So, you’ve decided that you want to buy your first home. Maybe you’re sick of renting or maybe you’re ready to start building some equity! Whatever your motivation, home buying is an exciting step in your life! The best way to enjoy the excitement is to become an educated buyer, so that you will know what to expect along the way.
Step 1: Mortgage pre-approval
It’s easy to get excited about finding your first place! Before you get wrapped up in the shopping stage, don’t forget that the most important part of the process is securing your financing. The first thing to do is to get in touch with a mortgage broker. If you don’t already have one you want to work with, ask your real estate Sales Professional ("agent"). Pre-approval is a short process that will let you know how much a bank or financial institution will lend you. This step is incredibly beneficial before you begin your shopping, so you won’t waste time looking at homes above or below your price range.
Step 2: Be prepared for other related costs
When you buy a home, there will be other costs related to the purchase that can catch you off-guard.
The most important cost is your down payment. For most residential transactions, you will require at least 5% of the purchase price for your down payment. In some circumstances the down payment may be higher, but this depends on the property you purchase.
Other associated costs include legal fees, moving costs, home inspection fees, home insurance, mortgage insurance, deposits for utility accounts, and you may need some additional furniture or appliances for your new home as well.
Take some time to look at these costs and set out a budget for yourself to ensure that when they arise, you are prepared for them.
Step 3: Separating wants from needs
Before you get out looking at homes, the best way to start your search is to identify what you need in a home, and what you would ideally want to have.
Try making a checklist, starting with things that are a must. As an example: the house must be in town, have 3 bedrooms, at least 2 bathrooms, a finished family room, and a fenced backyard.
Once you know what you must have, have some fun and make your “wish list!” It might include things like hardwood floors, a back patio, a rain shower, or a master ensuite.
Step 4: Make sure you are represented!
A local Sales Professional is your inside track to finding the right home. They will ensure that you are finding the right home quickly and are well represented in your purchase. A common misconception is that you need to call the Sales Professional who has the property listed for sale; however, this is not the case. Any licensed Sales Professional has access to the properties found on the MLS system.
When you are choosing a Sales Professional to work with, it is important to make sure that you feel comfortable working with them. At any point in the process, you should be able to ask any questions you have and should never feel rushed or pressured into making a decision. Remember: their biggest concern is to make sure you find a home that will work just right for you!
Step 5: The offer and purchase
Once you have found the home that is perfect for you, the next step is making it yours! Your Sales Professional will prepare an offer, referred to as an Agreement of Purchase and Sale, and negotiate the terms of the sale on your behalf. Together, you will look at comparable sales in the neighbourhood to determine a fair purchase price to offer the sellers, and which items you may want to be included in the purchase price (such as appliances).
Your Sales Professional will also include the appropriate conditions to make sure you are protected during the process. This could include things like a home inspection and/or a financing condition.
Step 6: Move in and enjoy your new home
Remember: not everything has to be done right away. Take some time to enjoy this experience: cleaning, painting, and tidying will all be complete in good time. Welcome to the wonderful world of home ownership!