Buying a home can be nerve wracking, especially if you’re a first-time home buyer. Not only is it probably the biggest purchase of your life, but the process is complicated and fraught with unfamiliar lingo and surprise expenses. Make sure you do your research, talk to professionals and get advice when you need it!
1. START SAVING FOR A DOWN PAYMENT EARLY
It’s common to put 20% down, but many lenders now permit much less. However, putting down less than 20% may mean higher costs and paying for private mortgage insurance. Just remember that even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000.
2. TAKE ADVANTAGE OF THE FIRST-TIME HOME BUYERSPLAN
The Home Buyers’ Plan is a program that allows you to withdraw up to
$25,000 in a calendar year from your Registered Retirement Savings Plan
to buy a house. If you have been saving for your retirement, the Home Buyers’ Plan helps you with your down payment, by essentially borrowing from yourself interest-free. And to ensure you don’t short your retirement fund, the government gives you a 15 year timeline to pay yourself back.
3. DETERMINE HOW MUCH YOU CAN AFFORD
Before you start looking for your dream home, you need to know what’s within you price range.
4. CHECK YOUR CREDIT
When you’re taking out a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the load terms.
5. PAUSE ANY NEW CREDIT ACTIVITY
Any time you open a new credit account, whether to take out an auto loan or get a new credit card, the lender runs a hard inquiry, which can temporarily ding your credit score. If you’re applying for a mortgage soon, avoid opening new credit accounts to keep your score from dipping.
6. BUDGET FOR CLOSING COSTS
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount.
7. RESEARCH MORTGAGE OPTIONS
Comparing rates with a Mortgage Broker will save you time and money. Mortgages is what they do, so they have the resources and access to get you the right deal for your situation.
8. BUY A HOME FOR TOMORROW
It’s easy to look at properties that meet your current needs, but if you plan to start or expand your family, it may be preferable to by a larger home you can grow into. Consider your future needs and wants and whether this home will suit them.
9. BE PREPARED TO COMPROMISE
It’s rare to find a house that’s perfect in every way, so think carefully about what you’re willing to compromise on and what you’re not. Perhaps no walk-in closet in the master bedroom is a deal breaker, but an outdated guest bathroom will be tolerable until you can renovate it.
10. LET LITTLE THINGS GO
When you’re looking at a home, it’s easy to get caught up on superficial details like paint colour, fixtures and carpets. These features are easy to change once the home is yours, so don’t let those tiny details get in the way.
11. KEEP SAVING
You’ve saved up enough to make a monumental purchase, your first home
– congratulations! But with home ownership comes major unexpected expenses, like replacing your roof or getting a new water heater, which I am very familiar with! Start an emergency fund for your home so that you won’t be caught off guard when these costs inevitably arise.
12. ONCE YOU FIND YOUR HOME, STOP LOOKING!
This is the golden rule from choosing anything from a car, to a wedding dress, to a life partner – once you’ve found what you’re looking for – stop looking! The same goes for a house. Once you’ve gotten the keys to your home, instead of looking for something better than what you have, focus your energy on making the space your own.