First Time Home Buyers Guide

Buying a home for the first time is a very exciting, and stressful experience without the right advice. It’s very important to work with the right professionals to ensure a seamless and less stressful experience. Take a look at the steps involved and considerations you should make while purchasing a home.

1. Affordability:

•  Ensure you’re able to afford a house! Going through your budget to ensure affordabability is a very important step. You can do that with a mortgage agent, as they walk you through the process of getting pre-approved for a mortgage. It’s important to know that a pre-approval is not a guarantee of funds but an estimate based on the current circumstances that you present to the mortgage agent. It gives you a place to start when meeting with a Realtor. Instead of working with what you think you can afford, working through a budget and getting a pre-approval will give you a ceiling price point and ensure you’re looking at homes within your budget.

2. House Hunting:

• A very exciting time in the buying process is looking for a home which can be both fun and frustrating. Depending on the market there may be few homes on the market (sellers market) or many homes on the market (buyers market) according to your budget. Working with a Realtor, as their client, ensures you are represented properly as you begin the search and have someone alongside you that won’t have emotions intertwined with the decision. You can lean on your Realtor when you have questions about homes, about the process of buying and with advice regarding what type of conditions you should include in an offer to purchase a home.

3. Making an offer:

• Once you’ve chosen a home, putting together an offer is the next step. Using your Realtor to put together the offer and advise you on what conditions/clauses should be included will help put you at ease. They should explain all of the documents, the dates, the conditions, the process, etc. After an offer has been put together, signed and sent (registered) to the seller, they have a certain amount of time (irrevocable time) to decide if they want to accept, reject or counter the offer. Assuming it is accepted it’s now your turn to do more work! You need to fulfill your conditions.

4. Get financing:

• Assuming you need financing, typically one of those conditions is to get financing. This is the actual application for the mortgage, that a mortgage agent would help you with. Using all of the information that was gathered initially for the pre-approval, a credit check is typically done (which requires consent). Assuming that nothing different comes back from the credit bureau then was presented, the probability of having the mortgage accepted by the lender is high (assuming the property is acceptable to them too, and the appraisal value is close to what the purchase price is).
• Once the terms are agreed upon between you and the lender, in writing, you’ll have a commitment letter that will allow you to waive the condition of financing (your Realtor will walk you through that process too).

5. Closing

•  A very important detail that many overlook as closing approaches are certain fees. At the time of closing there are typically adjustments that the lawyer makes which can include (but are not limited to) property taxes, utilities (ex. propane in a tank). On top of these adjustments there are other fees like land transfer tax (a percentage of the purchase price), moving expenses, setup fees, etc. Ensure you have an open conversation with the professionals you’re working with to confirm you have the cash upon closing to cover all the fees. It’s important to know this at the beginning of the process because it can play into the amount you determine to use as a down payment towards your mortgage.
• Your lawyer will take care of the transfer of funds from you and the lender to the seller’s lawyer and distribute the keys to you upon confirmation.
• Time to enjoy your new home!

6. After Closing

• •  As your mortgage agent would have explained there are terms for your mortgage (ex. 2, 3, 5 years). A term is different from the amortization period (the period of time it takes to repay the mortgage). Terms are typically different from the amortization period and need to be renewed upon expiry. Have a conversation with your mortgage agent to discuss what your new term will be and any plans you have for the future (ex. renovation, investing, cottage purchase, child college, etc.). They can point you in the right direction of what new term and product is right for you!