Thinking of buying your own place? It’s normal to feel a little overwhelmed. After all, it’s the biggest purchase you can make. In an effort to remove some stress from the equation, here are a few tips from the experts.
1. Get pre-approved.
A down payment of 20 per cent is a “rarity” with first-time buyers, but that’s how much you have to have down if you want to avoid paying CMHC’s mortgage default insurance. It’s calculated based on the size of your mortgage and how much money you have down.Your credit is one of three factors that will be considered before you get approved for a mortgage. The other two are income and your down payment.
Of course the bigger the down payment, the smaller your loan (and overall interest charges) will be. One way to help boost your down payment is to borrow money from your RRSP. First-time buyers can pull out $25,000 tax-free and have 15 years to pay it back. If you’re buying with your partner, you can contribute $50,000 together.
2. Find a real estate agent.
While having a real estate agent is not necessary when buying a home, it is recommended — especially if it’s your first time going through the process. Having someone who is knowledgeable about the market leading you through the process could take a big weight off your shoulders.
And a good agent will more than likely have a network of individuals such as…inspectors, credit counselors, insurance agents etc. who will be a part of your team.
3. Stay mindful of your budget.
One of the biggest things you have to consider in this decision is your lifestyle & what that requires from a cost perspective.
For example: You may be able to afford [your own home] but you’re also going to have to realize that you might be giving up going out for drinks after work or out for dinner with friends because you’re going to be paying a mortgage now.
Ask yourself: if you lost your job and weren’t working for three months, would you be able to afford your home? Or are you stretching yourself too thin?
You should also keep that in mind during your search. Just because a bank approves you for a certain amount, doesn’t mean you have to
4. Be open.
Wallpaper can be removed, walls painted and cupboards changed. The things you should be more concerned about is the size and layout, along with the condition of the roof, plumbing and hot water tank.
1. Don’t think you’ll be in that home forever.
The reality is, on average, people only live in their first two homes for seven to ten years.
So remember that not everything has to be 100 per cent as you’d always imagined. They call it a “starter home” for a reason.
2. Don’t be too emotional.
Experts say this can be quite common with first-time buyers. Check the emotions at the door and think with your head.
Always keep in mind the re-sale value of the home you want to purchase, and remember that in real estate it’s all about location, location, location.
Purchasing something that you can see yourself in for five years.
3. Don’t make big purchases before getting approved for a mortgage.
Approval is contingent upon your current income, credit and savings remaining the same. Do yourself a favor and halt on the spending until after you close on your house.
4. Don’t forget about closing costs.
Closing costs can add up. The CMHC recommends putting aside anywhere from 1.5 to four per cent of the purchase price to cover them.
Oh, and don’t forget to also save for a rainy day. You never know when that hot water tank could break down.
