Buying your first home is a very exciting and dream-filled process. This process involves many steps and decisions, but it also offers the chance to start a whole new life. This comprehensive guide is designed to help you through the process of buying your first home.
1. Considering Financial Check-Up
Purchasing your first home is the beginning of a new chapter in your life and the beginning of new hopes. But you need to start this new era by first assessing your financial health. According to recent surveys, 49% of Canadians plan to buy a property in the next five years, up 6% from a year ago. Understanding your expenses, income, credit scores and debts will be very useful to show your purchasing power.
Start by reviewing your credit report and any issues that may affect your mortgage approval. A healthy credit score will get you a better interest rate. Generally, your credit score should be above 660 to be considered as good. Then, calculate your debt-to-income ratio (DTI) so that it is within a comfortable range for lenders. Depending on the criteria and the type of loan you are applying for, your comfort level will depend on the lender’s criteria. But in general, most lenders will reject your mortgage application if your DTI ratio is above 36%.
2. Establishing Your Down Payment Fund
Setting up money for a down payment (the amount you put toward the property initially) and closing expenses (the charges incurred while purchasing a home) requires planning, just like it does for any major purchase.
Examine homes within your budget. Remember to account for prospective maintenance costs, property taxes, insurance, and the monthly mortgage payment (loan repayment) in addition to the purchase price. You may use this to help you make a reasonable budget for your new house.
To increase your funds, think about investing. You could also look at Canadian first-time homebuyer programs that provide reduced down payment mortgages or assistance with a down payment. Generally, you can put as low as 5% but if you can manage, go for a 20% down payment.
3. Choosing a Lender and Getting Pre-Approved for a Mortgage
At this stage, you should shop around between different lenders to find the right one for your mortgage pre-approval. You should not only shop around between lenders but also get different loan estimates. During this process, ask for forms from each of the different lenders you contact that will provide you with all the payment and loan terms and conditions for your potential mortgage. In this way, you can easily compare the different conditions offered to you. If you want to relieve yourself of the burden of finding a good lender with rates that fit your needs, work with a mortgage broker.
4. Partnering with a Real Estate Agent
Choosing an agent who is familiar with and experienced in legal services for real estate is essential, as they can ensure that all legal aspects of the transaction and process are handled properly and in a smooth and streamlined manner.
To find the right real estate agent, you can visit several different places and get an idea. This way, you will be sure that you have chosen the right place before you make a deal with any agency right away.
5. Starting Your House Hunt
If you have met with your real estate agent to discuss what kind of house you are looking for, your house-hunting process has begun. You can create a list for yourself so that you can consider your wants during this process.
Moreover, if you want to make this process even easier, you can start by looking at houses online. This way, you will have an idea of what is on the market and you can easily form ideas in your mind by filtering only the places you are considering.
6. Making an Offer
It’s time to put your offer into action when you’ve located the home of your dreams. To examine sales of comparable homes and to enable your real estate agent to negotiate if the offer exceeds your expectations, ask them to conduct a comparative market survey.
7. Completing The Mortgage Application
After your offer is accepted, finalize your mortgage application by providing updated financial documents and any requested information to your lender. They will process your application and order a home appraisal promptly. Timely responsiveness will help prevent delays in the process.
8. Scheduling a Home Inspection and Appraisal
One of the most essential steps in the buying process is the house inspection. Issues must be resolved immediately if the house needs major repairs or alterations. If your contract has an inspection clause, you can negotıate to have the initial deposit back, the repairs completed, or the repair amount subtracted from the purchase price.
At the appraisal stage, you may be eager to finalize the purchase, but it’s crucial to review everything carefully. Before completing the purchase, a final walk-through will assist you in identifying any concerns that need to be renovated or fixed.
9. Closing the Sale
At this stage, you are almost at the end of your home-buying process. You’ll be able to get the keys to your house after paying for all the required paperwork and closing charges. Carefully review the closing disclosures provided by your lender to see all the fees and costs involved in this process. After completing all your paperwork, you are now the owner of your home!
10. Moving Into Your New Home
Congratulations, you’ve got the deal! It’s finally settled into your new home. Now, create a moving plan and schedule movers. Your family and friends can also help you with your moving process. Don’t forget to update your new home address in your bank and other important places.
Purchasing your first house is a process that needs to be well thought out. Remember that the most crucial aspects of the house-buying process are patience and skilled advice. If you follow these recommendations, you may move forward with the buying process and make informed decisions.
