There are many social and cultural factors that influence homebuying trends, but perhaps none more so than the period of time we were born. Connected by shared values, attitudes and behaviours, generational groups tend to make decisions based on their place in the life cycle. For example, Gen Xers are diligently paying down their mortgage, while Zoomers are saving for a down payment. Baby Boomers are retiring and downsizing, and the post-war generation is considering reverse-mortgages or selling their homes and renting. That leaves Millennials, who, having come of age during a global recession, have often postponed the notion of buying a home.
Shaped by one of the most significant periods in Canadian financial history, and challenged with exorbitant student loans, high costs of living and a lack of savings, the largest generation in history has been faced with a significant and widening affordability gap between home values and income levels. Still, it would appear that the tides are turning as Millennials are now experiencing career growth and rising incomes, which is helping reduce personal debt and inciting a readiness and wiliness to enter the world of real estate.
If you’re a Millennial ready to buy, you’ve likely been doing some research to familiarize yourself with the process. But, before you get too far ahead, you’ll want to consider the benefits of working with a mortgage broker – it may prove to be one of the best decisions you make.
A professional mortgage broker will provide you with accurate information and trustworthy guidance. Together, you’ll create a detailed needs analysis and find the perfect property suited to you. Whether you’re a first-time homebuyer, searching for an investment opportunity or in need of help understanding renovation financing, a mortgage broker’s expertise is invaluable. What’s more, their services often won’t cost you a thing given that they’re paid by the lender who funds the mortgage.
First purchase
Securing a mortgage, especially your first, is a complex undertaking, but proper preparation and professional help can alleviate both worry and stress. Mortgage brokers play a key role for first-time homebuyers as well as non-traditional buyers, such as self-employed or low-income individuals. They have access to multiple lenders’ products providing you with more choice, and they’ll take care of the cumbersome groundwork and paperwork.
To get started, a broker will help you:
- Establish a budget, set a goal and recommend ways to pay down debt and increase savings
- Set realistic expectations and help you understand what you can afford before house hunting by getting you preapproved or prequalified for a mortgage
- Conduct a comparison of your monthly debt payments versus monthly income
- Understand costs beyond down payment and monthly mortgage payments, including one-time closing costs, and ongoing living expenses such as property taxes, insurance, maintenance and utilities
- Evaluate your credit score and provide recommendations for building credit and improving your rating, if necessary
Once you feel ready to move forward, you’ll need to gain a thorough understanding of the next steps. This is where the advice and assistance of a mortgage broker can be indispensable. The following are just some of the essential elements:
Mortgage preapproval
- How does it work? When and why should you get it?
Down payment requirements
- How much is needed? Are there restrictions? Will you have enough?
Different lender types
- Are you familiar with monolines, MICs, private or alternative lenders?
Mortgage loan insurance
- What is it? Will you need it? Hint: it’s a mandatory requirement if your down payment is less than 20% of the price of your home.
Government-implemented mortgage lending criteria
- What is the mandatory stress test? Are you likely to pass?
Variable rates and fixed rates
- What are the benefits of each? Which option is better for you?
Government initiatives for first-timers
- What are they? Do you qualify? How do you apply?
Different types of properties
- What are their defining features? Which type is best for you? Condo, townhouse, single family?
Housing market intel
- Is it a buyer’s or seller’s market? What are the prices in your desired neighbourhood?
Title insurance
- What protection does it offer? How much does it cost?
Mortgage Fraud
- Could you lose your house? How can you avoid becoming a victim?
If you’re still on the fence about the benefits of working with a mortgage broker, just know that they’ll have the answers to all of these questions and many more! Answers are a call or email away!