Deciding to buy
Maybe you’re tired of paying rent each month and would prefer to pay yourself rather than your landlord. Perhaps your family’s current home has outgrown their needs. Maybe it’s time to downsize or to find a home that requires less maintenance. People have different reasons for choosing to buy a home. It is the single greatest financial investment of most people’s lives, so it’s important to make sure you’re ready.
The following is a checklist to help guide you through the home buying process.
Create a wish list
Think about what you want in a home. Create a list of wants vs. needs. You may want a garage or pool, but you may need three bedrooms and two bathrooms. Consider what neighbourhoods you’d prefer to live in. Would you prefer a family-friendly active community – or a home that is more quiet and private from neighbours? You may want to consider how far you need to travel for work each day or what schools and businesses are nearby. Knowing what you’re looking for can make the search for the perfect home a lot easier.
Sell your home
Most people do not want to carry two mortgages; so if you own a home, now is the time to sell. This also allows you to have a clearer financial picture when it comes to purchasing your next home. Selling your home prior to buying your next one can avoid a potentially stressful financial situation.
The down payment
Think about how much money you want to put toward a down payment on your home. If you’re a first time home buyer and have very little saved, there are programs available for your situation. The conventional mortgage requires a 20% down payment. Remember not to put all of your money toward the down payment as there are other costs associated with buying a home, such as legal fees, a home inspection, a title search and disbursements. You should also try to have an emergency fund set aside for any unexpected issues that could arise.
Get qualified and pre-approved
Getting qualified by a mortgage broker or bank allows you to know what price range you can afford. This process can usually be done over the phone after supplying the bank or broker with your current income, debts and assets. Being qualified is based solely on the information you supply the lender. The lender can help you decide what type of mortgage works best in your current situation. However, if you really want to look attractive to a seller, I would recommend getting pre-approved. Getting pre-approved means that you are making an official mortgage application. The lender will perform an extensive check on your financial background and current credit rating. The lender will be able to provide you with an accurate mortgage amount for which you would be approved. Getting qualified and pre-approved not only gets you one step closer to buying a home, it also keeps you from wasting time looking at properties that are outside your price range. If you would like, I can provide you with a list of recommended mortgage brokers in our area.
Find a Realtor®
Realtors such as myself specialize in finding you the right home. There is no cost associated with hiring a Realtor as they are paid by the seller. Make sure the agent you chose is someone you feel comfortable working with. They should be aware of sales, listings and house prices in the local market.
Search for your dream home!
Providing your Realtor with your wish list and price range allows them to work their magic. Realtors know the local market very well – from how long a home has been sitting on the market to how many times it has been listed. With my background in carpentry, one of the benefits to having me as your Realtor is my ability to estimate the cost of any renovations needed. Together we will work towards finding you the perfect home for your needs.
Make an offer
Once you’ve found your perfect home the next step is making an Offer to Purchase. Before making an offer, I can provide you with important information such as what homes in the area have been selling for and how long it has been on the market. You will be asked to sign a “conditional offer” meaning you’re prepared to purchase the home so long as financing has been approved or once you’re home has sold. You may also choose to make a deposit which shows the seller good faith. If you are buying a resale home, it is important to make your offer conditional on a home inspection. This can help you avoid unexpected costs down the road. I can provide you with a list of recommended home inspectors in the area. Once the conditions have been met, you’ll make the offer “firm and binding”. If, for example, the home inspection turns up a major issue that you’re not prepared to deal with, you’ll receive your deposit back and the offer with be revoked.
Find a lawyer
Purchasing a home is a major financial transaction and it’s important to have a lawyer on your side to ensure the paperwork is in proper order. I can provide you with a list of recommended lawyers who specialize in real estate. Your lawyer will review your purchase agreement, conduct a title search and prepare documentation for closing.
Close the deal
If you’re a first-time home buyer, make sure you consider closing costs prior to making an offer. There are many fees and taxes associated with purchasing a home such as legal fees, land transfer tax, title insurance and disbursements. Closing costs can easily add up to 1 ½ to 2% of the purchase price of the home. If you’re purchasing a brand new home these figures can reach 2½ %.
On closing day your lender will give your lawyer the mortgage money. You will give your lawyer the money for the down payment as well as any remaining closing costs. Your lawyer will pay the seller, register the property in your name, and give you the deed and keys to your new home!
Congratulations! You are now a home owner. It’s time to move in and enjoy your new home.
Hamel Realty, 2013
image: courtesy of loanbox.ca