First-Time Home Buyers Guide
So, you’ve decided to explore the exciting journey of becoming a first-time homebuyer! Whether you’re just starting to consider homeownership or you’re ready to take the next step, the process can feel overwhelming at first. In this blog post, I’ll break down the home-buying process into simple, easy-to-understand steps, so you know what to expect and can feel confident as you begin your journey toward owning your first home.
Deciding if homeownership is the right step for you
Before diving into the idea of buying a home, take a step back to consider if this is the right idea for your current lifestyle and financial situation. Understanding the financials of owning a home is where people often fall short. Buying makes sense if your career is stable, your savings are secure, and you want long-term control over your living space. Renting remains the best choice if you value flexibility or you plan to relocate in the near future.
1. Figuring out Your Budget
Before you get excited and jump into looking at homes, it is important to sit down and go through what you can afford. Many people forget to think about the cost associated with owning a home. You need to consider:
- Down payment: The amount you want to contribute to the purchase price of your home.
- Property insurance: An ongoing expense that is added depending on the location of your home
- Strata fees: If you are living in a condo/townhouse.
- Legal fees: Putting away a bit of cash to help pay for a notary or lawyer to help handle the legal aspects of the purchase process.
2. Get a Pre-approval
Understanding and going through the pre-approval process is an important first step in the homebuying process. During the process, the lender will review your finances to determine the maximum amount they will lend you at a certain interest rate, which is the cost of borrowing, or, in simpler terms, what the bank will charge you to borrow. They will ask you for your personal information and will most likely run a credit check.
Some of the possible questions they may ask you before pre-approving you may be:
- What assets you currently own
- Your income
- Level of debt you have
You will also need to provide the following information:
- Photo ID
- Proof of employment
- Proof you can pay for the down payment and other closing costs.
- Information about your other assets, for example, your car loan.
3. Finding a Realtor® to help you with your journey
Buying your first home is a huge milestone; make sure you have someone who is your biggest cheerleader and has your best interests at heart. The right Realtor® will make this process a great experience. A Realtor® can help you understand the local market, find properties that match your needs, arrange showings, prepare and negotiate offers, and navigate the mountain of paperwork involved in purchasing a home. They can also explain important steps along the way, such as subject clauses, deposit deadlines, and completion and possession dates, so you have a better understanding of what you’re agreeing to.
4. Start Looking at Homes Within Your Budget
Now for the fun part: finding your home!
Before you get out and start touring homes, take the time to sit down with your Realtor® and discuss your budget, needs, and wishlist. This helps your Realtor® understand exactly what you are looking for and focus on the properties that align with your lifestyle. Once they have a better idea of what you want, they will be able to set you up on a personalized home search. This home search will notify you when a listing that fits your criteria hits the market, another perk of working with a Realtor®! Remember, you do not need to have every aspect figured out; your priorities may change once you get out there and start looking at your options.
5. Make an Offer
Once you have found a home you want to make an offer on, inform your Realtor® of the price you want to offer, deposit, and your preferred closing dates, such as when you want possession of the home. Protect yourself with contingencies, such as subject to finance, inspection, mortgage approval, and acceptance of strata documents if you are buying a strata unit (condo/townhome). Your Realtor® will go over the offer with you and submit the final draft on your behalf. Again, a huge perk of working with a Realtor® is that they deal with all of the paperwork so you don't have to!
6. Complete Your Due Diligence
As soon as the negotiation is done and you have received an accepted offer, it is time for you to get to work and remove your contingencies. Typical subject removal usually takes 5-14 days, but this can vary depending on the subjects your offer contains. In this time, you will contact your mortgage broker or lender right away with a copy of the accepted offer and submit your mortgage application. You will arrange for a home inspection to ensure that there are no major issues with the home that could possibly be a deal breaker. If you are purchasing a condo or a townhome, this would be the time to go over and review all of the strata documents. After all of the subjects have been fulfilled or waived, congratulations, you now have a binding contract!
7. Get Ready For Completion
Once your offer is firm, it's time to start getting ready for completion!
This is when the legal ownership of the property is transferred to you, and your lawyer or notary will help you complete the transfer of ownership. In the meantime, you will need to:
- Arrange home insurance: Make sure to secure a property insurance policy that is set to start on the completion date.
- Meet with your lawyer or notary: Sign the documents needed to proceed with ownership transfer.
- Plan your move: Book movers, plan to change your address, arrange utilities, and if you're living in a building, make sure you book to use the elevator!
8. Get The Keys
You've made it to the final step, possession day!
Once the purchase has been completed, you're entitled to take possession and collect the keys. Congratulations!
Final Thoughts
The process of buying your first home can be extremely nerve-racking, but understanding the steps and talking to a professional can ease some of the anxieties. The most important thing is to take your time and ask lots of questions!
If you’re thinking about buying your first home and aren’t sure where to start, feel free to reach out. I’d be happy to help you understand the process and explore your options!
