By Alan G. Whitnack, RPA
President of JOAL Consulting Inc.
Buying a home can be one of the most stressful and confusing times and yet is probably the largest single decision that most of us will ever make. Careful planning and knowing what to expect can make this journey much more pleasant and save you lots of time and money.
Know your own capacity for making payments
Banks will generally allow in the range of 30 per cent of your gross income for mortgage payment (PIT - principle, interest, taxes) and an overall debt service ratio of 40 per cent. These numbers are a good guideline but you should also consider your life style. For some people there aren't enough funds left to pay this amount. Only you can truthfully assess what you can and are willing to afford.
Have a mortgage amount pre-approved
Most mortgage companies have a process that will pre-approve you for a maximum amount subject to certain restrictions. These restrictions generally are a satisfactory appraisal of the property being purchased, the amount of the down payment you may be required to pay, confirmation of employment stability, satisfactory credit reports, etc. By having a mortgage amount pre-approved you have now established how much you have available and a price range of house you are looking for. There's no point looking for a castle if you can only afford a chateau; it will only leave you unsatisfied.
Know what you want in a mortgage and what's available
By getting literature from several mortgage companies you can educate yourself on what options are available, what special deals may be offered, and overall reviews of what mortgages are about.
Consider the following options when making the decision
(Alan G. Whitnack, RPA is President of JOAL Consulting Inc. He can be reached by calling (403) 948-0082, by fax at (403) 948-9503 or by e-mail at [email protected])