How to determine if you can afford to own a home

Courtesy of Barrie Real Estate Talk - www.barrierealestatetalk.ca

The first thing any prospective homebuyer needs to do is determine whether they can afford to buy the home they want.

Many people believe they have to save a large down payment. Thanks to mortgage insurance, there are various programs that enable homeownership with little or no down payment at all.

A down payment of 20 per cent or more will qualify you for a conventional mortgage. If it is less than 20 per cent, the mortgage must be insured with a mortgage insurance company, such as Genworth Financial Canada.

Mortgage insurance works by transferring the homeowner's risk of default from the lender to the mortgage insurer. This benefits homebuyers by allowing them to obtain loans at lower interest rates than would otherwise be charged if the lender retained the risk of default.

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