Being a first time buyer shouldn’t be an overwhelming experience. It should be fun. Yes, we said it – fun. Working with the right team can make the process educational and informative, and leave you excited to live in your new home.
Buying for the first time shouldn’t be stressful, and with this list handy, you won’t have to worry about missing any of the critical steps in your first-time-buyer experience.
1. Get a Mortgage Pre-Approval
A mortgage pre-approval will tell you how much you quality for. This is a critical step in the buying process, especially for a first time buyer, as you will work with a mortgage agent to get all of your qualifications in order. A good mortgage broker will guide you and educate you on the pre-approval process, and give you comfort in knowing exactly what your budget range is so you can start looking for a home you can actually afford.
2. How Much Can You Afford?
Think about your monthly costs. What can you afford to pay per month for your mortgage? Think about your other monthly costs too. Insurance, public transit pass or car loan, grocery bills, entertainment and anything else you pay on a monthly basis that will impact your home costs. Just because you were approved for a certain amount doesn’t mean that’s how much you can afford. Your lifestyle will come into play here as well.
3. How Much Should Your Down Payment Be?
It’s kind of up to you how much money you put towards your down payment. But it’s not really as simple as laying down a twenty and calling it a day.
A home that costs $500,000 or less — 5% of the purchase price
A home that costs $500,000 to $999,999 — 5% of the first $500,000 of the purchase price, and 10% for the portion above the purchase price above $500,000
A home that costs $1 million or more — 20% of the purchase price
4. Know What You Need (not want)
Make a list of things on your buying list that are the “must-haves”. Things like neighbourhood, proximity to work or public transit, number of bedrooms and bathrooms are all things that should be on this list. If you’re in a condo, do you need parking and a locker? These can make or break deals so it’s good to have your musts on a list. Think of them as the non-negotiables as you start your home search.
5. Work with a Seasoned Agent
Working with a buyer’s agent can not only help protect your interests but help educate you in the entire real estate transaction process. An agent that has experience working with first-time-buyers knows the ins and outs and is able to articulate that to you so you’re able to understand. You should also not be afraid to ask any questions – your agent should be willing to go above and beyond for you to sure you’re 100% comfortable.
6. Request a Home Inspection or Status Certificate
Any offer you plan to put on a house should include the home inspection condition. This will allow you to get an expert opinion on all of the critical elements of any house. If you’re putting an offer on a condo, a status certificate is equally important. Having this condition on any condo offer will allow you and your lawyer/realtor to inspect the status of the building, and any issues that it may have.
7. Budget for Closing Costs
All mortgage lenders are required by law to disclose in writing your estimated closing costs and fees for the actual mortgage loan, so you’ll know the amount ahead of time. Closing costs can be made up of taxes and insurance, a lender fee or inspection costs among other possible items. Keep in mind, various additional costs might apply depending on your province, mortgage type and down payment amount.
8. Budget for Other Necessities Too
Once you have your home, you’re going to need to fill it with furniture and all of the things that really make a house or condo a home. Mom and Dad will probably help out a little here, and your friends can help fill your bar, but you’re going to need to think about what you’ll need to make it feel comfortable and feel like you. Dreaming of a giant TV or upgrades to the closets? You’re going to need to factor that into your budget.
9. Know What First Time Buyer Rebates You Qualify For
As a first-time-buyer, you will qualify for one-time rebates on your home or condo purchase. Be sure to inquire with your lawyer and realtor to be sure you know exactly what requirements are needed to qualify, and that these rebates are issues properly.
10. Don’t Get Frustrated
One of the best pieces of advice we can give is to not get frustrated. The market is busy right now, and a lot of buyers are looking to get into it for the first time. You may not get the first home you bid on, and it may take several bids to finally work out. You may not find your dream home right away, but don’t rush the process. Nothing is truer than “when you know, you know”.