1. What are the 8 steps to buying a home?
2. Tips on setting your budget: How much can you afford?
3. Creating a wish list to find your dream home
4. How do you choose the location of your new home?
5. 8 Important questions to ask when choosing a realtor
6. Mortgage Calculator
What are the 8 steps to buying a home?
Decide to Buy
Buying your first home can be an exciting and scary time! When done right, home ownership becomes an investment with solid financial reasons to support your decision. Benefits include equity buildup, value appreciation and tax benefits.
Considering buying your first home but feeling unsure?
- If you are paying rent, you can very likely afford to buy.
- There is never a wrong time to buy the right house. Find a good buy and make sure you can cover costs in the long run.
- Can’t afford your dream home? The best way to get closer is to purchase your first home.
- Lacking a substantial down payment or have a less than perfect credit score? It won’t necessarily prevent you from buying your first home.
- It’s not as complicated as it seems! There are many experts to guide you along the way.
Hire Your Agent
You want to make sure you get the right person on your side! The typical real estate transaction involves at least two dozen separate individuals. Your agent will coordinate all professionals involved in your home purchase and act as your advocate.
7 Primary Roles of a Buyer’s Real Estate Agent
- 1. Educates you about your market
- 2. Analyzes your wants and needs
- 3. Guides you to homes that fit your criteria
- 4. Coordinates the work of all involved professionals
- 5. Negotiates on your behalf
- 6. Checks paperwork and meets deadlines
- 7. Solves any problems that may arise
If you are a first- time home buyer and are nervous about making such a big commitment, you’re not alone. You will follow a six-step process to secure your financing.
Four Steps to Financing a Home
- 1. Choose a mortgage agent or mortgage specialist
- 2. Submit a mortgage application and get pre-approved
- 3. Submit an accepted purchase offer contract to your lender
- 4. Obtain funding at closing
Find your home
Finally! The fun part. Beginning with an assessment of your needs, wants, and values will help you find the perfect fit.
What do you want in your first home?
- What amenities would you like to be close to?
- How much space do you need?
- Which is more important: location or size?
- Would you be interested in a fixer-upper? A condo? New construction?
- How critical is home value appreciation?
- Is neighbourhood stability a priority?
- What features do you want? Which do you really need?
Make an Offer
Now that you’ve found your dream home, it’s best to set emotions aside as you make your offer. This is where your real estate agent comes in! With a cool head and a realistic perspective of your market, your agent helps with the three essential components of price, terms, and conditions.
The right price must accurately reflect the real market value of the home.
The other financial and timing factors included are:
- A schedule of events that will happen before closing.
- Fixtures and Chattels : the items that stay with the house when the sellers leave.
- Deposit paid, which protects the seller from you unexpectedly pulling out of the deal and lets them know you are serious about your offer.
- Conditions – If your offer has conditions, it is important to remember the timelines and make certain that we meet those time frames.
Perform due diligence
The property inspection can expose issues and help you know exactly what you are getting into. Don’t sweat the small stuff. The primary concern is structural damage. If a big problem is detected, you may want to bring in a specialist to offer their opinion on whether or not you should proceed.
Closing consists of a visit with your lawyer ( title search, title insurance), and a final check of your credit and finance. Your work here is almost done! Your agent will keep you posted on how things are progressing. Here are your pre-closing responsibilities:
- Stay in control of your finances
- Return all phone calls and paperwork on time
- Regularly communicate with your agent
- Confirm with your agent that all documentation is in place
- Obtain certified funds for closing
- Conduct a final walk-through
A few days prior to closing day, you’ll sign documents that finalize your mortgage, pay the seller, pay your closing costs, transfer the title to you, and legally record the transaction as a public record.
Congratulations! You’re now officially a homeowner!
Protect Your Investment
Attention to your home’s maintenance needs is crucial to protect the long-term value of your investment. It’s best to keep up with cleaning and regular maintenance because fixing small repairs early can save you money later.
Tips on setting your budget: How much can you afford?
Lenders decide how much you qualify for based on numbers and formulas, but they may not fully understand your lifestyle and spending habits.
In Canada, lenders use a Gross Debt Service (GDS) ratio to determine how much you qualify for. Your GDS should not exceed 32% of your gross monthly income, and your Total Debt Service Ratio should not exceed 40% of your total debt load. As home prices rise, some lenders have stretched this amount to 50%.
We suggest you don’t stretch your budget quite this much. It’s best to leave a little room for the unexpected. Deciding how much you can afford should involve careful attention to your current financial profile, but you should also consider how it may change in upcoming years. Your peace of mind, comfort level, and security matter most.
Creating a wish list to find your dream home
To help you find your perfect fit, your real estate agent will want to know as much as possible about the features and amenities that are important to you. It’s best to separate your list into what you need and what you want.
Home Features to include on your wish list
Age – Do you prefer historic homes or newer properties?
Style – Love ranches or bungalows? Let your realtor know if you have a preference.
Living space – How many bathrooms and bedrooms do you need?
Layout – Open concept, traditional or formal?
Square footage – How much space do you need?
Extras – Is having an attic or finished basement important to you?
Amenities – What is top of your list? Examples of amenities to add to consider: Office, playroom, security system, sprinkler system, studio, fireplace, pool, hot tub, patio, in-law suite.
How do you choose the location of your new home?
Where you buy your home will affect your lifestyle and the current and future value of your property. There are a few things you may want to consider when choosing your location:
- Urban, rural, or suburbs?
- Commute time
- School districts
- Proximity to hospitals, airports, restaurants, and shopping
- Access to highways or public transportation
- Types of recreation close by
- Length of time you plan to live in your home (how will the area change over time?)
8 Important questions to ask when choosing a real estate agent
- Why did you become a real estate agent?
- Why should I work with you?
- What makes you stand out?
- Can you describe the process you will use to help me find the right home?
- What are the most common things that go wrong in a transaction? How would you handle them if they came up?
- What mistakes do people make when buying their first home that I should avoid?
- What other professionals do you recommend?
- Do you have references or testimonials?