You're Ready to Buy Your First Home. So What's Next?
First of all, determine how much of a down payment you can save, and evaluate how much you can afford in ongoing costs, maintenance, etc.
Next, get a pre-approval on a mortgage from your bank so you know the maximum you can borrow, and the price range that you can afford. This will be helpful when you begin your search because your realtor can identify the homes in your price range.
Next, identify your home-buying team: a lender who will provide you with a mortgage, a realtor, a lawyer, a home inspector, an appraiser and an insurance broker. Read on below for more tips and advice.
Tips and Advice for First-Time Homebuyers
How do I Save for My Downpayment?
Create a budget you can live on to help you decide how much you can save each month (use Scotiabank's Money Finder™ Calculator to see where your money goes). You should factor in all of your monthly expenses, as well as some extra funds for those unexpected expenses. Make your plan realistic so you'll be able to stick with it. Remember that even $100 per month can quickly grow into a sizable amount over time.
If you have RRSPs, explore the Home Buyers' Plan to see if it could apply to you. And remember, the more of a downpayment you have, the less you'll have to borrow. And if you have at least a 20% downpayment, you won't have to pay mortgage default insurance premiums (note that some exceptions apply).
I'm Ready to Start Shopping for a Home
Write up a wish list of things you'd like your home to have, and prioritize what's most important to you. Once you've made your wish list and determined where you'd like to live, you can begin your search for the right home.
Consider if you want to purchase a new home or an existing one - both have advantages and disadvantages. Once you've decided, you can visit new development sites or have your realtor help you find the homes available in your chosen neighbourhood.
I've Found a Home That's Right for Me, What Should I Know Now?
You've found a home that you really like and that seems to fit most of your needs. But before you make your offer, a few things to consider:
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What are the property taxes?
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What are the condo fees?
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What are the heating costs?
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Is there easy access to public transit?
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Are there schools nearby?
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Is the location right for your whole family?
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Are there stores close enough for you?
If you're comfortable with the answers, ask your realtor to complete an Offer to Purchase. Let him/her help you decide what amount to offer for this home, and then present it to the seller. Sometimes negotiations around price are necessary.
The offer should include the price you're offering, a closing date and the specific "conditions" you want included (i.e. time period the offer is valid, a home inspection, financing arrangements, etc.). Also, ensure that it includes everything you expect to have remain in the home, including serial numbers of appliances, details of other fixtures, window coverings, etc.
You may want to have your lawyer review your offer to ensure your interests are protected. The process of making offers and counter offers is not uncommon and will result in the Agreement of Purchase and Sale.
My Home Purchase Offer has Been Accepted, What's Next?
If you already have a pre-approval for your mortgage, all you need to do now is formalize it with your lender. The home is subject to the lender's approval, and may require an inspection and/or appraisal. If you have any questions or concerns, this would be a good time to raise them.
Remember too, that choosing the right mortgage is as important as choosing the right home. So make sure that the mortgage solution you choose is best for you.
General Tips and Advice
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Choosing a real estate agent
Your agent should know the neighbourhood you are interested in, and preferably have an office there.
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Choosing a lawyer
Get a referral from friends, family or associates. Or call the law society to get a list of lawyers who specialize in real estate law. If you're buying a condo, choose a lawyer who has specific experience with condos.
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Choosing a home inspector
Ask for a referral or check with your provincial regulatory body, such as the Ontario Association of Home Inspectors. The Canada Mortgage and Housing Corporation's website provides valuable information on all aspects of home buying, including a fact sheet on 'Hiring a Home Inspector'.
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Negotiate visits prior to closing
If you plan to renovate, paint or are just trying to figure out which furniture will fit where, you'll need to plan for additional visits between the time your offer is accepted, and your closing date.
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Preparing to move
Ensure that your utilities are up and running and that everything in the house is working. If previous owners are moving out on the same day you're moving in, the logistics can be difficult - be prepared!
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Make sure your financing is in order and you're prepared for ALL of the closing costs
If you reside in a province that charges 'Land Transfer Tax', make sure you have that amount calculated and ready to pay on closing day. Some other closing costs you may encounter are: property taxes, heating costs, survey costs, appraisal and legal fees, mortgage default insurance premiums, moving expenses, or utility connections.
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Closing Day
Take the day off work, even if you're not moving that day. There will be documentation to sign and various other last minute details that you'll need to be focused on.
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Once you have possession of the home
Check to make sure everything is as it has been stated in the offer. You may have legal recourse if anything is missing.
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