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Dolce Real Estate Group

  /  Buying Advice   /  Everything A First-Time Buyer Needs to Know About Credit & Real Estate
Everything A First-Time Buyer Needs to Know About Credit & Real Estate

Everything A First-Time Buyer Needs to Know About Credit & Real Estate

Everything A First-Time Buyer Needs to Know About Credit & Real Estate

What is Credit

Credit is a “deferred payment arrangement between a borrower and a lender that facilitates access to funds for repayment at a later date. Common types of credit include installment loans for large purchases such as a home or a car, as well as revolving credit arrangements including credit cards and lines of credit.” (SOURCE: CIBC)

Why is Credit so important for home-ownership

Why is Credit so Important?

Having access to credit (credit cards and loans) allows people to purchase items they may not otherwise be able to afford using cash, like a home. Credit is built throughout your life through credit cards, auto loans, student loans, and mortgages. When you make payments on time your credit score increases, likewise late payments will hurt your score.

The Relationship Between Real Estate & Credit

When purchasing a home you will need to apply for a mortgage loan, (unless you’re paying in cash). The interest rate on that loan will depend on your current credit score. Paying your mortgage on time will help maintain or improve your credit score. This will help you get a great rate on a forever ever home down the road.

Mortgages vs rent in CalgaryMortgage vs. Rent

Mortgage payments are typically reported and recorded on your credit without any necessary steps from you. Rent on the other hand is not usually reported to the credit bureaus. This means that rent does not help your credit, no matter how spotless your payment history is. When you’re paying a mortgage you’re not only investing equity in an asset, you’re also helping your credit score for future investments. Renting does not carry these benefits.

Mortgages Help Credit History

Credit is built though payment history from things such as loans and credit cards. A mortgages requires long term payments typically for 5 to 30 years, depending on how long you live in a home and how much your mortgage is. The longer you pay your mortgage the more history you build. A longer history of good credit benefits you tremendously in future investments, and can help you get a much better rate for a future mortgage.

Diversify your Credit with a Mortgage

There are two types of credit, reusable and installment. A credit card is revolving reusable credit, and a mortgage or a student loan are installment loans. Both help your credit if you continually make your payments on time, but having a few diverse streams is generally better for your credit.

Home Ownership vs Renting

Aside from building credit with a mortgage, homeownership also gives you equity in an asset. You can sell a house in the future and get a return on your investment, but you cannot get back your rent.

 

First Time Home Buyer Incentive

All About the First-time home buyers incentive Calgary

If you’re a first time home buyer there’s no better time to purchase a home than now. The market is leaning in your favour and the government is offering a first time home buyer’s incentive. This Incentive provides shared equity loans of 5%towards the down payment of a resale home, and 5% for 10% for newly built homes.

This incentive is a no brainer! You can get your hands on this deal if:

  • Your household income does not exceed $125/year 
  • You have a minimum down payment of 5% for a home 
  • You or your partner are a first time home buyer.
  • You have not owned a home, or dwelled in a home owned by your spouse, over the last 4 years. 

If you answered yes to each of these questions then you may be eligible for the Government of Canada’s First Time Home Buyers Incentive! There is absolutely no better time for you to invest in property. 

Call Dolce right away to take advantage of this deal while it’s available: 587 229 7108  | info@dolcerealestate.ca 

 

Read More About The First-Time Home Buyers Incentive  

 

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