Many first-time homebuyers decide they’re ready to take the leap, and start touring open houses “just to see what’s out there.” While getting a feel for the market is certainly a good idea, you risk falling in love with a home that is not in your budget. Before you start seriously shopping the market, visit your bank, mortgage broker or lender, and get a mortgage pre-approval. You’ll know the exact amount you’ll qualify for, so when you’re ready to make an offer, you can do so with confidence. I'm always happy to meet with new buyers and assist you to finding the right mortgage fit as well, so don't feel you need to wait to contact your REALTOR® before then.
I'm mentioning this one again, because it’s super important. Getting pre-approved not only informs you of how much you can spend on a home, but it also guarantees the current interest rate for about 90-120 days, giving you the freedom to shop knowing you’re safe from rate hikes in the near future. With interest rates on the rise, this step is more important than ever.
Once you’ve filed your application, avoid changing jobs, making big-ticket purchases on credit, or taking out new loans. These can all alter your financial picture, and can impact your ability to qualify for the mortgage or the amount you had originally anticipated. If there are any large purchases or job changes in your future, plan for them to happen AFTER your possession date, as even a mortgage approval doesn't guarantee you can afford the property on closing date IF your situation changes. The new truck will have to wait .. just a few more weeks :)
It’s true that the minimum requirement in Canada is five per cent, but try to put down at least 20 per cent of the purchase price. Having 20 per cent or more means you won’t have to take out a high-ratio mortgage – and avoid the mortgage or CMHC default insurance premiums that go with it. Getting to 10% or 15% as a total down payment also lowers the CMHC insurance cost, so the more the merrier if you can get to any one of these milestones.
You can estimate to spend (approximately) between 1.5 to 3 per cent of the purchase price of the home. This includes costs such as the land transfer tax, property insurance, title insurance, lawyer fees, home inspection fee, moving costs and more. Be sure to budget these into your purchasing plan.
Before you settle down, make sure you sow your oats, so to speak. Since you’ve never owned a home, and particularly if you’re moving from your parents’ place, you’ll want to tour lots of different home styles and neighbourhoods. Keep an open mind – you just might surprise yourself! When narrowing down your home’s location, weigh factors such as proximity to work, family and friends; public transit and access to major roads and highways; and things such as shopping, services, green space, and your lifestyle. which will affect the liveability of the home, its current value, and the resale price of your home. People always ask what an "average" is and I'd say for new home buyers 3 months of searching is typical .. which equates to about 30-50 viewed properties between showings and open houses.
Don’t get me wrong – it’s definitely a good idea to see what’s on the market, if only for the sake of comparison. You’ll gain a better understanding of what comparable homes are valued at, their condition, and your negotiating power. This is valuable intel, whether you’re buying your first home or your tenth. But buyer beware: particularly in a hot market, sitting on the fence can mean losing a good property, being overwhelmed with options, spreading yourself too thin, and ultimately getting frustrated with the process. If you get to 100 homes .. you've probably gone too far ;) Either way, I'm with you for however long the ride takes as I understand it can take more time for some (myself included .. took us over a year to find our house. So take this lesson from me, bite the bullet and go with your gut early on. You don't want to be shopping for a year!)
Under the right market conditions, negotiating may be part of your purchasing plan. Any conditions of the purchase and sale must be on paper. If it’s not in the contract, it doesn’t count. Your contract is your only way of holding the buyer and seller accountable. That's why having your own REALTOR® is SO important. I will walk you through everything and make sure we get the air con, the W/Dryer, the extra mirror, the shelving in the garage ... and if there's anything that needs fixing, we get that in writing too with a value attached.
You’ve likely heard the term “house poor.” Buying a home is a huge financial commitment, so ensure you can afford it. As a first foray into home ownership, condos are a popular choice, thanks to their lower price point, smaller footprint (read: less maintenance and lower operating costs) and their central locations. But condos are a lifestyle choice as well as a financial one. It's my job to make sure your life remains happy, healthy, and fun on all levels .. which doesn't mean stressing over bills! xo