Often when renting, people decide that home ownership is their top priority. Why pay rent when you can be putting your money into your own home? This could be the most important investment you’ll ever make, so please proceed carefully!
You need to first determine whether or not home ownership is right
for you. The main advantages of owning a home are:
-financial security
-flexibility (your home can reflect your personal tastes and needs)
-stability
Before deciding, consider some possible disadvantages:
-financial stress-you need to come up with a down payment, meet
regular mortgage payments and you will have maintenance costs.
-extra costs of home ownership, such as insurance and property
taxes
-more responsibility- you must make payments, repairs and maintain
your property.
You will need a budget and a list of priorities before you start house-hunting. Calculate your net worth (your total liabilities minus your total assets), your current monthly expenses and your debt payments. How much do you have available for a down payment? You will need this information when you meet with your mortgage specialist.
Your future monthly housing costs should not exceed 32% of your gross household monthly income. Housing costs include mortgage principal and interest, taxes, heating expenses. Also, your total monthly debt load should not exceed 40% of your gross monthly income. This would include housing costs and other debts such as car loans and credit card payments.
When you consult with a mortgage specialist, they will be able to give you a pre-approval. This is very important before you go looking for a house. The amount of mortgage that you can afford will be established and the lender will give you a written confirmation at a fixed rate of interest for a specific period of time. This will make the search for your new home easier and less time-consuming- you will know exactly what price range you can look in and be confident when making your offer to purchase.
With all of this in place, you may want to spend some time at open houses to see what is on the market. When you decide to take your search one step further, contact a realtor. The best way to find a realtor is through personal recommendations. You may also want to interview a few realtors to find who will be the best fit for you. You should feel relaxed and not pressured when working with your realtor, and that person should be aware of exactly what you need. You should be provided with plenty of information on the current market and be able to make a comfortable, informed decision about your purchase.
Your realtor will be ready to show you all of the homes which fit your price range, in your preferred location and you will find the one that is perfect for your needs. Your realtor will prepare your Offer to Purchase and represent your best interests as a buyer throughout your transaction, negotiating on your behalf to get the best possible deal for you. Your realtor is there to save you time, trouble and money. He/she can provide you with essential information about the area you are interested in and supervise your home inspection once your offer is accepted.
You will need a lawyer. Your lawyer will ideally be someone local with knowledge of real estate laws, regulations and restrictions. Your lawyer should have reasonable fees and be there to explain anything to you if you have any questions.
The home inspector will inform you of the condition of the property you are purchasing. He will be able to reveal any deficiencies that may be present and require repairs. A good home inspector generally is a member of the Canadian Association of Home and Property Inspectors.
As with your fit with a realtor, it is wise to get recommendations from people you know before you choose a lawyer or home inspector. Ask questions.
The time it takes to find your perfect first home may take as little as a few days, and as long as a year. It depends upon your budget, and how much time you have to find the home that fits your particular needs.
If you do all of your homework you’ll be ready to go. Be patient, it may take longer than you think. Make sure that your first homebuying experience is a positive one!
Tammy Dufault
Century 21 BJ Roth Realty Ltd.
