Buying a home is both an exhilarating and overwhelming experience. Let me try and guide you through a few steps to help make it a little smoother and more enjoyable.
Determine What You Can Afford
I can’t stress this one enough. There’s no point looking and dreaming about million dollar homes if what you can afford is actually half that amount.
Know what you are willing to put down as a down payment. Aim for 20% to avoid CMHC insurance if possible.
Go talk to your bank or mortgage broker to get a pre-approval. Need a reference? I know a great one!
The bank or mortgage broker will tell you the upper limit of what you can get a mortgage for. Don’t go there. Cut it back to something you are comfortable with that won’t make you house poor.
One Time Fees
There are several fees you need to consider before purchasing a home, along with the timing of them.
After an accepted (conditional) offer you’ll have to pay for an inspection ($500) and potentially an appraisal by the bank ($350) , although you should be able to negotiate that the bank pay for that.
If your offer goes through (congratulations and have a look at my article for your moving checklist) you’ll be faced with several expenses upon closing:
· Utilities Adjustments.
Of course you will also have your moving expenses and the start of your home insurance and utilities to consider, as well.
You should be prepared for roughly 1.5-2% of the purchase price for all of your closing costs. Make sure you budget for this because this is actual cash and not tacked onto your mortgage.
Making an Offer
So you’ve crunched the numbers, seen enough homes and you’re ready to make an offer - now what?
We sit down to discuss current pricing scenarios and comparables for the neighborhood. How long has it been on the market? How fast are homes selling in the immediate area? How does it stack up compared to other homes currently sold? If I’ve done my job educating you about values while visiting homes, you should already have a pretty good idea of what you’d like to offer.
There are three major and moving parts within an offer: Price, closing date and conditions.
The first two will have the biggest sway on the owners. They’ll have a desired closing date (when you take possession of the home); trying to match that up with your ideal date will make things go smoothly. Price is pretty self-explanatory - everything is negotiable and the price is what they are “asking” for and not something set in stone.
An offer with conditions creates a ‘conditional sale’ on the property with one or more conditions that need to be fulfilled before the sale goes firm. These could be a home inspection (always recommended), financing, or Insurance. The home is not sold until all of these conditions are met.
Acceptance of the Offer
Depending on how things go in negotiations there could be several rounds of offers before an agreement is created that all parties will sign off on.
So you’ve got a deal! Now what?
You need to hire a lawyer. Any lawyer can do it but you want someone that specializes in real estate transactions so they can look after your best interests. Once again, if you need a recommendation, I can help point you in the right direction.
I am with you every step of the way and can help guide you through the ins and outs of the entire home buying experience. From mortgage brokers to home inspectors to lawyers, I have some great referrals for you that I have worked with over the years and trust completely.