Tell me about buying a home for the first time

[ShadowHM]

Mortgages in the U.S. typically run for 30 years and I’ll assume that it is the same in Canada.

With that in mind, you might want to consider a 15-year mortgage. The interest rate will be slightly lower and because you are paying down the principle quicker, this will result in a dramatic reduction in the total amount of interest you pay. For instance, a $175,000 mortgage at 7% interest will have a monthly payment of $400 more per month; yet will save roughly $60,000 over the course of the loan. Also, you will build up equity in your home at faster rate, which is good if you decide to sell the house in a few years. (Play around with the mortgage calculators to see the difference.)

Mortgages are not quite the same here in Canada. You get your mortgage for an amortization period of your choosing, but you lock the interest rate (or not) for a different time frame, and that is what dictates your rate. There are a number of other differences. DeeBye will be getting a detailed list of all that through his banker.