These realtors shared with us their experience and referred to all the aspects mentioned above and more. You can read their opinions below.
In no particular order…
1. Donna Boruck – DonnaBoruck.com
First Time Home Buying, how do you know if you are ready? You generally start thinking about buying your first home when certain achievements have been attained. You are in a position that your income is relatively stable and you feel comfortable committing to a mortgage.
You could see yourself staying in the city or town you find yourself in for at least the next few years. You want to start putting down some roots, investing in where you live and personalizing your living space.
Getting started, there is no point starting to look for a place without having your mortgage pre approved. Know your financial comfort level, not just what you can be approved for. Have more than just the required down payment on hand. There are closing costs to cover including taxes, legal fees, home inspection, adjustments as well as all the little extras you’ll need for your new place.
Assemble a team you can trust, Real Estate Agent, Lender, Lawyer, Inspector. Ask friends and family for recommendations or interview candidates to be sure you are a good fit. Often one professional can refer to a group of trusted advisors. This can really help simplify the process and get you off to a good start.
2. Joel Flewelling – David Dunn
When buying your first home, the very first thing that needs to be done is to meet with a mortgage broker and find out how much of a mortgage you can afford. That way, you are able to start looking for homes that are within your budget. There’s nothing worse than starting to look for a property that you fall in love with only to find out you can’t afford to buy it. Make sure that the real estate agent or broker knows of any incentives or programs available for first-time home buyers.
Also, it’s extremely important to know what type of property you are looking for in particular. Once you’ve decided, meet with an agent that can make suggestions for properties that fit within your parameters.
It’s extremely important to have a real estate agent that you’re comfortable working with and that you trust with helping you make one of the most important decisions in your life!
Also, make sure you are aware of all costs associated with buying your first home. Costs can vary from province to province and you never want to be in the position of finding out there are extra costs that you were not privy to on closing day!
3. Mariko Baerg – Bridgewell Real Estate Group
Get pre-approved and talk to a mortgage broker/bank — these should be the first steps for a first time home buyer because it will give them direction on what their true budget is. It is important that first time home buyers obtain this information as soon as possible, as it is key that they are aware of all of the costs associated with home ownership so that they can proceed with a comfortable and realistic budget based on their lifestyle.
During this process, the mortgage broker will also estimate closing costs, which is essential for a first time home buyer to be fully aware of so that they are prepared to close come the completion day.
Furthermore, a mortgage calculator won’t take into consideration whether you’re self-employed or on a salary, where your credit score stands, and other important factors that can affect affordability. To avoid disappointment and wasted time, a buyer should get pre-approved before they start looking at places to ensure that they know exactly what they can afford comfortably.
Another benefit when you get pre-approved is that you’re able to lock in the interest rates for typically 90-120 days. With raising interest rates set to continue rising in Canada, locking in an interest rate sooner rather than later can result in hundreds of dollars saved on a monthly mortgage payment. If a buyer completes within that rate hold period but the rates have risen, they will still be able to purchase at the held rate rather than the current rate.
4. Rebecca Kopel – RoyallePage.ca
Most first time buyers are so nervous spending all this money they have saved up over so many years that for them, spending this hard-earned money on a home needs to be profitable. However, profit is not the most important reason to purchase a home. I remind them that yes, a good investment is important, but real estate is a long-term gain, not a short-term gain. Remember that it is most likely going to be your home for at least five years or so.
They are looking for their first home, not just an investment. They have to LIVE there. Buying a home needs to feel right, not just have the numbers align. As I have seen this process unfold with many first-time buyers, I remind them gently that real estate is long-term (5-10 years at least) before they may see strong increases in value. They should plan and think accordingly.
Also, moving is EXPENSIVE! Moving costs, legal and other fees, land transfer tax, and (sometimes commission), all add up and can cost tens of thousands of dollars to a home buyer. This needs to be taken into account as well so that the buyer does think along the long-term. Pay special attention to the moving company and other particular circumstances that could affect the transfer to better prepare for the unexpected.
5. Jamie Blades – Homicity
When you get pre-approved with your mortgage, it will feel more than a milestone in the home buying process especially for first time home buyers. It is a necessary step they need to take before they start searching for a home for two reasons: to know how your home buying budget and to make the offer right away.
Knowing how much you can afford narrows down your search. With a pre-approval, you will not be tempted to ask for a larger mortgage loan if you find a property that has everything you want, but the listing price range is out of your budget. Once you get pre-approved, the mortgage sets the limits you need to find the right home at the best possible price.
Sellers usually have several offers on the table, and yours might be rejected without a pre-approved mortgage. When you get pre-approved you are showing the seller that your credit history is clean, your finances can take on a mortgage, and you are ready to sign the agreement of purchase and sale. The house or condo that checks everything off your list might be gone, or it might be lost in bidding war if you are not ready to show that you are a suitable candidate
6. Dorothy Mazeau – DorothyMazeau.com
The most important step in purchasing your first home is to talk to a Mortgage Broker and have a full pre-approval evaluation done, including proof of income, credit worthiness, and debt load you are currently carrying. Insist on this being a thorough review, which is somewhat time-consuming; some lenders won’t want to go through the full process until they are at the stage of approving a mortgage on a specific property – which is too late! In order to avoid any unpleasant surprises, insist that this be done early on.
A Mortgage Broker is more likely to be willing to do this for you than an individual bank or another single source lender. A Mortgage Broker has access to a wide range of mortgage products and a good one will be willing to do the work to get you a real pre-approval based on the dollar amount of the mortgage you qualify for.
Once you know the value of the mortgage you qualify for, you can go shopping. Only look at properties you know you can afford, based on this amount. Beyond that, you will be seeking the right balance of location, the condition of the home, and features it offers. Keep in mind that this is your first entry into the housing market; your dream home may be somewhere down the line.