For most Canadians, buying a home is the biggest, and most important purchase they will make in their lives. And for many first-time homebuyers, the path to finding, financing, purchasing and outfitting a new home is a long and winding road.
If you are looking to make your first home purchase – whether by yourself, with a partner, or with your family – there are few things you should keep in mind to help make the process as smooth as possible. Consider these tips for first-time homebuyers to help you on your way.
Carefully Consider Location
As the old saying goes – location, location, location!
When considering your first home purchase, the old adage does ring true. Making sure your potential home is in the right location is vital. Ask yourself the following questions:
- Do I mind being on a busy street? Or would I prefer a quieter one?
- Are there schools in the area?
- How accessible is public transportation? Grocery shopping? Other everyday necessities?
- Are there parks and outdoor spaces in the area?
Be Patient With House-Hunting
House hunting is a process. You can’t expect to find your new home within a matter of days, so take your time and be patient.
Understand that no home will be able to fulfill every single requirement on your “Wish List.” Pick your most important features – such as “2 storeys” or “4 bedrooms” – and stick to them. But be prepared to be flexible, too.
Determine what your “needs” are, versus what your “wants” are, so you can figure out what you are willing to compromise on when it comes to your new home. This will help you narrow down your options so that you can find a home that fits your family’s needs and budget.
Research Down Payment Options
While the minimum down payment is at least 5% of the property’s price, it is highly recommended that you put down as large of a down payment as possible – preferably 20%.
The best thing that you can do, as a first time home-buyer, is put down 20% or more of the value of your home. That way, you will be able to qualify for a conventional mortgage.
Get Pre-Approved For Your Mortgage
After you have researched and decided on your down payment, you will want to contact your bank or mortgage proper in order to get pre-approved for your mortgage.
If you get pre-approved, you will have an automatic advantage over other potential buyers interested in the same property. Getting pre-approved for a mortgage will indicate to sellers that you are serious about purchasing the property, and will be able to negotiate the home purchase seriously.
What’s more, getting pre-approved before putting a bid on a property will help you in determining what you can afford, and help set you up for successful bids.
Don’t Forget About Closing Costs
Many first time homebuyers make the mistake of forgetting about closing costs. Be prepared to pay approximately 1.5 to 3.5% of your home’s total price in closing costs, so budget accordingly.
Your closing costs may include some or all of the following:
- An appraisal fee
- A home inspection fee
- Interest adjustments
- Property and fire insurance
- Property transfer tax
- Any legal fees
- Title insurance
- A Land transfer tax
Besides closing costs, you’ll want to also carve out a small budget for any extra costs that come with your new home – such as moving expenses, furniture, or small repairs.