Whether you’re looking to buy your first home, upsize, or downsize – there is a lot to know. With the help of an experienced realtor, it can be simple and stress-free. This buying guide will take you through the steps you need to know when it comes to buying a home.
The largest step to buying a home is getting your finances in order and ready to go. This section includes important financial decisions, as well as choosing a lender and getting pre-approved for a mortgage. Ensuring you have this organized makes finding and buying your dream home a simple process.
Getting pre-approved for a mortgage (Step 1)
Before you begin look for your new home, you need to determine how much money you have, and what you will need in order to afford to pay in monthly payments. Talking to a mortgage broker or bank will help you determine your price range and what you can afford. Getting pre-approved for a mortgage is the first step in buying a house. When you pre-qualify for a mortgage, your lender will examine your income, debts, and downpayment. A mortgage pre-approval is in writing, and generally is valid for 90-120days. It requires you to prove your income and credit history. Getting pre-approved will ensure that you know how much of a mortgage you can get, and that will in turn help you to know what price range of homes to look at during your search.
Mortgage decisions (Step 2)
Mortgages can seem like an intimidating process, especially for a first time home-buyer. Once you’ve qualified for a mortgage, there are some decisions to be made before you can take possession of your new home.Mortgage Term and Amortization Mortgage term – The amount of time a lender will loan you money for. When the term is up, (typically set for anything from 6months to 5years) the remaining amount is due unless you arrange new financing terms. Amortization – The calculation or a mortgage over a longer period of time (example: 25years). They are calculating how long it will take you to pay the amount back, plus interest, over a 25 year period. The longer the amortization period, the lower your payments. You always have the option to change your amortization depending on market conditions, or your financial situation
Payments – mortgage payments consist of two parts: principal, and interest. This is known as a blended mortgage payment. Each payment reduces your balance owned on the mortgage by the portion of the payment that is credited to the principal.
The interest rate is the largest contributing factor to how much you end up paying for your home monthly, and throughout the life of your mortgage. The interest rate is the cost of borrowing money, and fluctuates with the economy.
A fixed rate mortgage means that you commit to a single interest rate that won’t change during the term of your mortgage. This locks down how much of your monthly payment is credited towards the principle of your mortgage.
With a variable rate mortgage, your interest rate fluctuates based on the bank’s prime interest rate.
House hunting is by far the best part in buying a home!
Whether you’re beginning your search online, or in person, having a good Realtor on your side can help you in finding your dream home. There are a few things you want to figure out when you begin your house hunt: your wish list, choosing an agent, and of course, finding homes!
Making your wish list
A wish list is composed of the things you that are WANTS and NEEDS in your new home! A want is something you’d like but isn’t
a deal breaker, for example a hot tub, while a need is something that you have to have, for example the number of bedrooms!
Choosing an Agent
Buying a home is a large decision, and the process can be stressful and emotional – but it doesn’t have to be. It is
important to find an agent you are comfortable with, who will help support you through the process and is experienced with negotiations. An agent who is dedicated to your goals and needs.
Searching for Homes online
94% of Canadians search for homes online, so you’re not alone. While there are endless real estate websites to choose from,
the main one to consider is Realtor.ca. Realtor.ca is the website that is owned by the real estate association and pulls available properties directly from the system that agents use.
When you’re searching for a home online, keep an open mind. Photos and descriptions are not always representative of what the
house looks like in real life. Remember to “read between the lines” when it comes to descriptions of homes for sale.
Real life House Hunting
House hunting in real life gives you the opportunity to get a feel for different neighbourhoods, ask questions, and refine your wish list as you go. Working with a real estate agent you trust is the only way to guarantee you’ll be able
to see the homes you want to see.
It is important to make a plan when it comes to house hunting, try to focus on one neighbourhood at a time so you’re not
driving back and forth. Remember to take notes and photos on the homes you visit to be able to look back on afterwards.
Making an offer is an exciting time, and with the right realtor it can be stress free for you. You want to ensure that your
offer includes everything from the price you are prepared to pay, to any inclusions that you want (such as appliances), as well as your ideal closing date and conditions that need to be met. Once you have submitted your offer, the seller can either accept, reject, or counter offer. During these back and forth negotiations, having an agent that is experienced is vital to ensure you get what you want.
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