10 Tips for Home Buyers
1. Write out the wish list
Determine needs and wants. Create a list of features you could do without, and ones that area absolute must-haves. Consider lifestyle as well. Do you like being close to downtown, or would you prefer living outside the city? Do you like the prospect of maintaining a garden? Where do you want your children to attend school? These are lifestyle decisions that play a large role in the new home buying process.
2. Calculate the total cost of buying
There's more to the cost of buying than simply the price of the home, so it is important to take into consideration the other costs involved with purchasing a property.
Plan for the costs associated with:
• Home inspection fee
• Legal fees
• Property transfer tax
• Appraisal fee
• Land transfer tax
• Title insurance
• Interest adjustment
• Property and fire insurance
3. Get Pre-Approved, not just Pre-Qualified
To get pre-qualified you just give the Lender an overall financial picture, including debt, income and assets. Based on the information you provide, a lender can give you an idea of the mortgage amount for which you qualify. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home.
Getting pre-approved is more involved.
A loan application is completed and you'll supply the Lender with the
necessary documentation to perform an extensive check on your financial
background. The mortgage lender will review the following information:
income, debt, assets, confirmed monies available for down payment and
Pre-approved and pre-qualified are not the same things. Before you begin your home search get pre-approved.
4. Aim for a 20% down payment
Your down payment should be at least 5 per cent of the price, but aim to put down 20 per cent of the value of the home in order to qualify for a conventional mortgage. With a down payment of less than 20% you'll have to pay for Mortgage Insurance.
5. Tap into RRSP Savings
Through the Government of Canada Home Buyers' Plan (HBP), first-time home buyers can withdraw up to $25,000 from an RRSP to purchase a first home, without having to pay tax on the withdrawal. It allows a couple to withdraw up to $50,000.
6. View the area at different times
A perfect neighbourhood at 10am may not seem as good during the evenings, so get to know the area you're interested in on more than one occasion and at different times of the day.
Have a wander around and talk to the local residents. Check out local shopping, access to transit, schools, parks, and dining.
7. Get a home inspection
Home inspections have become an integral part of the home buying process. There's no substitute for having a trained professional inspect the property. Depending on the size of the home, the inspection can take between 2 and 3 hours. It's a detailed look from roof to foundation.
A home inspector is an objective expert and your advocate. But the inspection is about more than just finding faults with the property.
Take the opportunity to join the inspector during the process. Find out where the electrical panel is, get to know about the wiring and plumbing, pick up tips about the furnace and AC to learn preventive maintenance tips and about seasonal upkeep.
As part of the process, you should receive a report on the property that will outline the "have to fix", "want to fix" and "keep an eye on" items you and the inspector may have discussed. It may even provide cost guides for making future repairs.
With a home inspection, you have the chance to gain first-hand knowledge and come away with a "Buyer's Guide" to taking care of your purchase.
8. Have a pre-closing inspection
The pre-closing inspection, also referred to as "the final walk-through" is another step in the home buying process. Chances are, you'll have negotiated a 60 or 90 day closing date, and things can change during that time. Don't miss the opportunity to conduct an inspection prior to completing the deal. Why?
• To validate that the appliances you saw, and think you're purchasing as part of the deal, are the ones in the home.
• To ensure no water or fire damage has happened since the home inspection.
• To see that other fixtures and chattels you expect to be there… are indeed there.
Protect your investment, take your time to poke around inside and outside.
9. Get an up-to-date survey
A survey is an accurate graphical representation of the size and extent of the property that shows the location of the house and other structures. It will reveal most title or boundary-related issues on the property that have the potential to become problems in the future.
10. Be clear on the contract
Be sure you understand every aspect of your purchase before making a commitment. Legal jargon and real estate terminology can be confusing, so polish your real estate vocabulary before home hunting, and don't be afraid to ask questions along the way.