Ready to buy your first house? You’ve been looking at homes online, so what comes next? Contact me as I am a REALTOR® with an ABR® designation. As a result of this training, I help you “buy” a home instead of “selling” you a home. This home buyer’s guide discusses the steps involved in a home purchase.
Have Your Finances Ready
First of all, you need to understand your credit rating. Low scores limit the number of lenders who will accept you and also increase the interest rate you are charged. Tips to improve your credit scores.
Next, you need a basic understanding of your current financial situation and the maximum home price you can afford. Monthly debt payments, household expenses and income are factors used to calculate the two affordability rules. These are your GDS and TDS ratios. These ratios determine if you can realistically pay for a home. The maximum purchase price is calculated using your income, down payment and interest rate. In addition, mortgage loan insurance and it’s costs are discussed. Talk to a mortgage professional if your calculations look encouraging.
Also, the federal government offers financial assistance for first time home owners. First Time Buyer’s Tax Credit offers a tax credit. The Home Buyer’s Plan allows first time home owners to use their RRSP as a down payment.
Mortgage lenders require a down payment which is typically 5% of the purchase price. Allow money to cover closing costs which may include home inspection, property insurance, legal and registration fees, new purchases, renovations, moving costs, utility hook up fees and property tax adjustments and condo document review.
Your mortgage specialist collects your financial information and does an initial suitability analysis. These documents are forwarded to the mortgage lender. If their specific loan criteria are met, you will receive a letter with your maximum mortgage amount. Now you are ready to go looking for your first house with a REALTOR® ABR®.
Start looking for your first house
The type of housing you purchase at depends on your price, the lifestyle you want and personal preferences. Your team consists of friends or family that support you during this process. In addition, there are professionals on your team. Most of the professional relationships will be defined by contracts, and all these contracts should be explained to your satisfaction before you sign.
Your REALTOR® ABR® will search for properties that fit your parameters and coordinate showings for you. When looking at homes, let your real estate professional know what you like and don’t like about each property. Because of good communication, future showings can be fine tuned to your preferences.
You have fallen in love with a property! A number of checks will be done by your REALTOR® ABR® to make sure the property is as good as it appears. An offer to purchase is written to the seller that includes purchase price, possession date and deposit amount as well as other items. Conditions that protect you such as financing approval, home inspection and condo document review are added to the contract. The seller may accept, reject or counter your offer.
When the offer is accepted, the conditions in the offer that protect you need to be fulfilled within the time frame specified for the contract to be valid. The contract then goes to your lawyer for review and signing. They will collect your down payment and some of the closing costs. Final moving arrangements, utility connections and address changes need to be finalized.