First Time Home Owner Tips:
Adapted from Luke Skar of MadisonMortgageGuys.com
Buying a home can be exciting, overwhelming and scary. The following tips are designed to help you get a place of your own without making major mistakes.
Get an Agent for YOU.
When an agent has listed a home for sale some people think that agent will work just as hard for the buyer but this is not the case, as a listing agent’s duty is to the seller and not the buyer.
Also, the listing agent’s commission is based on getting the highest price possible which will not always align with the buyer’s needs. Talk to a few real estate agents and pick one that is right for you. Your agent as a buyer, will get a share of the commission from the home sale.
Get a Pre-Approved Mortgage.
Getting a pre-approved mortgage before looking for a home is the best choice. The lender can review credit history, income and down payment funds, and give you a firm approval subject to a home appraisal. This gives you and your agent peace of mind knowing you have secured financing, subject to the property being appraised at or above the price that you have agreed to pay for it.
Do your own Market Research.
Use the internet to check things that matter to you such as distance from the neighbourhood to your job, crime rate, restaurants, hospital or walk-in clinic . You may also find other items that are deal breakers for you in different locations.
Make decisions rationally, not emotionally.
Buying a home is the largest purchase you may make in your life. Apart from knowing whether you can afford it there are other things to consider. Does the home have enough space for your current needs and your future plans? Do you need a large yard for pets, outdoor entertaining, or hobbies? Do you prefer to be close to neighbours or further away with more privacy? Is the home conducive to your life and how you want to spend your relaxation time?
It is wise to look at your needs, in comparison to the home, and decide what is best for you.
Spend time with your agent to learn the process.
There will be several things that are new to you. The agent can explain to you about home showings, offers, counteroffers, appraisals, title search on the home and many other things. Take notes, ask questions and feel comfortable before moving on with the process.
Compare offers for Home Insurance.
Using your car insurance agent for home insurance may not be the best deal. Certain insurance agencies specialize in particular kinds of policies. Talk with some agents and get multiple offers before making a final choice.
Home expenses include much more than the monthly payment.
New homeowners do not always realize the price of the upkeep and maintenance of their home even if it is brand new. The lawn needs to be mowed, gutters cleaned or something could break. Replacing a water heater or repairing a heating and air conditioning unit can be costly. It is a good idea to factor saving a bit of money every month intended only for repairs and emergencies.
Do NOT try to save money by forgoing a Home Inspection.
It is easy to be influenced by the homeowner and agent to omit a home inspection. The home will be clean and everything will appear to be in working condition. An independent home inspector may uncover a few normal maintenance items or they could uncover a major problem such as a roof leak, an electrical issue or the existence of mold that the homeowner may or may not have been aware of. Spending the extra money on the inspection will help you know exactly what you are getting.
Give your agent very specific details.
Your agent wants to help you find the right home at the right price. To do that they need accurate information from you. It is better to provide more detail than hold back and create frustration for the agent and you.
A 20% down payment is usually not required.
Any house purchase over $1 million requires 20% down payment. Less than that ranges from 5-15% . Several loans are designed for first time home buyers. You may be eligible for the Home Buyers’ Plan where you can withdraw up to $35,000 tax free from your RRSP or you may qualify for a shared equity mortgage with the Government of
Canada.
You will need some money for the purchase.
In addition to dealing with the down payment there are other expenses that have to be paid prior to closing. For example, the home appraisal, home inspection and land transfer tax. Your lender and your lawyer can review all closing cost expenses with you.
The first home you buy may or may not be your last home.
It is impossible to know if circumstances will change over the next few years. Family situations may change, new job offers come along and many other things that could create a huge change. This is why it is important to purchase a home that meets your current needs completely. If things change you can sell your present home and purchase
another one that suits your new circumstances.
Ask the opinion of others.
After you find a home that you feel meets your needs ask a friend or relative to visit it with you. Having a different person look at the home with your interests in mind may turn up things you have overlooked.
It is ok if you DON’T have all the answers.
It is easy to get overwhelmed with all the information involved with a home purchase. Get advice from your real estate agent and your lender and discuss it with someone you trust.
If that person thinks you are making a good decision, then it is time to buy a home.
Be prepared to make an offer.
Many homes for sale today have multiple offers, so with your pre-approved mortgage and knowledge that you have gained, you are now prepared to make an offer through your agent once a home is available.
Keep realistic expectations.
One thing that prevents a first time home buyer from putting in an offer is an unrealistic expectation. It could be the price, size or location of the home but most people overestimate what they can get for their budget especially when comparing their situation with friends or family. Everyone is in a different place in life and at different times.
It is important to talk to your agent and get a good feel for the homes that are available so that you end up getting what you expected.
Work on focusing down to a few homes.
Some people have the idea of viewing all the homes available within their budget. Looking at dozens of homes is not fun. Based on your list of needs go on line and get details so you can eliminate homes that do not reflect your requirements. This may be the size of the home or neighbourhood or location. You will then be left with a few best possible properties to review.
Pick your real estate agent wisely.
It may take time between your pre-approved mortgage and the closing of your home so you need to pick an agent who you get along with. Check online reviews and track records of agents and get recommendations from co-workers, friends and relatives. Then talk to a few agents. You have your own personality and preferences, so go with the person you like the best. It will help make the whole process more enjoyable.
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