HOME AND LIVING

BUYING YOUR FIRST HOME

Being able to buy your first home is an incredible feeling!! It can, however, also feel a little scary. Nonetheless, it is one of the best long term investments you can make. Whether you are considering a house, a condo, pre-construction or resale, there are a few things you should keep in mind when you are ready to start the search.

COSTS:

There are a few costs associated with purchasing a new home. 

  1. Your down payment. Typically you need anywhere from 5%-20% for your down payment.  20%, or more, is better, as you can avoid paying CMHC insurance fees, which can really add up. Also keep in mind that a portion of that down payment gets used as you initial deposit (think anywhere from 3.5-5%)
  2. Closing costs including, but not limited to:
  • Provinicial Land Transfer Tax (and Municipal Land Transfer Tax if buying in the City of Toronto); 
  • Legal fees, for registering the transfer of the property and registering a mortgage;
  • Title insurance;
  • Tax on CMHC Insurance;
  • Tax on a new build (pre-con sale);
  • Home inspection;
  • Additional appraisals, if the one from the bank isn’t what you need it to be;
  • Property Taxes;
  • Utilities; 
  • Moving; etc

Ideally you would want to set aside 2-4% of the purchase price for closing costs, but keep in mind that there are rebates available for eligible first time home buyers.

PREPARE YOUR FINANCES:

It is very important to get your finances in order before you start your search.

First, make sure you have a solid credit score. Your credit score will be used to determine whether you’ll be approved for a mortgage. Obviously the higher your score, the better your chances. If your score is lower than you’d like there are ways to help improve it.

Second, find out how much you can afford. Getting pre-qualified for a mortgage means the bank will tell you exactly how much they are willing to lend you. A pre-approval should be in writing and include a guaranteed interest rate (valid  for 60-120 days). This will help you figure out the price range of homes you should be looking at.

Third, keep in mind the plethora of first time home buyer incentives :
Land Transfer Tax Rebates; 
RRSP Home Buyer’s Plans; 
First-Time Home Buyers’ Tax Credits; 
GST/HST on New Housing Rebates;
Etc.

Fourth, (and this is very important) once you have your finances organized, DO NOT make any major lifestyle changes: Don’t buy a new car; don’t switch jobs; don’t donate a large sum of money, etc. And if you do, make sure you go through and re-evaluate your credit score, and mortgage pre-approval.

INTERVIEWING AN AGENT:

This is likely the biggest purchase you will make, you should take the time to find the right person to represent you.  There are a few things I think are especially important when selecting an agent:

  • Is the agent part of a team or a single agent? Some work alone, some are teams of 2, and some are large groups. Each type is different, with pros and cons to each: how they work within a transaction will vary; how they communicate within the teams is different; and how many people YOU end up working with is different.
  • What is the agent’s experience in the areas you’re interested in? This is where your agent’s understanding of neighbourhoods, schools, grocery stores, socio-economics, re-gentrification etc. come into play.
  • What is the agent’s experience with the type of property you’re interested in? Not every agent is experienced with everything. Commercial vs residential; condo vs freehold; urban vs rural. 
  • Do they have a team of professionals they work with? Find out about their connections to inspectors, mortgage brokers, lawyers, cleaners, painters, contractors etc
  • What is the agent’s plan for winning your home? How do they negotiate? What happens in a bidding war?
  • How available are they? For some of us real estate is our full time career, whereas for others it’s a 2nd job. If you wanted to see a house tomorrow, does their schedule allow it? 
  • Does the agent have access to the data you will need? In Ontario we have different boards for realestate, and unfortunately all the boards don’t share data with each other, so if you are working with an agent whose home board is Toronto, they may not have access to all the sold data, and comparables in Hamilton.
  • How does your gut feel? Is the agent listening to you? Do you like them? Do you trust them?

And, a bit of self-promotion here, if you, or someone you know is thinking about buying their first home, please reach out, I’d love to interview for the job 😊. 

Meetu M

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