Buying a home can be one of life’s biggest decisions. Having the right information and experience is crucial to making sure your first home is the perfect choice for you.
For many of us, it is common to seek advice from those closest to us when contemplating decisions of this magnitude. Friends and family will undoubtedly have your best interests at heart but since most people only go through the home-buying experience once or twice in their lifetimes they likely lack the up-to-date reliable information a that you need to make informed decisions.
You need to discover people in the know to ensure you have the best information to make the best decision possible. In essence, you need to put together a home-buying team that has the ability to provide accurate information based on extensive knowledge and experience. This team should include a lender, realtor, property inspector and lawyer.
Your lender – The first crucial step in buying a new home is to discover what you can comfortably afford. A qualified lender will work with you to create an accurate picture of your financial readiness. Lenders fall into three main categories – chartered banks, credit unions and mortgage brokers. It is a good idea to interview several potential lenders to find out not only what you can afford but also who you feel comfortable working with.
A simple guideline in determining how much you can afford on a monthly basis is to ensure your housing costs do not exceed about one-third of your gross monthly income. Housing costs include your mortgage payment, property tax and heating costs.
You will also need to save for a down payment. A typical mortgage requires a 20-per-cent down payment. This can often be a little steep for young families in today’s economy. However, the Canadian Mortgage and Housing Company (CMHC) and Genworth Financial Canada offer insurance-backed mortgages with a low five-per-cent down payment to make it easier for first-time homebuyers.
Your realtor – In today’s information age, we can do a great deal of property searching ourselves and may feel we do not require the services of a realtor. However, a good realtor essentially functions as the quarterback of your home-buying team by narrowing down your home choices, scheduling viewings, writing quality offers, and helping to identify and coordinate other team members.
Realtors fall into two categories: listing agents, who represent the owner, and buyer’s agents, who represent the buyer. A good idea is to engage the services of a buyer’s agent to negotiate the lowest possible price on your behalf. It is essential to remember that the listing agent has been hired to achieve the highest price for his or her client, the homeowner. With the two agents negotiating for both sides, you will usually meet somewhere in the middle.
Your property inspector – Typically, an accepted offer to purchase will be pending an inspection of the property. A professional property inspector will go over all aspects of the dwelling to ensure you are getting what you are paying for and that there are no surprises. The results of an inspection will result in one of three outcomes: 1) your purchase of the home, 2) a renegotiation of your offer, or 3) a decision not to purchase.
Your lawyer – The lawyer's function is to conduct property searches, hold deposits, transfer funds between the buyer and seller, and ultimately transfer title (ownership) to you.
If you are considering buying a home, remember that it takes time, effort and planning. To move forward as quickly as you can, begin to put your team together as your first step and find out what you can afford.
Back to top
Previous | Next: Heat Pumps For Summer