Preparing For Your Down Payment

Down payment day is one of the most stressful steps in purchasing a house in Chatham-Kent for first time home buyers. It’s the moment when you take your hard earned money, and turn it into equity through the purchase of your first piece of Chatham-Kent Real Estate. Most banks and lenders require a down payment for a home mortgage, proportional to the price of the home you’re purchasing. Having a larger down payment available will give you a bargaining chip during real estate negotiations, because it shows the homeowner that you are serious about buying, and capable of sealing the deal. As a first time home buyer in Chatham, there are some things you should consider when discussing a down payment.

What Does the Bank Require?

Most banks in Chatham-Kent, and across Ontario for that matter, require a 20% down payment, or almost a deposit, on your mortgage to purchase a house. For a $200,000 home, this would equal $40,000, which is no sum of money. Anything less than this number typically will mark you as unqualified for a conventional mortgage. If you have less available, let’s say 5-10% of the purchase price, this is seen as a higher risk transaction, and you may be required to purchase insurance or meet other requirements. In the long run, paying this insurance will cost you more money. For that reason, many Chatham-Kent real estate agents and banks will recommend you work hard to save your money for a period of time, and then enter the Chatham Ontario real estate market when you have a sufficient down payment.

Save Some For a Rainy Day, Because Your Roof Might Leak

Most Chatham-Kent realtors, or experienced home buyers for that matter, will suggest you have some money set aside for a rainy day. Rainy days are especially unkind if your roof is leaking, your furnace dies, a pipe bursts, or your A/C is on the fritz. Ideally none of this will happen when you purchase your first home in Chatham, but having money left in the bank is extremely wise. Home buyers that enter a mortgage with no reserve funds are often setting themselves up for financial unrest, because like it or not, things will break in your home, whether it’s 50 years old, or 5 months old. On top of your down payment, plan to save, or keep a few thousand dollars secure for repairs and emergencies.

Not only for repairs, but this fund can save you from disaster in case of unexpected job loss, health issues, or any other dilemma. Plan ahead, and your first home buying experience in Chatham-Kent will be less stressful.

Bargain With the Support of Your Wallet

If multiple offers are put on a home in the burgeoning Chatham-Kent real estate market, both conditional on financing (which is typically the case), having a larger down payment will often secure you the deal. Home buyers who can show they are capable of quickly acquiring financing, that have the capital to potentially fix up a few issues a property is known to have, and who are confident enough to put their money on the table, are far more likely to secure a deal in the Chatham real estate market. Down payments often aren’t deal breakers, but most Chatham-Kent realtors and home buyers see a large down payment as a positive point in their corner.

For first time home buyers in Chatham-Kent, this information might seem like a lot to handle. The best thing you can do is talk to your banker and Chatham Ontario Realtor. Sit down, go over your finances: what you make, what you owe, and what you have saved, and decide on a number that is good for you. Knowing how much you have available, or will have available in the near future for a down payment will also help you focus in on a price range for buying a home.

If you still need help, or you’re ready to put your down payment to work, give me a call at 519-360-0141, or visit my Real Estate Contact Page for more information. If you are a first time home buyer, I recommend you peruse the rest of my Chatham Ontario Real Estate Tips and Advice Articles .