Buying a home can be a very overwhelming experience, but if you are prepared and have contracted the right advisors, it can be a smooth and enjoyable process.

What to do when you’re a first-time home-buyer:

1. Get pre-approved.
Getting pre-approved for a mortgage is an important first step in the home-buying process. You don’t want to start house-hunting and fall for a home you can’t afford. Plus, there may be problems with your credit that you don’t know about.Your credit is one of three factors that will be considered before you get approved for a mortgage. The other two are income and your down payment.

“It is advisable for first time home buyers to try and put a 20% downpayment on their mortgage. A larger downpayment will save you from paying the CMHC insurance payment, it will often qualify you for a larger mortgage and you will save on mortgage interest over the period of the mortgage” — Sean Kavanagh

One way to help boost your down payment is to borrow money from your RRSP. For more information on how to use RRSP money to buy a home, contact your lender. Also ask if there are any other government programs you may qualify for (First Time Home Buyer Credit).

2. Find a real estate agent.
Having a real estate agent when buying a home, is highly recommended. There are several components to a real estate transaction and several people you will need to be in contact with throughout the transaction (lawyers, mortgage specialists, home inspectors, insurance companies, etc). An experienced real estate agent will help connect you with these people taking much of the transaction stress out of the transaction.

“A quality real estate agent will not only connect you with the right people to help you through the purchasing process, but they will help find you the right home, in the right neighbourhood as well as recommending the right price.” – Sean Kavanagh

3. Stay mindful of your budget.
“It will be tempting to overextend and push your budget when buying a home, but always be aware of your budget. Understand how much you currently spend on a monthly basis and then add a mortgage payment, property taxes and utilities to that budget. You should also factor in a percentage of your household expenses to care and maintenance of the home.” — Sean Kavanagh

Your first home will not be your last, so go into the process with realistic expectations. Your agent will be able to help by sending you listings in your desired area so you can match your budget with what is available on the market. Be prepared to adjust the stye of home, location of the home or your purchase budget so you are not disappointed.

What not to do when you’re a first-time home-buyer:

1. Don’t think you’ll be in that home forever.
On average, people live in their first home for approximately 5 years. It is important to remember that the first home is never the perfect home.

“It is always advisable to buy a home that needs some work as your first purchase. Since it will not be your last home, you will want the opportunity to add value to the home by updating and renovating.” – Sean Kavanagh

2. Don’t be too emotional.
It is never a good idea to make emotional purchases, but making an emotional real estate purchase can set you back financially for years. Have your real estate agent provide you with a list of recent sales in the immediate neighbourhood so you can compare the home you are interested in with the homes that have recently sold. This analysis will help determine what you should be paying for a home.

3. Don’t make big purchases before getting approved for a mortgage.
That may seem fairly obvious, but you’d be surprised. An approval is contingent upon your current income, credit and savings remaining the same. Do not make any large purchases between being approved and purchasing as that may affect the amount you were previously qualified for.

4. Don’t forget about closing costs.
Closing costs can add up. The CMHC recommends putting aside anywhere from 1.5 to four per cent of the purchase price to cover them. There are several costs in addition to the purchase price of the home that should be budgeted for. Work with your real estate agent as they should be able to detail these additional costs so there isn’t a surprise on closing.

THE 905 REAL ESTATE GUYS
info@905realestateguys.com
Sean Kavanagh 905.220.9198
Leo Manchisi 905.334.9650