I have recently had the pleasure of working with many first time home buyers and I began to notice a trend. Most not all expect to buy a home on a soda pop budget but expect to find a home that has all the bells and whistles. It's ok to have high expectations when buying your first home but there are certain things that should take precedence over anything else. Here are some tips for all the property virgins out there.
1- Size should not be more important than location. Real Estate is all about location. Buying in the right neighbourhood that will bring a greater return on investment should be the priority. You will kick yourself when the time comes to move on to something bigger if the home has not captured a higher resale value in the future.
2- buying a home within your means. It's important not to stretch yourself financially when searching for your first home. I know everyone wants the bells and whistles right off the hop but it’s not logical to live house poor. Buying a modest first home and living comfortably is better than living pay cheque to pay cheque. Most people who don't understand this concept should think that it's better to own a modest home than pay rent to a landlord.
3- the structure of the home is more important than the look. This one is a no brainer. Buying the a home that requires the least amount of repair possible. Most first time buyers become obsessed with buying older homes that have tons of character which is ok if the home was properly maintained over the years, but usually older mystic homes do require thousands to be spent in repairs. Do your best to avoid this money pit.
4- Knowing how much you can afford and being approved prior to looking at potential houses. It's important in getting yourself per approved first before going out and shopping blind. The home buying process is a lot of fun when buyers are aware of what they can afford, it elevates tons of stress.
5- Understanding different mortgage products. It's important to sit down with a mortgage specialist that can educate first time buyers about how different mortgage products work. This tip is especially important as most buyers are not aware of the hidden costs that can come from certain mortgage products.
6- Closing costs. Budget accordingly! In Ontario the buyer is responsible to have closing costs funds available after the down payment. You cannot as a home buyer include closing costs into the mortgage. Costs include as follows;
A) Land Transfer Tax
B) legal Fees
C) Title Insurance
D) Home Insurance
E) Appraisal Fees
7- The more the down payment is, the better. In order to avoid CMHC insurance fees, home buyers should aim to have at least 20% down to towards the purchase price. This will allow for a better mortgage product and hopefully a better interest rate as well.
8- Get a grip on the closing costs. Don’t forget about tip #6 in this guide! Most home buyers don't budget accordingly which will cause big issues at the closing table. Always budget 2% of the purchase price.
9- Don't look at homes that are out of reach financially. I have no idea why some first time home buyers like giving themselves grief buying looking at the dream home as opposed to the goal. Home ownership! Stick and only view homes that you can afford.
10- Remember to furnish the essential rooms. Having a prudent budget in place to furnish the essential rooms that will be utilized from the get go. No need to furnish spare bedrooms but having the funds to buy proper small wares for the kitchen and having a couch to lounge back on is always great. The point is to live within your means and not living house poor.
10 great first time home buyer tips, I hope you enjoyed them but most importantly follow the tips wisely and buying your first home will be a great experience rather than a nightmarish stressful event. Make it fun! Be smart and enjoy the moment.
Please feel free to add any other tips that you think is important in the comments section below.
Also please feel comfortable to contacting me if you require help with home buying process. Virgin or a pro, I don't discriminate.