Top 10 Tips for Buying a Home

Thursday, 4 February 2010
1. You need to decide what type of house best fits your lifestyle: It's important that first-time home buyers consider which factors are most important for you and your family. Spend time making a checklist of your needs and rate each of them on a scale of 1 to 10.

2. Pick your desired neighbourhood: You need to visit possible neighbourhoods and review the different types, the availability and the price range you're looking at. When you do find a neighbourhood that seems to be a good fit, take a closer look at schools, local amenities, and other features that will make it home.

3. Use all available resources: Canada Mortgage and Housing Corp. (cmhc.ca) is there to serve you. As Canada's national housing agency and as a government-owned agency, CMHC is not only is a provider of mortgage loan insurance and other programs and policies, it is also a source for terrific information and research on housing.

4. Know your credit score and history: By knowing your credit history, you will have accomplished the first step in determining your budget. Your credit history is key to discovering how much money you can borrow, and how what mortgage terms you will have.

5. Know how much you can afford: When you buy a house, you need to consider two main questions: how big does the down payment have to be, and how much of a monthly mortgage payment can you comfortably afford? Typically, the rule for calculating how much of your household income can be used for household expenses, including mortgage payments, is that the total amount of household expenses should not be greater than 32% of your gross income.

6. Get pre-approved: When you are pre-approved with a lending institution, you are actually already approved for the loan - up to a certain maximum amount - by the lender. This means you can be confident when you get out there and shop for a home and negotiate the final price. It also takes all of uncertainty out of the entire process because you will already know how much money you have available.

7. Put together your support team: Once you know where you want to live, and you have determined how much you can afford, and you have been pre-approved for your mortgage, you will still need the help of knowledgeable professionals! You'll need a real estate agent, a mortgage broker or banker and a lawyer. Each of these professionals will help provide you with necessary advice that will be uniquely tailored to your individual situation.

8. ALWAYS do a home inspection: You cannot judge a book by its cover, and you cannot judge a home by the great staging job done by the seller and the seller's agent. A good home inspector is one who will perform a comprehensive visual inspection, examine the home's foundation and roof, examine all of the main systems and mechanisms (such as plumbing, heating, ventilation and electrical) and review the condition of all of the doors and windows. An inspection will identify areas where you might need to do repairs, that have been repaired in the past, estimate the remaining life span of specific components in the house and provide a written report of the inspector's findings - very important information that will play a key role in deciding the home's worth and how much you should offer.

9. Uncover hidden costs: In addition to the cost of your home, there are several other charges, fees, taxes and other amounts that you will need to cover in completing your home purchase. 'Closing Costs' can really add up and there's no avoiding getting them, so you need to make sure you get an itemized list way before your closing date. These hidden costs can include the initial deposit on the purchase price, legal fees, any land transfer taxes, appraisal fees, and land surveys or title insurance.

10. Stay calm: Buying a home can be full of challenges and the only way to deal with them is to be prepared. Take your time, research and gather as much information as possible, and you will be prepared to make the best possible informed decision. It may appear overwhelming at times, but don't lose site of the fact that you are about to buy your own home!!
 
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