1. Is it worth it?
The short answer is yes. However, home ownership isn’t for everyone. If
you pay rent, you are essentially throwing money out the window every
single month and you will never get it back. There are some benefits to
renting, but in my opinion, they do not out weight the long term benefits of
home ownership. You pay a tremendous amount of interest over the course
of a 25 year mortgage, but at the end of the day you will have something of
2. Understand the home buying process.
HGTV has ruined the perception of the home buying experience. It is very
important to talk to a professional about the home buying process in your
market, because it can be very different than other areas. A few things you
need to ask yourself are: How do I find out what I can afford? Deposit
cheques-what are they for? How much should a deposit be? What happens
if I back out of the property due to a terrible inspection? Do I have to pay
my REALTOR®? What exactly does a home inspector do? How long
should this process take? What other costs are involved? What about new
homes is that process different? Obviously everyone will have different
levels of understanding about the home buying process, but it is important
to have a conversation with a REALTOR® before you begin.
3. Get a (legitimate) mortgage pre-approval from a lender
I emphasize legitimate because there are pre-approvals that may not be so
solid once it comes down to actually submitting the application to the
lender. A rock solid pre-approval, whether with a mortgage broker or your
local banker should be with verified documents, not just verbal
communication. Some things you will need to prepare for your lender are
your T4 slips, pay stubs, employment letters, and notice of assessments.
These documents should be provided and verified before you even start
looking at homes.
4. Buy less than what you can afford
There are plenty of websites out there that will tell you how big of a
mortgage you can qualify for. These sites may not take into account all of
your expenses though, so be careful when using them. Home buyers tend
to focus on the purchase price of a home (understandably, it’s a large
number), however the most important number is the amount that is
removed from your bank account every month, that is what affects you on a
day-to-day basis. So when your lender says you can qualify for $400,000,
find out how much that costs you on a monthly basis, including principal,
interest, property taxes and condo fees (if applicable). The reason why I
say buy less than you can afford is mainly due to interest rates. They are
still at historic lows….but that means they only have one way to go! Be
mindful of how much a percentage point or two can affect your monthly
payment. Again, this is something that your REALTOR® can help you with.
5. Interview REALTORS®!
In my experience, especially with first time home buyers is that they start
looking for homes online and when they see a few that they might want to
go have a look at, they call the listing agent (the person who’s name is on
the sign). This is not the most effective way to search for homes. Think
about it, if you call the listing agent and he/she shows you the home…who
do they work for? That’s right, the seller…not you. It is beneficial to have
your own representation throughout the home buying process. Any
REALTOR® can show you any home, no matter who it is listed by. If you
don’t know a REALTOR® my suggestion is to find a few to sit down with
and interview…sellers do this all the time but very few buyers shop around
for a person to best represent THEIR interests. If you don’t know how to
find a REALTOR®, ask your friends, co-workers, see who is active on
social media, see who is active in the community you want to buy in…and
most importantly find someone who you think you can relate to. Buying a
home should be fun! You want to like the person you will be going through
this journey with so be mindful of that when selecting your agent.