by Lino Arci
on Wednesday, June 26th, 2019 at 7:12am.
Are you ready to buy a home for the first time? If so, there are a few things you should know. While finding the perfect place to live is a rewarding experience, it can also be complicated. From obtaining a mortgage to setting a price range to hammering out your agreement with a seller, getting the process right is the key to success. Luckily, there are a few steps you can take to help ensure a great outcome.
If you're a first-time home buyer, here are five ways you can prepare for one of the biggest purchases you'll ever make...
1) Obtain pre-approval
First things first: if you're going to need financing, you should get pre-approved for a mortgage. During this process, a lender will look closely at your financial history and current circumstances. They'll use this information to figure out how much you're likely to receive in financing. Many first-time buyers don't see the point in getting pre-approved, but it's a crucial step in the purchase process. It tells sellers that a lender has vetted you, and that you'll likely have the necessary funds to make it to closing.
2) Budget carefully
Most buyers are aware that they should start off the home hunt by setting a reasonable price range. After all, knowing what you can afford—and what you can't—can prevent a lot of headaches and wasted time. Start by performing a few calculations to determine what type of home (and monthly mortgage payments) you can fit into your budget. The biggest mistake that many first-timers make is underestimating the costs of homeownership. From insurance to taxes to larger utility bills, the expenses can add up quickly—so be conservative when you're budgeting.
3) Know your neighbourhoods
When you're searching for your first home, it helps to know exactly what you're looking for. Start by researching neighbourhoods. Consider a variety of factors that matter to you, from price points to local schools and green spaces to transit options. When you're narrowing down your list of areas, try to be open-minded. While most home buyers have a few ideas of where they'd like to live, they're often surprised to learn that communities they've never considered before are a perfect fit.
4) Understand closing costs
From a financial perspective, the road to closing is less stressful when you know what to expect. There are a number of costs you'll pay at the end of your purchase, though these differ from one transaction to the next. In almost all cases, the most significant one will be land transfer taxes. The amount you pay will be calculated as a percentage of the overall price of your home (typically between 1 per cent and 2.5 per cent). You'll also have to pay legal costs, along with an assortment of others that may include inspection and appraisal fees.
5) Work with the right agent
When you're buying your first home, your real estate agent should act as your guide. From helping you find properties that meet your needs to making sure your i's are dotted and your t's are crossed, a knowledgeable professional will help at every step. If you're thinking of working with a particular agent, make sure you understand their approach. Ask about their track record, what sets them apart, and whether they've worked with first-time buyers before.
Purchasing your first home is a big step toward securing your future. By making sure you're as prepared as possible, you can set yourself up to make an informed decision—and a purchase you'll be happy with for years to come.
Preparing to buy a home? From starting your search to making a highly-appealing offer, we can help at every step. Get in touch to learn more about the process! If you want to learn more about first-time homebuying, visit our complete buyers guide!