First Time Home Buying Process
So you’ve decided you want to buy your first home. Maybe you’re sick of renting, maybe it’s time to leave Mom and Dad behind, or maybe you’re just ready to start building some equity! Whatever your motivation, home buying is an exciting step in your life! Along with the excitement can come a lot of anxiety. The best way to enjoy the excitement is to become an educated buyer, so that you will have knowledge of the home buying process, and what to expect along the way!
First: Mortgage Preapproval
It’s easy to get excited about your first place! Before you get wrapped up in the shopping stage, don’t forget the most important part of the process is securing your financing. The first thing to do is get in touch with a mortgage broker, if you don’t already have one you want to work with, let me know- I have a couple of fantastic brokers who are great to work with. A “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, as yyou will know exactly how much house you can afford, so you won’t waste time looking at homes above or below your price range, saving you hours and hours during your search process.
Second: Be Prepared- Other Related Costs
When you buy a home, there will be other costs that relate to the purchase that can catch you off guard. Again, the more you know about these costs and the process, the more confident you will feel going forward.
Most importantly, 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, talking to a Mortgage Broker will also clarify for you what you will need for a down payment.
Other costs that will be associated with your purchase will be legal fees, moving costs, home inspection fees, home insurance, mortgage insurance, deposits for utility accounts, and you may also need some additional furniture or appliances for your new home as well.
The additional costs can add up, and start to look scary but the best offense is a good defense. Take some time to look at these costs, and set out a budget for yourself to ensure that when these costs arise, you are prepared for them.
Third: 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 like to have.
Try making a checklist, starting with things that are a must. As an example, - must be in town, have 3 bedrooms, at least 2 bathrooms, finished family room, with 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, back patio, rain shower, or a master ensuite.
When you start looking for your new home, this list will really help your Realtor to narrow down which homes may suit just what you are looking for!
Fourth: Make Sure You are Represented! – Call your Realtor.
A local Realtor is your inside track to finding the right home. They will ensure that you are finding the right home, finding it quickly, and being well represented in your purchase. A common misconception is that you need to call the Realtor who has the property listed for sale; however this is not the case. Any licensed Realtor has access to the properties found on the MLS system.
When you are choosing a Realtor to work with, it is important to make sure that they are someone you feel comfortable with. 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. Your Realtor works for you and their biggest concern is to make sure you find a home that will work just right for you!
Once we have had a chance to review your list of wants and needs, your Realtor will select some listings that match your must haves, and with any luck cover at least a few of your wish list items as well. Then you will get a chance to look through them, see lots of pictures, and decide which homes you would like to see in person.
Fifth: The Offer and Purchase
Once you have found the home that is perfect for you, the next step is making it yours! Your Realtor 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 also what items you may want to be included in the purchase price (such as appliances.)
Your Realtor will also include the appropriate conditions to make sure you are protected during the process. This could include things like a home inspection condition, and/or a financing condition.
As I mentioned before, don’t ever be afraid to ask questions at any point during the process. When it comes to purchasing a home, there is a lot of paperwork involved, and it can become intimidating or overwhelming. Your Realtor is working on your behalf, and will be happy to answer any questions you have, and to explain in more detail each step of the process.
Finally, the last step is to move in and enjoy your new home. Remember, not everything has to be done right away. Lots of people get overwhelmed when they think about settling into a new home and getting their things unpacked and put away. This will happen over time!
You’ve probably just made the biggest purchase in your life to date, take time to celebrate it! Congratulations, and welcome to the wonderful world of Home Ownership!