Lets face it: buying your first home can be an overwhelming experience. After all, it’s the largest investment most people make in their lives and with so many different options on a homebuyers plate, it’s easy to get stressed. We’ve compiled a list to help you navigate and streamline the process to keep things exciting and hopefully stress-free!
Get a Mortgage Pre-Approval
Knowing what the bank will approve you for is the first step in your home buying process. Without this, you may start shopping and fall in love with a house you cannot get—which is a trap many first time buyers fall into! Alternatively, you may find an issue with your credit that you were unaware of and need to deal with prior to purchasing.
Either way, having a firm grasp of what you can afford is essential. Getting a pre-approval does not mean you are locking in a mortgage, a rate, or even the specific lender. It simply means you will know what the bank qualifies you for.
Find a Real Estate Agent
Having a realtor is not mandatory, but it is highly recommended, especially if it’s your first purchase. Having someone that is knowledgeable and experienced can simplify the process, resulting in a stress-free and enjoyable experience. A good agent will assist you with negotiating the purchase price, help with securing your mortgage, and complete all the paperwork necessary. A realtor will also protect you from any pitfalls you might encounter during the process.
Know What You Need vs. What You Want
It’s important to be realistic when looking at homes and decide what you absolutely must have in a home (your needs) and what would be nice to have (your wants) if it fits within your budget.
On average, most people stay in their first home for five years or less, so plan accordingly. It’s easy to get swept up in interior finishes like granite, hardwood floors, or a Jacuzzi tub, but keep in mind you can always upgrade or renovate later. What’s important when looking at a home are the features you cannot change or upgrade later such as layout, lot, and community.
Don’t Forget About Closing Costs
So you’ve purchased the home, secured the mortgage and that’s it, right? Not quite. Closing costs are something that needs to be budgeted for and include things such as:
- Property taxes
- Legal fees
- Disbursement fees
CMHC recommends putting away 1% of the purchase price away for these expenses. Depending on what type of home and where you purchase your closing costs could be more or less than this – again, your realtor typically is the best resource here and will prepare you in advance for these costs.