a mortgage with a more favourable interest rate is highly related to the quality of your credit score. An increase in your credit score, even if it’s only a little bit, can have an effect on your monthly payment and might save you hundreds or even thousands of dollars over the life of your loan.
Experience an easier way to buy a home with a loan Save for Extra Costs
Last but not least, you should set aside some money each month to cover additional expenses that aren’t covered by your mortgage payment. Your down payment and any other charges associated with the closing are included here.
A private mortgage insurance policy, sometimes known as PMI, is a specialised insurance policy that enables borrowers to make down payments that are less than 20% of the total loan amount. It safeguards the interests of the lender in the event that the payments are not made. If you have a mortgage that includes PMI, PNC will provide you the choice to pay the PMI premium either as a one-time, lump-sum payment at the time of closing or as a recurring portion of your monthly mortgage payment.
- A down payment of 20% or more helps you avoid PMI (Private Mortgage Insurance) and lowers your monthly payment.
- Closing costs are typically 3% – 5% of the total home cost.
Find the home that fits you and your budget. Determine a mortgage payment that you can afford, based on your actual budget and lifestyle. Or start shopping for homes with real‐time rates and loan products.