7 Tips to Get You Started on Buying Your First Home
1. Get pre-approved for your mortgage. This is the big one that many people still don’t think about as the first step in the home buying process! Getting pre-approved for your mortgage gives you greater buying power than the ‘Looky Loos’ who leave it to the last minute. Go and speak to you bank or friendly mortgage specialist, they are there to help.
2. Know how much you can afford and save as much as you can for a down payment. This is so not the same as getting pre-approved and often the one piece of advice people should always be given but rarely hear. Lenders have formulas to determine how much you can afford to borrow. But they don’t know you personally and don’t always have your best interest in mind. Crunch the numbers yourself to make sure that you feel confident that you can afford the payments. You should be aiming for at least a 5% down-payment with extra money to spare for closing costs and to treat your new home to something special. Owning a home shouldn’t mean sacrifice. Just because the bank approves you for a $300,000 mortgage doesn’t mean you can actually afford it. Even though your dream might be to purchase a new home with ensuite bathroom and granite counter tops in an established neighbourhood, you might only be working with a budget for a small fixer upper. Don’t overbuy on your first home. You’ll end up being better off with smaller payments on a starter home. You can always move up later on. Dreaming big is awesome, but you build equity by starting from the bottom and working UP!
3. Find a Realtor. A great Realtor is like a great hairdresser – once you’ve found them you never want to let them go! Find one who suits you, not your parent’s choice from their last purchase in 1986 or a friend you played baseball with in 8th grade, but someone who fits your needs, supports your wants and gives you the honest advice you need for this most important purchase. Don’t automatically go with the listing agent – And if you do and they disclose information about the owners, the owner’s motivation, that they can get you a better deal if you use them or disclose financial information (just to name a few things), walk away. This is against the Realtor Code of Ethics and they are motivated to look after no one else but themselves. INTERVIEW them, ask about their services, availability, response times (crucial in a busy market – a Realtor MIA is no good when you want to make a quick offer on a hot property). Test their knowledge of the local market-place, ask about their resources to get you the information you need at the right time. Ask how many clients they are currently working with – if it seems a lot to you they may not have the time to service your needs effectively. Don’t be afraid to ask lots of questions and please remember there is no such thing as a stupid question. If something bothers you and you don’t know the answer you need to ask. Most importantly meet with a number of agents for an interview and go with someone you feel will work with your best interests in mind and who you feel comfortable with.
4. What’s on your wish list? Before you start seriously shopping for your first home, you should determine what your needs and wants are. Create a list of features you are willing to compromise on, and ones that you need to have. Remember you rarely get everything you want so be realistic. By doing this, you will be able to narrow your house search down and start to look for properties that really fit your needs.
5. Don’t forget about closing costs. Closing costs vary, and, as with Realtors, call a few lawyers who will gladly let you know about their service costs and expected closing costs.
6. Go with your gut instinct. If there’s doubt, if it feels not quite right, then, it isn’t. Never be bullied or bamboozled into buying something you’re not happy with or indeed working with someone you’re not happy with.
7. Don’t cheat on your new home, stop looking. You know how it is! Getting dressed up every Friday night to hit downtown and then suddenly one magic night you find the one – your Mr. or Mrs. Right and suddenly local craft beer, a splash of Eau de Cologne and egg rolls at 2am don’t seem quite as appealing anymore. Well, buying real estate is exactly the same thing. Once you find ‘home’, don’t cheat and stop looking.