Buying your first home is a big and important step in your adult life. For many, it represents a personal achievement and fulfilment of a major goal. It’s crucial to be prepared and to take it seriously because buying a home is a long-term investment.
Borrowing capacity and financial means
Purchasing a house is often so exciting that many people don’t follow important steps or do them in the wrong order. The first crucial step is to visit your financial institution and meet with a mortgage specialist. This meeting will establish how much you can borrow and what payments you can afford. After all, there’s no point looking at $300,000 homes if you can only afford homes in the $250,000 range.
At this meeting, you will also be able to look at ways of reducing other debts you may have, which can help with your payments and the amount you can borrow. You should also talk about the down payment you have. If possible, it is recommended to have 20% of the mortgage lending value to avoid needing CMHC insurance and therefore paying a premium. If you only have 5%, you can still purchase a home and qualify for a mortgage, but you will have to pay an insurance premium to the CMHC.
At the same meeting, you may receive pre-approval for the mortgage your financial institution is willing to give you. This step helps to protect your financial means as you shop around for your home. It’s an important step in the whole process and your life will be much easier if you do it right at the start. Being able to show realtors and sellers that you have mortgage pre-approval shows them you are serious and ready to buy. If you are up against other buyers, this document can tip the odds in your favour.
Real estate professionals
Buying a home also involves deeds, inspections and other important procedures. Once the purchase process has started, things can move forward very quickly. That’s why it’s recommended that you arrange who you want to work with before it becomes urgent. This will prevent a lot of unnecessary stress.
Choosing a home
There are many different types of house to choose from. Depending on your needs, you might want a condo, a single-family home, a duplex, triplex, townhome, etc. Your final choice should also depend on your long-term plans. As mentioned above, don’t bother looking at homes above your price range. That simply wastes your time and the seller’s time. It can also set your expectations too high, so try not to keep them realistic.
That said, do try to see as many homes as possible with your realtor. See lots of types so you can get an idea of what you like and what you don’t like. Remember, buying a home isn’t a race against the clock; take your time to reflect and make the right choices.
Inspection and questions
You can never ask too many questions, so don’t hesitate. The inspector will do a lot of work for you, but it’s essential to ask about certain potential issues. How old is the water heater? Has the roof been replaced recently? How effective is the insulation?
Insulation is very important because it can have a significant impact on your electricity bills and comfort. Insulation that complies with industry standards will mean lower bills and more even temperatures.
Expanded polystyrene (EPS) insulating panels will offer both short- and medium-term savings. Unlike other types of insulation, EPS is recyclable and won’t absorb water. This means if you have water damage, you won’t have to replace your insulation on top of everything else! Is there any renovation work needed to the walls or foundations? If so, use the opportunity to remove ineffective insulation like damp and compacted wool and replace it with expanded polystyrene boards.
Offer to purchase
After all these steps, you should have found the home of your dreams. You can then proceed to make an offer. If possible, be flexible on the possession date; sellers love this!
Now you have everything you need to start the process of buying your first home. Have fun, it’s not every day you get to make such an exciting purchase!