First Time Home Buyer's Guide
Hiring a professional real estate agent (that you feel comfortable with) to walk you through the process is great when you are buying for the first time. Letting you see and get comfortable with the paperwork involved, having basic timelines explained to you, describing who is involved at which point during the buying process (such as financial people, inspectors, lawyers), offering referrals of trusted individuals in all of the roles just listed and looking out for your best interests is important.
There are many benefits to being a home owner. Here are a few to consider:
Pride of Home Ownership
Pride of home ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results, will be to your benefit. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.
In Canada, especially in the last few years, homes have appreciated considerably and in doing so have added substantially to owners net worth. Unlike stocks and bonds, you get to live in your real estate investment. Also, in Canada your principal residence is exempt from capital gains taxes.
Mortgage Reduction Builds Equity
Each month, part of your monthly payment is applied to the principal balance of your home loan, which builds your equity. You can borrow against a home's equity for a variety of reasons such as home improvement, sending your kids to university or college, or starting a new business. Why pay-off your landlord’s property when you can own your own?
Homeowners accumulate wealth for the future while enjoying the benefits of a shelter that they have can use, improve and sell. Their home is a safe haven for investment.
Are You Ready to Buy a Home?
First – do you have the financial resources? You should have five percent of the purchase price of a home for the down payment, but ideally even more. Are there other priorities in your life e.g. starting a new business, which require your savings? If not, buying a home should be on your radar.
Second – do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before having to relocate. Your job and home life should be stable.
Now that you are excited, here are a few things you need to find out:
What Can You Afford?
If you haven't already gone through the mortgage pre-qualification process, you will need to meet with a lender or mortgage broker. They will establish how much of a mortgage you will qualify for. Mortgage rates vary considerably and it is paramount that you shop around for the best rate, terms and options.
Our Mortgage Calculator will help you determine what monthly mortgage payment and the maximum mortgage you can manage. Note: if you are buying a condo, the amount of your monthly fee has a direct impact on how much you can afford to spend on your mortgage.
First time homebuyers may want to take advantage of the federal government’s Home Buyers’ Plan. Under this plan, you may use up to $25,000 of your RRSP towards the purchase of a home. The money is tax-free as long as you pay it back in the next 15 years. Ask your RE/MAX Sales Associate for details.
Questions To Ask When Assessing Home Features
- What do you need in your home? Think about things like: whether you need a yard or how big a yard, number of bedrooms, bathrooms, space for a home office, size of garage.
- Next think about what you want in your home. Do you want air conditioning, extra storage, a hobby space, a fireplace, a swimming pool, a walk-in closet, a big kitchen, appliances included? Do you have family members with special needs?
- What area do you want to be in? Downtown or suburbs? Think about proximity to recreation or work.
- Will any remodeling be required to make the home move-in ready for you?
- What service providers (cable, Internet, telephone, Satelite) are available in the area, and is the house completely wired for each? Can you hear me now??? - how good is the cell phone reception?
- How much are the yearly property taxes?
- How much do utilities run each month? Does the house use gas or electric for the furnace, water heater, and appliances?
- How old are the major appliances, and which are included with the house?
- Have there been any major repairs to the house, and if so, when were they completed? For example, how old is the roof? Has water ever damaged the basement or foundation?
- Have there been problems with insects, such as termites and spiders, or rodents?
- Older homes need to be carefully examined - Windows may need caulking or new sashes, bathroom tiles may need grouting, home may need rewiring (planning on a hot tub or sauna?), a new hot water heater, or a new furnace.
Location, Location, Location
- How far will you be commuting and what is the traffic like? Factor in cost of fuel.
- Are there recreational facilities and parks close by?
- Is the area safe or is high crime an issue?
- Is the property close to an obstacle or negative influence? (i.e. an apartment building, shopping centre, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project).
- Access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals
- Adjacent undeveloped land - what is proposed for this or other green space?
- Heavy traffic can be noise nuisance and hazard
- Distance from the unit to amenities, parking, walkways, roads, public transit
- Does the neighborhood reflect positively on the value of the property and your lifestyle choice?
- Does this neighborhood, for any reason, have a poor reputation? You need to consider re-sale value.
- Is the future economic climate for the area good? Are businesses moving in? Is there government investment?
- Are people moving in or out of the neighborhood? What is their age, income level, family size?
- Are there plans for this neighborhood that you may be unaware of (i.e. a future highway, a commercial development or a new housing development) that will provide competition on resale?
Noise and Privacy
- Proximity to highways, driveways, parking lots, playgrounds, trains.
- Proximity to elevators, garbage disposal, fire exits, heating and air conditioners.
- How well is the building soundproofed.
- Visit at different times/weekends to check noise levels and activity.