First Time Buyer’s Guide
It’s the moment you’ve been waiting for: You are ready to buy a place of your own! You were told to save for the deposit and you did. Now what? Where do you start?
First and foremost: congratulations!!! Deciding to become a homeowner was a big decision and saving for it is something to be proud of! At times the process to find and secure a home may seem complicated but it does not have to be. Start by getting the right team to help you through the process. First step, find an informative Mortgage Professional.
Before you shop for a home, it is important to know how much you can afford to pay each month. An exact ratio depends on total debt. Besides your monthly mortgage payments you will have additional expenses that you did not have as a renter. Create a budget with the following expenses in mind: property taxes, homeowner’s insurance, possible mortgage insurance, fuel/heat, water & sewer charges, maintenance fees (if you are purchasing a condo or coop), plus an allowance for general maintenance around the house.
It’s important to analyze your finances. Do not be persuaded to purchase more than you can handle. Buy according to what you can afford today and not based on what may come tomorrow. Find a mortgage professional that is knowledgeable and willing to educate you on the many available programs and grants that can assist you.
Eliminate any financial surprises. Have the Mortgage Broker pre-approve you. Note, that there is a difference between getting “pre-qualified” and “pre-approved”.
A “pre-qualification” is a general idea of the amount you may be able to qualify for once the required documents have been submitted and reviewed.
A “pre-approval” is a commitment from a lender stating the amount they are willing to lend you based on their detailed analysis of your income, debt ratio, tax returns and credit history.
Before starting your search, you want a “pre-approval” which tells you how much you are able to finance through a loan, what your monthly payments will be, the required deposit and other upfront costs and monies needed at closing. Typically, a pre-approval is valid for approximately 30 days. And can be renewed as long as your financial circumstances don’t change.
Once you know your budget and have your pre-approval in hand, the exciting search for your dream home may begin. Make note of what you want. Think of your needs: size of the space, location, available schools (if you have children), transportation, shops, amenities, etc.
It’s helpful to make a list differentiating between your “wants” and “must haves”. You would “love” a pool but “must” live within a certain distance from work. When creating your list, be realistic and keep in mind your budget, the type of homes in the area and your essential needs. It’s important to be flexible and willing to compromise. Remember that almost every home you look at will need some improvement or change to accommodate your preferences.
With your pre-approval and search criteria in hand, look for an Agent that you will be comfortable working with. The relationship with your Agent must be based on trust and understanding.
It’s also important to realize that a real estate agent can play different roles in a transaction so it is crucial to understand in which capacity an agent is working with you. As a buyer, you want to enlist a “buyer’s agent” who essentially is a licensed real estate agent that represents the interests of a home buyer in a real estate transaction. Their fiduciary responsibility is to assist you in finding and purchasing a property that meets your needs. This will include negotiating the purchase price and terms of a purchase and ultimately guiding you through the entire home buying process. A buyer’s agent will be your advocate and ensure that your needs and interests are met.
Once you find someone to work with, share your “wish list” and “must haves” with your Agent. Your Agent should be someone who will listen, understand your needs, answer your questions and provide you with information. Don’t be afraid to ask questions. Purchasing a home may be the biggest investment you make and one that cannot be easily resold or liquidated should you later regret your choice. Don’t be SOLD on the idea of a “great investment property”. The property you buy should ultimately fit your needs. The idea is to find a suitable home for you to comfortably live in and potentially grow in.
Do not allow the process to overwhelm or dissuade you. Take one step at a time. Plan accordingly. Equip yourself with information; knowledge is power. Making an informed decision will help you choose a new home where you will create wonderful memories, build equity, benefit from tax deductions and add to that feeling of accomplishment. The rewards of owning a home are priceless.
Need help taking the next step? Contact us; we’re ready to help you get started.