Purchasing your first home can be a daunting and often stressful time. But let’s say for arguments sake that it should also be exciting, fun, and one of the most memorable moments in your life. What can I say, I love Real Estate! Each transaction brings a different challenge, each person craves their dream home and you and your partner may not see eye to eye on everything. Compromise and vision are both so important.
Ask yourself why do you want to be a homeowner? Is it to turn those rent cheques into mortgage payments, or do you yearn for the freedom of your own space. So as a First Time Home Buyer, what are the most important things to look for?
Let’s take a look at these top 7 tips when purchasing your first home.
Step 1- Get pre-approved
It is pretty common for most people to go straight to a REALTOR®. Now whilst this is not the biggest mistake in the world, that REALTOR® is going to send you off to see a bank or Mortgage Broker, to determine how much you can be pre-approved for. Without this information you could be looking at properties which are way above what you can afford or vice versa, maybe you could look at a nicer home in a more up and coming neighbourhood.
Step 2- What are you looking for?
How often have you watched a housing show where two people buying a home have agreed on everything? Never. And this is going to be the case with you as well. However, we can get on the same page about many things and we should do this from the start so as to narrow down our search. Do you want the condo life, a townhouse or single family residence? Look at the pro’s and con’s. Are you a DIY expert and want a fixer upper to invest for the future? Make sure you are thinking about time management and how long it could take you to accomplish all these tasks. Is it move in ready? Maybe you will need a little extra cash to put down in order to afford a brand new condo or newly renovated home. Do you want a large garden? Finding the time to mow the lawn or weed, rake up those leaves in the fall? Figuring out what you want is the first step to maximize your time.
Step 3- Use an Agent
Why use a REALTOR® when you do not actually need one? Well, a good REALTOR® will have an understanding and knowledge of the market that comes from years of experience. This will take a huge weight off your shoulders. Let them take the stress out of what can be a challenging time. More than likely your REALTOR® will have a circle of trusted professionals such as Mortgage Brokers, Home Inspectors, Lawyers, etc who will also be able to help you through the process.
Step 4 – Hidden Fees
It is not as simple as finding a house and putting down a payment. Think about all the other fees you will have to pay. Conveyance, lawyers, commission, taxes, home inspection, title insurance, will you be paying GST? A good REALTOR® should guide you through what you will expect to pay throughout the process. Do NOT think that because you get pre-approved for X amount, that is the amount you should apply for. Think of ongoing costs. What if you get laid off and have difficulty finding a new job. Will you be able to pay the bills? Could you afford the same amount each month if you have a baby? Perhaps the property needs some renovations and you want to add that onto your mortgage instead of using your savings. There are many hidden fees and also unexpected events that could cause you problems so seek professional advice before taking on a mortgage.
Step 5 – Property Transfer Tax
If it’s your first time buying a home then are you exempt from paying tax? Yes to a certain degree. If your purchase is less than $425,000 you will not have to pay PTT. If you purchase between $425,000 and $450,000, you will pay a percentage of the tax, and if you purchase a home over $450,000 the full amount is required.
Step 6 – Understand the Different Payment Methods
There are several ways to pay your mortgage, whether it be monthly, bi-weekly or accelerated bi-weekly, so understand what they mean. A shorter amortization period will allow you to pay off your mortgage faster and save money in the long term but a longer period will allow you to have more cash for budgeting your day to day living.
Step 7 – Enjoy your new Home
Now that you have the keys to your new home, make sure to change the locks. You don’t want a stranger popping round unannounced. As a REALTOR®, we often rely on customer referrals, so we may drop by and see how you’re getting on, and don’t forget that we know many people in this industry from plumbers and electricians to drywallers and window experts, so give us a call if you are ever in need of some help.
Now that you know these great tips, you are at an advantage when buying your first home, but there are so many other factors involved. Make sure that you speak to specialists, ask questions, and by all means try to have some fun!!