Whether you're moving to accommodate your growing family or looking to downsize, buying a home is a big decision. It's particularly nerve-racking when it's your first time.
Take heart, it's not as difficult as you may think. With the right mechanisms in place and a little research beforehand, buying your first home is well within your grasp.
Do Your Homework
Get informed about the buying process early, before it begins, to save yourself time, hassle, and money. Speak with your trusted REALTOR® ahead of time about your options, including how long it may take to find your dream home, what neighbourhoods are in your price range, and discuss where you can be flexible in your wish list.
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Talk through the financial possibilities with a mortgage broker or bank advisor, find out what you're approved to spend and if the payments at that level will be comfortable. It's not uncommon for lenders to approve an amount that's beyond your comfort zone. If that's the case for you, pay close attention and trust your instincts.
Work out what the mortgage payment equivalent is of your current rent, and go from there. The higher the down payment you're able to make, the lower the biweekly or monthly payments will be.
When you consider that it can take decades to pay off a mortgage, the more you can budget to pay in the early days, the more you can save in interest down the road.
Ensure the Right Fit
When considering your real estate professional, do your research. Visit the Real Estate Council of Ontario (RECO) website to confirm your REALTOR® is registered. Check out testimonials on the agent's website to get a sense of their approach to client service. Ask friends for referrals.
Ensure you find someone you're comfortable with, because your ability to work well with their style can go a long way towards strong communication and finding your dream home quickly.
Understand What You're Signing
Before you sign an exclusive Buyer Representation Agreement, make sure you know what it means. Understand how long it will be in effect, and what the different clauses mean.
Professional, licensed REALTORS® will walk you through the document, clause by clause, ensuring you're comfortable every step of the way. Seek legal representation for a second opinion if you still have questions, and don't sign until you're ready.
It's customary for a seller to pay the real estate commission, while a buyer will typically cover the Land Transfer Tax. That said, the representation agreement is a legal document and, as such, it's important for you to understand your rights and responsibilities.
Keep Budget in Mind
Legal fees, land transfer tax, mortgage insurance, moving costs, and utility disconnection and connection fees are some of the critical areas you'll want to consider in your budget planning.
Moving costs can vary based on volume, distance, and whether you hire a professional mover, but there is almost always an expense associated with this. Get a quote from a few reputable moving companies so you have a benchmark in your planning.
Legal fees vary depending on where you live and the complexity of the purchase, but can range from $1,000 - $2,000 or more per transaction.
Land Transfer Tax is calculated on the sale price of the home, and can be quickly calculated using a Land Transfer Tax calculator.
You will also likely wish to invest in a home inspection before putting in an offer. This helps uncover any potential problems in home, including structural and mechanical components, among other things. The cost for these varies depending on the size and age of the house, but can range from $400 - $600 or more.
Your real estate professional will usually recommend that you include conditions in your offer. In essence, a condition means the offer is subject to certain things happening before it's considered a firm deal. This often includes home inspection and financing conditions, at a minimum, but can include other things as well.
In the case of a condominium, you will want to include a condition requiring a satisfactory lawyer's review of the Status Certificate, for example.
As part of the service provided, your REALTOR® is there to protect you in the transaction. As such, they will recommend which conditions to include and how much time you may need to satisfy them.
Bear in mind that in a seller's market, conditions may be looked on unfavourably by a seller. If you enter into this type of multiple offer scenario, it will be important to carefully weigh the pros and cons of adding conditions.
Your real estate professional will offer you guidance, should you find yourself in this situation, but it's always best to have your strategy in place ahead of time.
Establish ground rules in advance about what you want from a home, what you're willing to spend, and what conditions absolutely must be met. Once your rules are set, stick to them. This will help to preempt any anxiety as you go into your negotiation.
Expect the Unexpected
The process of buying your first home is at once exciting and scary; we've all been there. Those who find the experience the most enjoyable are those who plan well in advance, set financial limits and stick to the budget, and find a REALTOR® they can trust and can see themselves working well with.
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