Happy home ownership requires attention to detail – an understanding of the market in your community, deciding on a price you can afford, finding a mortgage with the best rate and terms and building a realistic understanding of the costs of managing a house or condo.
My job as a Realtor is to provide you with the tools and experience needed to guide you through this process. If you are ready to start your journey into home ownership, here are 10 tips to get you started.
1. Know how much you can afford.
Let’s say you're interested in a home, but you’re not certain it’s within your price range. That will be a problem. Before you start browsing, it’s crucial that you iron out important questions such as, “What can you afford?” “What is your ideal price range?”
To help you get started, use an Online Mortgage Calculator to determine the maximum monthly payment you can afford based on the price of the home after the down payment. You will also be able to play around with the different Amortization Rates, Payment Frequency and Interest Rates to see how these factors will effect the monthly amount.
Even though your dream might be to purchase a character home in an established neighborhood, the reality is you may be working with a budget for a condo. Don’t overbuy on your first home. You can always move up later on.
2. What’s on your wish list? What are the absolute Must Have’s?
Before you start seriously shopping, consider your lifestyle and what you value in a home. What features would enhance your well-being? And what really would not work for you? From there, make a list of "Must Have’s" from location, to square footage, to community or building amenities. This will also help guide me, your Realtor to narrow your home search down to properties that really fit your needs and will ultimately save you time and stress in the long-run.
3. Aim for a 20% down payment.
Your down payment should be at least 5% of the price, but it is recommended that buyers should aim to put down 20%. If you have money in your RRSP's, you can use a certain amount towards the purchase of your first home.
Also, it is important to consider that what you have saved for a down payment isn’t necessarily the amount you should use. You may want to hold a little back for closing costs, minor repairs, moving expenses or furniture for your new home.
4. Don’t forget about associated and closing costs.
These costs may include some or all of the following:
Home Inspection Fees
Land Transfer Tax
Property and Fire Insurance
And how about the commissions you ask? Well, as the BUYER the commissions are actually covered by the seller – not you (the buyer) Whew! (*Confused about this? Feel free to ask me more!)
5. Get pre-approved for your mortgage.
After you’ve figured out how much you can afford for a down payment, decided what you absolutely must have in a property, and have budgeted for closing costs, the next step is to contact your bank or mortgage broker in order to get pre-approved for a mortgage.
A pre-approval will let you know how much you can borrow, and the rate provided to you during the pre-approval will be guaranteed for 120 days even if rates change during this time.
Aside from this being a necessary step - getting pre-approved for your mortgage early on also gives you an edge over other people who might be interested in the same property as you. The seller can be reassured that you are a serious buyer, and you will be able to confidently negotiate the purchase of your home.
Need a referral? We work alongside some of the best Mortgage Guru's in the business and would be happy to put you in touch with someone. Let me know!
6. Understand the different payment options.
You can pay for your mortgage in a variety of ways, including monthly, bi-weekly, and weekly payment options. Paying off your mortgage sooner can save you a fair chunk of change in interest, while a longer amortization period will reduce your regular payments and frees up cash in your budget. You can use this online mortgage calculator to start to understand what payment schedule is right for you.
Some mortgages also give you the ability to make extra lump sum payments, or the option to skip a payment. Make sure you talk about this with your Mortgage Professional or Broker to understand what your options are, and that you are comfortable and knowledgeable about the terms.
7. Ask your Realtor to educate you about the market.
It is always a good idea for home buyers to show interest in the comparable homes in the area they are looking at buying in. As your Realtor, I do all the heavy lifting for you on this one and provide the data and research and walk you through it. As the home buyer it is absolutely in your best interest to know that you have a confident understanding of the value of the area you’re searching in.
8. Use an experienced Realtor who knows the area and the market.
The choice you make in a Realtor really can make or break the entire home buying process for you. Experience matters, and when it comes to making a decision to purchase your home you need to know that your agent is a professional. A good Realtor has extensive knowledge of the market and an ability to listen and execute what you are looking for. You can meet our team here to learn a little more about us and our collective expertise.
9. Buy with your head, not your heart
While purchasing a home does have many emotional deciding factors – it also calls for many moments that require logical thinking. This will be the biggest purchase of your life. Letting emotions overtake common sense could result in paying more for your home either at the point of purchase, or over the long run.
10. Once you find your home, stop looking.
It’s the golden rule for choosing anything from a car to a wedding dress – once you’ve found what you are looking for – stop looking! The same goes for a home. Once you’ve waived those conditions, it’s time to focus your energy on making the space your home!
Interested in seeing what is currently on the market? Use our easy to navigate Calgary Real Estate Search!