Thinking of buying your first home in Manitoba? We recommend doing ample research before making such a massive investment. This step-by-step first time home buyer Manitoba guide will get you all covered, from starters’ hacks to essential tips, rates, and all you need to know as a first time home buyer in Manitoba.
First Time Home Buyer Manitoba: Where Should You Get Started?
The feeling of owning a home for the first time is simply out of this world, and in Manitoba, it’s a golden opportunity to make your dream come true. Yet finding a new home can be a daunting task if you don’t do your homework before browsing credible realtor sites like realtor.ca, point2homes.com, and zillow.com; I recommend following an action plan to sort things out.
First, figure out how much mortgage loan (known as “pre-approved”) you are entitled to. Check this affordability calculator or find a mortgage broker or a bank to help you. A mortgage broker or bank will review things like proof of income, assets, and debts to calculate the amount of mortgage one is approved for.
As a first time home buyer in Manitoba, it’s best to follow some steps for the fastest and safest way to buy your home, and so we have rounded up all the steps that one would need before buying their first house.
How To Buy a House in Manitoba: Step by Step
Step 1: Determine The Cost And If You Can Buy A House In Manitoba
Considering you have already decided to become a first time home buyer in Manitoba, it is critical to plan ahead of time and budget for everything from the realtor to the actual purchase price. So, by using a mortgage affordability calculator, one can quickly determine how much they can afford before completing a mortgage application.
In most cases, the DTI and available down payment play a significant role in determining how much mortgage one can afford to buy a house in Manitoba. The calculation also considers national mortgage regulations, the amortization period, mortgage insurance, and Manitoba taxes. To cover for unforeseen circumstances, it is generally recommended to have at least three months’ payment on hand and the down payment.
First Time Home Buyer Manitoba: Things You Should Consider Before Buying:
Income And Employment Status
The financial situation also must be under control, which is the first step on the readiness ladder. However, this involves considering what your current income is and whether you are employed or unemployed. Are you paid monthly or self-employed? You will be required to answer your mortgage application as it plays a vital role in your mortgage affordability.
Debt-to-income Ratio (DTI)
The debt-to-income ratio is also crucial in obtaining a mortgage loan. If you receive too much debt, the net income will be too low to save anything significant for a down payment on a house. The ideal debt-to-income ratio is under 42 percent.
If you do not have sufficient money to buy a house outright in Manitoba, taking a mortgage is the way to go. However, every mortgage requires a down payment. A down payment is an amount that your mortgage lender requires you to pay upfront for the house. While the amount of the down payment varies by lender, it should not be less than 5% of the purchase price. Furthermore, the larger your down payment, the less interest you will have to pay.
Estimate your monthly utilities. Although monthly utilities vary from person to person, it’s best to determine everything ahead. Make sure to include heating, hydro, water, Internet, phone, and cable costs in your estimation.
So, it’s crucial to research property taxes in the area because property taxes vary from home to home.
A credit score demonstrates creditworthiness and the ability to pay their mortgage on time. Importantly, if someone wants to buy a home with a mortgage, a good credit score is essential. Most borrowers require a credit score of 650 or higher to obtain a mortgage. However, people with poor credit can still hope to get mortgage loans to finance their home purchases.
Home And Contents Insurance
Talk to an insurance provider for home and contents insurance for a quote. Home and possessions are among the valuable investments. If something goes wrong, the insurance will cover the cost of repairing or replacing the belongings as per the terms and conditions applicable.
For day-to-day home maintenance, we suggest budgeting at least $5,000 per year. In addition, consider more significant expenses, such as replacing the roof, windows, or furnace.
While buying a fixer-upper, it’s necessary to consider the cost of home renovations. Consider adding the amount to the mortgage; note that it will increase the mortgage payment.
Estimated Living Expenses
Estimate the living expenses. While calculating living expenses, make sure to budget for contributions of savings and any loans or credit card payments should you pay.
Condo Fees (If You’re Interested in Purchasing a Condo)
In the case of condos, monthly condo fees vary from condo to condo. Take the costs into consideration if it applies to you.
Step 2: Reserve Your Down Payments, Upfront Costs & Fees
Buying a house is quite expensive; consider it one of the costliest purchases. So, when you are serious about buying a home and do not have a ton of cash sitting in the bank, start it all with some savings. Your down payment will be at least 5% of the property’s worth, depending on the type of mortgage you pick.
So, there are closing costs, including legal and land transfer fees. Among other things, these can range from 1.5 percent to 2% of the house purchase price. So, any small sum you come upon might need to be saved. Because, in the end, buying a property will cost a lot of money.
Step 3: Choose Your Mortgage Rate Type and Terms
After figuring out your down payment, look for a credible mortgage lender with reasonable conditions and rates for a mortgage loan as a first time home buyer Manitoba. A mortgage lender differs from a mortgage broker in how they lend money. For your information, a mortgage lender lends money directly, and a mortgage broker acts as an intermediary between mortgage lenders and consumers. Before agreeing to deal with them, carefully review their conditions and prices. Hiring an experienced mortgage lawyer to evaluate your conditions and look for any odd elements would be wise.
Talk to various lenders about their offerings to locate the ideal mortgage lender for your circumstances. When looking for a mortgage lender, ask yourself the following crucial questions:
- For how long do you expect the mortgage to last?
- Is the mortgage plan suitable for your circumstances?
- What do you prefer? Fluctuating interest rates or a fixed rate?
- How often do you want to make a repayment on the mortgage?
Tips: Get Pre-approved For a Mortgage
After selecting the perfect mortgage broker or lender, your job is to organize the papers to submit a mortgage application. Pre-approval for a mortgage assures that you may confidently bid on preferred residences. Pre-approval also means that the lender has calculated the maximum loan amount you are eligible for so that you can keep the price range in mind while browsing properties. Pre-approval requires submitting various documents, including a bank account or investment statement, proof of assets, income, financial information, and identity.
Step 4: Understanding Manitoba’s Property Market
It’s necessary to do some research on property prices to get a good deal on the house, i. The best way to understand the price range for different properties is the price per square foot.
So, how are the properties comparable?
Look for properties
- if in an identical neighborhood
- Similar age of the property structure
- having virtually similar indoor and outdoor square footage,
- and with comparable characteristics
Note that the cost per square foot in a downtown condominium is generally higher than in the suburbs.
The price of a home is also heavily influenced by its features. A home backing onto the water, for example, is something that the majority of Manitoba homes do not have, so that it will be more expensive than the others. Check for other features that influence home value, including:
- Driveway and/or garage layout.
- Outdoor amenities such as a pool or shed.
- Any extraordinary views such as a park or river view.
We recommend inspecting the house’s condition (roof, furnace, etc.) by a professional before purchasing the home.
Step 5: Start finding your perfect home
When purchasing a home, the buyer likely intends to live there for some time, so it is critical to understand what is available nearby. Unfortunately, many first-time home buyers make the mistake of purchasing a home without considering nearby schools, shopping centers, recreational facilities, and public transportation. This error can cost you financially and make you regret your purchase.
First time Home Buyer Manitoba: Determine your Neiborhood choice
Before long, the chosen neighborhood will be the community, so consider the lifestyle, prioritize what you want in a community, and explore interesting local areas. Like if someone is looking for a suitable place for both adults and kids. One can choose the Crescentwood MB; it’s situated southwest of Winnipeg city and is beautifully adorned. But if the buyer wants to select a livable place that has been flourishing, then the Exchange district would be best.
First time Home Buyer Manitoba: Choose the Preferred Type of Home
Before buying a house, it’s better if you can determine what kind of house they are looking to purchase. For example, a single-family detached home, side-by-side, or condominium?
Helpful home buying resources for Manitoba:
This link leads to some affordable houses:
To get informed of the mortgage rates, you can go through the links and choose the program preferably:
Step 6: Find a real estate agent
It’s an option to locate a qualified real estate agent. The cost of real estate agents is already built into the price of the home, so as a buyer, you don’t have to pay the realtor’s commission. The seller will indeed cover the fee of the buyer and their agent.
Some people believe they can avoid using a realtor and negotiate a lower price for a home, but this is not always true. If the buyer decides to start a real estate transaction on their own, they might spend more.
Step 7: Make a buying offer
When you find your dream house, I suggest not getting too excited (you can’t hide it either, right?). It’s time to do the most important: make a buying offer. There may be scopes of negotiation in the highly competitive Manitoba real estate market. Nonetheless, when making an offer, it is always best to stick with the price one can afford and remember not to spend the entire pre-approved mortgage amount on the purchase (since additional costs are attached). Then, once the offer has been accepted, proceed to the mortgage application.
Step 8: Prepare to move in
Request a home inspection before paying for the house; after the review, the purchase price may change depending on the findings (such as renovation and fixing). Then, contact a real estate lawyer, as a down payment and transfer of ownership may be required. The entire procedure should not take more than 30 to 60 days.
First-time Home Buyer Manitoba: Bottom line
I have written this article to make life easy for first time home buyers in Manitoba. Following the steps outlined above will simplify the process and let you develop an action plan. I hope you find your dream home in Manitoba.
First Time Home Buyer Manitoba: Tips
There are programs available to assist first-time home buyers in Manitoba who need to meet specific criteria before purchasing a home in Manitoba. Learn if you are eligible or not and which kinds of houses are eligible for the First Time Home Buyer Manitoba Program: https://www.lrcc.mb.ca/first-time-home-purchase-program
Home buyers can take advantage of the Home Buyers Plan (HBP), which allows them to use their retirement savings to buy or build a home. The First Time Home Buyer Incentive (FTBHI) provides a 5-10% down payment and the CMHC Green Home Program for a premium refund for mortgage insurance.
Having a good credit rating, DTI ratio, and a stable income can also help them afford the house of their dreams. Finally, don’t disregard any financial and administrative hindrances that may occur.
First Time Home Buyer Manitoba (terms you need to know):
A mortgage is an agreement of loan between you and a lender that gives the lender the right to repossess your property if you fail to repay the loan plus interest. Mortgage loans are used to purchase a home or borrow money against an existing home’s value.
A down payment is a percentage of the house’s purchase price that you pay upfront while closing the mortgage. Lenders frequently consider the down payment as your investment in the home.
Preapproval is as close to confirming the ability to repay the loan without a purchase contract.
The upfront cost is the initial amount needed for a purchase.
A credit limit is the maximum amount of money a lender will allow a borrower to spend on a purchase, i.e., a house purchase.
First Time Home Buyer Manitoba: Costs At a Glance:
|Down Payment||5-10% purchase price|
|Mortgage Default Insurance (if your down payment is less than 20%)||2.8% – 4% of mortgage|
|Closing Costs||1.5% – 2% of purchase price|
|Home Inspection||$275 – $500+|