Are you looking to purchase your first home? If so, congratulations – buying a home is an exciting milestone! For first-time buyers, however, the process can seem daunting. But don’t worry – we’ve put together our top 9 tips to help you through it. Keep reading to learn more!
1. Be Sure You’re Ready To Commit To A Loan
The first tip for first-time home buyers is to be sure you’re ready to buy a house. The average mortgage loan term in Canada is around 25 years. Although you don’t need to stay in your home for that amount of time, buying a home is still a major commitment. Be 110% sure that you’re ready for homeownership before you take on a mortgage.
Start by asking yourself the following questions:
- Am I ready to commit to this home and city for at least 5-10 years?
- Do I have an emergency fund that can cover at least 3 months of expenses?
- Do I have a stable income?
If the answer to any of these questions is “no,” you may want to hold off for now. Keep saving. Keep researching.
2. Get a Pre-approval
It can be tempting to jump right into hunting for the perfect house, particularly if this is your first time. It’s a really good idea to get a mortgage preapproval before you begin comparing properties.
Some of the benefits of getting preapproved include:
You know exactly what you can afford: You and your real estate agent know what you can afford once you have a preapproval letter in hand. This will help you shop within your budget.
You can make a stronger offer: Sellers need to know that the buyer they choose can afford their home. A preapproval shows a seller that you have the money needed to purchase the home.
3. Maintain Your Credit
Be careful about taking out loans before you close on the house! If they find that your credit balance has increased, or if late payments are starting to come in then it might risk final approval. Make sure you are paying all bills on time and don't make any other large purchaes during this time - lenders want consistency from their clients to ensure payments will be made down the road.
4. Save For A Down Payment
In Canada, you will need a minimum 5% downpayment to qualify for a mortgage. There are a few first-time home buyers incentives that you may qualify for.
If possible, you should save 20% for your downpayment. Having 20% for a down payment means that you can avoid mortgage insurance on conventional loans, saving you money in the long term.
5. List Your Needs And Nice-To-Haves
For example, you might focus on finding a home with extra bedrooms if you plan to have children or need a home office. If your dogs are your best friends, a big yard or a location near plenty of green spaces may be non-negotiable.
Sit down and create a list of qualities you want and need in your new home. This will help you shop for homes more effectively and compare properties more easily.
6. Don’t Forget Closing Costs
Don’t assume that your down payment is the only thing you need to close on your mortgage loan. You’ll also need to cover closing costs before you take control of your property.
Closing costs are expenses that go to your lender in exchange for arranging certain loan services. Some common closing costs you might see include:
- Lawyer fees
- Pest inspection fees
- Appraisal fees
- Home inspection fees
It’s not uncommon to ask the seller to help cover closing costs. Seller concessions could be a flat percentage of the total closing costs or cover specific fees, like appraisal or Lawyer fees.
7. Work With A Real Estate Agent
Work with a real estate agent or REALTOR® to find the perfect property. Agents and REALTORS® are local professionals who are experts in all things real estate, and will help you during the home buying process.
A real estate professional can help by:
- Showing you properties in your area that fit your needs, wants and budget
- Advising you on how much to offer for a property
- Submitting an offer letter on your behalf
- Helping you negotiate with the seller or the seller’s agent after you submit an offer
Remember, only a buyer’s agent will work on your behalf. Don’t rely on the seller’s agent to represent your best interests. Always choose a qualified REALTOR® or real estate agent to help you buy a home. See a full list of our Sutton REALTORS®
8. Hire A Professional Home Inspector
You need to hire a professional inspector before you get a home.
During a home inspection, the inspector tells you about specific problems with the home. You can use the results of your inspection to learn more about your home and request concessions from the seller.
An offer on the home often includes a home inspection contingency, which would allow you to invalidate an offer and not lose your deposit in the instance of needing to make extensive repairs to the home.
Congratulations on your decision to purchase a home! Even though the process can seem daunting, with the right preparation and team of professionals by your side, you will be able to navigate it successfully. We hope that our tips have helped give you an idea of what to expect and what you need to do in order to get ready for homeownership. If you have any other questions or would like more information, please don't hesitate to contact one of our Sutton real estate agents today!