Tips for First Time Homebuyers
February 19, 2020 | Posted by: Mike Garganis
The place we call home, whether it be a small high-rise condo or a large house on the edge of town, is one of the defining features of our lives. What motivates first time home buyers to enter the market? According to Statistics Canada (Canadian Housing Survey: A profile of first-time home buyers, 2018), two-thirds mentioned: “to become a homeowner” as the foremost reason, while one-quarter stated “to upgrade to a larger or better quality dwelling” as the reason for entering the housing market. For the first time home buyer, this is an exciting time, but it can also be overwhelming. Here are some tips to help get you started.
The first step in buying a new home should be to take a look at what you can afford and how you are going to pay for it. If you’re like the majority of home buyers, you most likely need to apply for a mortgage.
There is no point in contacting a real estate agent and viewing properties that may be out of your price range. Knowing your budget beforehand will keep your expectations realistic and help narrow down your search.
WHAT & WHERE SHOULD YOU PURCHASE
Now that your budget is in place, it’s time to make a list. Itemize your requirements between “needs” and “wants” to get a clear picture. Single-family, duplex, townhouse or condo? New or a fixer-upper? A large backyard or a low-maintenance space? What combination of living space are you looking for? You’ll also need to consider the neighbourhood. Is access to public transit, schooling and amenities important to you?
Be as specific as you can and keep your list at hand when viewing homes, this will help you focus on what you “need”, rather than get sidetracked with what you “want”.
GET HELP FROM A PROFESSIONAL REALTOR
Buying your first home is a new experience and consulting with a professional in the field will serve you well and reduce stress. You are unlikely to incur out of pocket costs as 9 of out 10, a buyer’s agent is paid a finder’s fee by the seller’s agent.
Aside from helping with the forms necessary to complete a real estate transaction, a realtor will provide information about available properties, arrange for viewings, present a written offer, as well as familiarize you with the steps needed to complete the purchase. It’s important that your agent is familiar with the market you’re planning on buying in; determine what characteristics and strengths you value and research an agent who is the right fit for you.
ARRANGE FOR A HOME INSPECTION
A certified Home Inspector provides information on the physical condition of a property and will provide you with a written report as to its condition. Some concerns may arise so be prepared to either walk away or renegotiate your price if there are major issues like mould, evidence of a previous marijuana growing operation, or other alarming items noted in the report. It’s best to be aware of all, if any, deficiencies in order to avoid costly repairs shortly after your purchase.
Contact the Ontario Association of Home Inspectors to obtain a reference for a reputable certified inspector in your local area.
TAKE ADVANTAGE OF FIRST-TIME HOME BUYER PROGRAMS
As a first time home buyer, you may qualify for a variety of government programs that can potentially help you save money. For example,
• The Home Buyers' Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home.
• First-Time Home Buyer Incentive offers 5 or 10% of the home’s purchase price to put toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making homeownership more affordable.
• The First-time Home Buyers' Tax Credit was introduced as part of 'Canada's Economic Action Plan' to assist Canadians in purchasing their first home. The Home Buyers' Tax Credit, at current taxation rates, works out to a rebate of $750 for all first-time buyers.
You may also be eligible for a variety of energy-efficient rebates if replacing appliances, upgrading electrical or heating systems. Don’t miss out….if you’re not sure if you qualify, Google it!
DON’T FORGET CLOSING COSTS
There are last-minute costs, such taxes (property transfer tax and GST), legal fees, appraisal fees, moving expenses and home insurance to pay before you are finally in your new home. In order to avoid a financial crunch at the end of your purchase, you need to budget for those expenses now.
Other costs you shouldn’t forget to set money aside for include home inspection fees, utility company deposits, extra household goods such as appliances, window coverings, minor renovations, etc.
Not sure where to start? Contact me today to get pre-approved.