FirstHome

1 FirstHome A step-by-step guide for first-time homebuyers As Canada's largest private residential mortgage insurer, Genworth Canada has helped shape our country's strong and dynamic housing market. By providing mortgage default insurance to residential mortgage lenders, we make homeownership A better way to more accessible to first-time homebuyers like yourself. As a company, we are committed homeownership to increasing financial literacy, while helping Canadians achieve the dream of homeownership sooner and responsibly. We want to help first-time homebuyers purchase homes they can comfortably afford today, and over the lifetime of their mortgage. That's what sustainability is about, and it's simply a better way to homeownership. Genworth Canada resources such as this guide are designed to help homebuyers make financially sound choices. Our website provides advice on every step of the home-buying process, from early-stage goal-setting and financial planning, to house hunting and financing, right up to closing day, moving in and feathering your nest.

2 Also features interactive tools to simplify the budgeting process for first-timers. We invite you to check out the site, join the conversation on social media, or contact us with any questions. Are you eager to begin your journey to homeownership? Turn the page, and let's get started! C O N T E N T S. Dreaming of homeownership Determining if homeownership is right for you, and whether it's better to rent or buy Rent vs Buy.. 2. Are you ready for homeownership?.. 3. Financing All about affordability, beginner budgeting, and Mortgages 101.. 4. Budgeting.. 5. Mortgages .. 6. House hunting Finding the right pros, and locating the perfect home Team 8. Start 9. House hunting .. 10. The buying process Everything you need to know about the mortgage approval process More on .. 12. Credit score 13. Closing & moving in Navigating the home stretch to home sweet # FirstHome Purge and save.. 14. Closing 16. Moving day countdown.

3 17. Home sweet # .. 18. Help in difficult 19. Kick off those # FirstHome goals.. 20. Glossary Mortgage terms every first-timer should 22. # FirstHome A step-by-step guide for first-time homebuyers 1. Dreaming of homeownership Rent vs How to tell if homeownership Buy is right for you To buy or not to buy. It's a RENTING PROS HOMEOWNERSHIP PROS. question many people struggle with. And, it's important to know It costs less It's a sound investment if you truly want to own a home When budgeting for If you choose a home you can before you're firmly entrenched homeownership, you'll have to afford, the payoff can be great. in the home-buying process. factor in more than your monthly When you make a mortgage Wondering if homeownership mortgage payments. Consider payment each month, you build is right for you? Here are some condo maintenance fees and equity in a place of your own things to consider about renting repair expenses, too.

4 Tenants (unlike a rent payment). Equity ". versus buying. don't have to sweat those costs: they're the owner's responsibility. is the difference between the value of the home and your outstanding mortgage. Assuming your money is that your home continues to more accessible increase in value, then the longer If you choose a home you Homeowners have the you stay in your home (and the can afford, the payoff can more payments you make), the satisfaction of knowing their be great. When you make property is likely to increase more equity you'll have. a mortgage payment each in value over time, but for the It s a first step month, you build equity in short-term, their major asset is on lockdown. If you need to sell your As you build up equity in your a place of your own. home during the first few years of current home and comfort level homeownership, you could lose in being a homeowner, it may money given the various costs be easier to move up to another involved, such as REALTOR fees home in the future.

5 And possible fees for breaking a mortgage. If ready access to your It provides satisfaction nest egg is important, it's better and security to keep renting. As a homeowner, you can decorate and renovate your home any way you like. You don't have that luxury as a renter. Owning a home also gives you the pride of ownership. your family may also feel stronger ties to your community. Ultimately, the decision to rent or buy is a personal one. Do what's right for you, at the time that's right for you. 2. Dreaming of homeownership Are you ready for Take this simple quiz to find out if you're ready to start homeownership? your # FirstHome journey Read each question and Q. Have you saved enough for Q. Do you have a healthy credit answer it honestly. Then read at least a 5% down payment score? the tip below it to get you on towards your first home? Yes No track for homeownership. Yes No TIP: Poor credit makes it harder to Q.

6 Are you familiar with the real TIP: Conventional mortgages get mortgage approval. Always estate market in your preferred require a down payment of meet your monthly minimum neighbourhood? 20% of the purchase price. With payments on time, but don't Yes No Genworth Canada mortgage stop there. Be aggressive about insurance products, you can buy clearing your credit card debt, or TIP: Start perusing with as little as 5% down. at least bringing each credit card well before your house hunt. You balance to under 35% of its credit don't want any surprises when limit. If you're recovering from Q. Do you have a regular income bankruptcy, apply for a secured meeting a real estate agent source, whether you are salaried card to help re-establish a pattern and finding out homes in your or self-employed? of responsible borrowing. preferred community are way out of your price range. Yes No TIP: Genworth Canada's Business Q.

7 Have you got a handle on Q. Do you know how much For Self Program is geared at your consumer debt? you can afford to spend self-employed borrowers. If Yes No on your first home? you've got a two year history of managing your credit and TIP: A high debt load could Yes No hinder your ability to meet finances responsibly, you can TIP: Determine how much qualify without traditional income your financial obligations. your you can afford. Estimate your verification. monthly debt repayments mortgage using Genworth (housing, car, credit cards, lines Canada's What Can I Afford? of credit, etc.) should not exceed Calculator, which factors your Q. Do you have a credit history? 40% of your household's gross income, debt and other expenses monthly income. If you're carrying Yes No into mortgage and monthly more than that, be aggressive payment amounts. TIP: Lenders look at credit history about paying it down so you're to determine if someone is a set up for success when you start reliable borrower.

8 If you don't your homeownership journey. have a credit card, establish good credit by acquiring a credit card. Use it for small purchases and pay off the full balance each month. # FirstHome A step-by-step guide for first-time homebuyers 3. Financing What first-time homeowners Affordability need to know about responsible homeownership Affordability. It's a word that gets Total debt service (TDS) ratio Set a budget tossed around a lot when people Homeownership costs (as you can afford talk about homeownership, outlined above) plus debt but what does it really mean? payments (credit cards, lines of Between the numbers-driven Affordability is a term that's both credit, student loans, car loans, debt service ratios used by banks, quantifiable (lending institutions etc.), relative to household trust companies and mortgage use a formula) and a little bit income. insurers and the discretionary subjective (lifestyle considerations lifestyle expenses that also affect To qualify for mortgage insurance your bottom line, you ll find what factor in, too).

9 Here's what you (mandatory for any home affordability means for you. need to know about affordability, purchase with a down payment and what it means for you. of less than 20% of the cost of the home), the highest allowable NEXT STEPS. GDS ratio is 39% and the highest allowable TDS ratio is 44%. Speak with a mortgage professional or financial planner Lifestyle expenses to determine how much Key household costs should also mortgage you can comfortably be considered. While they don't carry. This will help you assess affect debt service ratios, these your financial fitness and also expenditures should be included help you set realistic goals on in your own budget calculations, an achievable timeline. as they add up to a large chunk of income: Groceries CALCULATOR TIP. Child care How much house Mobile phone Debt service ratios can you afford? Internet For lending institutions and Genworth Canada's What Can mortgage insurers, affordability Clothing I Afford?

10 Calculator helps you is assessed by your gross debt estimate the mortgage amount Entertainment you may qualify for from your service ratio and total debt service ratio. Memberships bank or another lender. Gross debt service (GDS) ratio Kids' extracurricular activities Homeownership costs (mortgage Household expenses change payments, property taxes, heating over time. Are there any areas and, if applicable, 50% of condo where you could cut back? Or will fees), relative to household some expenses disappear, such income. as when a car is paid off, or when a child leaves daycare for full-time school? 4 Financing Budgeting Saving for a down payment your home may well be the Cut your cable or satellite TV. Downsize to a smaller rental. biggest purchase you'll ever make. Most Canadians take on Negotiate discounts with Move in with your parents. a mortgage so they can stretch your insurance providers.