The process of becoming a homeowner is truly exhilarating. It’s a defining moment in your life and marks the start of your adulting phase. Anyone who has gone through the motions knows that it requires a lot of determination, patience and sacrifice. While it is a big decision to make, it’s 100% worth it and a truly rewarding experience.
Before you can officially “enter the market”, you’ll want to do your homework and find out everything you need to become a homeowner. With this being uncharted waters, there’s probably a lot of technical jargon being thrown around which can make things confusing and stressful. To make things a little easier, we’ve put together a guide that can help you during the search for your first home.
Get pre-approved for a mortgage
First things first – if you want to buy a house, you need to prove that you can afford it.
To do so you’ll need to have some money put away. Base your savings goal on having enough to cover a down payment and closing costs while leaving some money to be used for house maintenance, payments and emergencies.
If you’ve got this under control, finding a mortgage broker will help you secure the remaining funds needed to buy a home. This person will act as the middleman between you (the borrower) and a lender. There are various types of lenders, including: banks, mortgage companies, insurance companies and credit unions. However, before you start reaching out to any lenders, you’ll want to check your credit score. A poor credit score can result in mortgage refusal, a lower approved amount or higher interest rate, or lead to a larger down payment than hoped.
You’ll also need to provide proof of your identity, employment and ability to pay the down payment and closing costs; information about any assets you possess; and information surrounding any debt or financial obligation you carry. These will all factor in to how much money, if any, the lender is willing to give you.
Once this step has been completed, you’ll know the maximum amount that you qualify for and have an idea of what your price range should be.
Selecting an Agent
Now that you’ve been pre-approved it’s time to pick out a realtor. If no one is coming to mind, ask around to see who your family and friends have used in the past. Taking the time to meet with candidates will ensure that you pick the person that’s right for you. They will also be a great resource for finding inspectors and contractors which will make your life as a homeowner that much easier.
Remember, the realtor is representing YOU. Make sure you let them know what it is you are looking for in a house. From size to location to age, there are many factors that play into a house’s value. At the end of the day, you want to find a home that meets your needs. Once you’ve established the criteria for your dream home, you can officially start looking.
Searching for a house
The trick to this step is to not rush it. Houses will come and go on the market and you need to be ready for that. Whether you conduct daily searches online or receive listings from your realtor via email, you will likely come across several properties that are of interest to you.
If you think there’s a house that could be the one, let your realtor know and they will arrange a viewing for you. This is your chance to get an in-person look at the house, which will give you a better understanding of its layout, feel and potential. Make sure you reference your checklist of must-haves so you can weigh out the pros and cons of each house you view.
One thing to keep in mind about the real estate industry is that it’s very competitive. Just because a listing price is set for a house, it doesn’t mean that it will sell for that amount. It is quite common for houses to be listed lower than their appraised value. This is a strategy that sellers use to gain the interest of buyers, in hopes of receiving multiple offers to cause a bidding war. Their intention is to land on someone that is set on buying the house no matter the cost. Keep this in mind and consult your realtor if you’re keen on a specific listing.
Making an offer
If you’ve found a home that you can see yourself living in, contact your realtor and tell them you’d like to make an offer. They will then prepare documentation that outlines any pre-written clauses, the names of all buyers, sellers and agents, the lot dimensions, property information, closing date, etc. You will also have the opportunity to set any conditions that the sale will depend on. This can include things like a house inspection and arranging finances.
Don’t expect to hear anything right away. The sellers will want to review any offers they receive and can even come back with a counter. As previously mentioned, real estate is very competitive so don’t get discouraged if your offer isn’t accepted. However, if it does get accepted, you will start to feel the excitement!
If your offer was conditional on financing, have your realtor send paperwork to your mortgage broker so they can arrange funding for purchase. If a home inspection is required, get an appointment booked as soon as possible so you can detect any underlying issues the house may have.
Find a lawyer, coordinate utilities and schedule tours
Assuming the conditions of the sale have been met, you will need to start looking for a lawyer. Once you’ve found one, have your realtor send them paperwork so they start working on your deal.
In the meantime, you should start to research home insurance providers and contact the appropriate gas, hydro and water providers to let them know that you will be taking over the payments. To keep things organized, set up a bank account that will be dedicated to household expenses. Most providers have the option for pre-authorized payments, so you won’t have to worry about ever missing one.
With the countdown to move-in day underway, you can also begin to set up your viewings. This is your chance to show family, plan out your new home’s layout and assess the condition of the house. You typically have the opportunity to conduct a few viewings but make sure you save one to the week of the closing date to check for any issues that the seller needs to fix.
Closing time
Something that we can’t forget about are the taxes attached to the sale of the house. These are the Land Transfer Tax and Property Tax. With this being your first home, you will be eligible for rebates on your Land Transfer Tax which will save you some money. As for Property Taxes, your payment schedule will depend on your down payment and could be included in your mortgage payments. There is also the option to pay them weekly, monthly, quarterly or annually so it all depends on your specific situation.
In the days leading up to your move, you will be asked to meet with your lawyer to sign some paperwork. These documents will outline everything surrounding the sale of the house and your responsibility of it moving forward.
Now that the day is here, there a few last things that need to take place. First your lawyer will receive the mortgage funds from your lender. Then you must provide your down payment and closing costs to your lawyer. The lawyer will then pay the sellers, register the home in your name and will call you once the deed and keys are ready to pick up.
Move in and enjoy it
It’s now time to celebrate the start of the next chapter of your life. It might take some time, but once you’re all moved and settled in you can finally make it your home sweet home.
If you are a first-time home buyer, consider CAA Home Insurance1. CAA offers a range of products that are flexible and designed to meet your unique needs. Plus, CAA Members automatically save 10% on CAA Home Insurance2.
For more information or to purchase CAA Home Insurance, please visit caaniagara.ca/home, contact an Agent, or call 1-877-222-1717.
1 Property Insurance is underwritten by CAA Insurance Company. Certain conditions, exclusions and underwriting eligibility rules apply.
2 To qualify for the discount you must be a current CAA Member in good standing (CAA Membership dues paid in full by membership expiry date). Eligible CAA Members may qualify to receive a Member Loyalty Discount based on membership tenure and Roadside Assistance usage.
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