Helpful Hints For First-Time Home Buyers
The task of buying your first home is a multi-part project requiring research and a lot of careful consideration. Although the process might seem daunting, the following suggestions might make the experience a whole lot easier:
Step #1-What Can You Afford?
- How much money do you have for a down payment?
- How much will a bank/lender let you borrow for a mortgage?
- How much are you comfortable paying on a monthly basis?
Starting off with what you are comfortable paying is one of the easiest ways to begin. You can base this number on your current salary or your current rent that you pay, then make adjustments from there. Try this What Can I Afford spreadsheet to give you an approximation. Keep in mind if you base it on rent; are utilities or maintenance included in your rent?
Next, get Pre-Approved. Go to the mortgage broker and they will help you get through the process. We always recommend a mortgage broker due to the numerous advantages and better rates. Checkout: The Advantages of a Mortgage Broker.
Mortgage – the amount a bank/lender will lend you is determined by two lending principals:
1. Gross Debt Service Ratio (GDSR) – this lending principle says that your monthly housing costs should not exceed 32% of your gross monthly family income
2. Total Debt Service Ratio (TDSR) calculation – this lending principle says that your monthly housing cost and payments on all other debts (including loans, credit card, lease payments, etc...) should not exceed 40% of your gross monthly income
Finally, what do you have for a down-payment? Based on the last two steps, you should have an idea as to the house price that you are aiming for. The minimum down payment you should have will be 5%. (as a guideline, factor in approx. 1-2% for other closing costs) Down-payments can be cash or money borrowed from your existing RRSP's. See Home Buyers Plan for more details.
Step 2: Choosing Your First Home
Now that you have a good idea of what you are comfortable with, you can begin the search!
This is the fun and exciting part of the whole experience. Make yourself a list of some of the basic needs and wants you require. The Cole-Newman Team will work hard finding a home in your price range with as many of the features you like. We setup the viewings to work around your schedules and make it convenient for you!
Here's a convenient form for you to get an idea of home features that you might be looking for:
Home Buyer's Checklist
When you have found the home you want and can afford STOP LOOKING! Make that offer. All your preparation leading up to this point was to keep you from wavering at this point and missing the opportunity to buy your new home. Depending on the market, stopping to think for a day or two could lose you your opportunity to buy the home you've been looking for.
Step 3: Buying Your New Home
Now that you've decided on the home that you have been looking for, it's time to create the offer. With our help we can draw up the offer, including clauses, warranties and any other legalities associated with your purchase. We will ensure that all your concerns are covered, and the paperwork is flawless. This is the area where our experience can really make a difference!
With the offer drawn up, we now continue on to the presentation of the offer. This part of the process can sometimes be easy, and sometimes like a tug-of-war. However, with our negotiating skills and experience we will keep your mind at ease and get you the best possible purchase price.
When all parties come to a mutually beneficial agreement, we continue the rest of the process and paperwork, including delivery of the deposit cheque and forms. Your next step is selecting a lawyer to ensure the title is clear and the finer details on the paperwork are clear.
At this point we will keep you informed with any other steps that need to be followed from now until your moving date. We are here to keep you informed, especially at this time when so many things are on the go in your life.
Step 4: Moving Into my First Home
Congratulations, on the purchase of you new home!
At this point we will have provided you with a hard copy list of the steps you need to complete leading up to your moving day. Some things in cluded on this list would be:
- mailing out change of address forms
- booking your moving company
- other minor costs associated with you home purchase
- ensuring your down payment is ready
- and much more...
Remember, we are only a phone call away ...... contact us
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