First-time buyers plan
Navigating the world of Canadian home buying
Step 1: Figure out how much you can afford.
- First, decide how much you can afford for your down payment. The Home Buyers Plan lets you withdraw up to $20K per person (or up to $40K per couple) from your RRSPs – tax-free – to be repaid over 15 years. The bigger your down payment, the less principal you will owe, and the less interest you will pay.
- Don’t forget about closing costs, like insurance, legal fees, home inspection costs, land registration and land transfer fees. Add those to your moving expenses and service hookup fees, and they can add up surprisingly fast.
- Your monthly housing expenses (mortgage, taxes, heat, etc.) shouldn’t use up more than 32% of your income. (If your combined monthly income is $5000, for example, 32% of that is $1600.) If you have car payments or credit card debt, the rule of thumb is that debt repayment shouldn’t be more than 40% of your income.
- Get pre-approved for your mortgage. It’s a good way of finding out how much you can borrow – and it speeds up the process once you’ve found the home you want to buy.
Step 2: Figure out what type of home is right for you.
Step 3: Decide where you want to live.
Living in an area you like is as important as buying a home you love. Do you want a busy urban lifestyle, a house in the "burbs", or a quiet place in the country? Do you want to walk to work or are you okay with a longer commute? Do you need to be close to good schools? Recreation facilities? Shopping?
Step 4: Start looking.
Contact me, and let me know that you're wanting to buy. I can set you up with a daily or weekly automatic email if you let me know what it is you are looking for. With my knowledge and expertise, we can start to process right away! Of course, feel free to look online at properties available, write down their address or MLS number, but having your trusted realtor show you through these home will help you get the best deal possible. Remember, I work for you! I want you to find the home of your dreams, and to get the best deal possible; it's my job.
Step 5: Building a team.
Putting together the right group of experts to help you buy is essential to success. Start with me, a realtor you trust, then look for a reputable lender or mortgage broker, a lawyer or notary, a home inspector and an insurance broker. I work closely with all of these professionals, and will be happy to recommend people you can depend on. Eventually should you need it I can also hook you up with trades people that are trustworthy and very good at what they do.
Step 6: Making an offer.
Ok, so we have found the perfect place – now it’s time to make an offer. An offer to purchase includes the purchase price you’re offering, chattels to be included in the purchase (like appliances or light fixtures maybe even the horse), the amount of the deposit, the closing dates and any other conditions.
I believe I have excellent negotiating skills and with my knowledge of the market, I will help you prepare your offer. I will personally present the offer to the seller, who will either accept it or make a counter offer (they may want a higher price or different terms). You can accept or reject the counter offer. Patience here will really pay off. Once everyone agrees, the home is yours conditionally upon you removing any subjects. Should things not work out because of any concerns about the deal we can collapse the deal and keep looking. You NEVER want to be in a hurry to make a mistake. Here is where a good Realtor really pays off.
Step 7: Getting a mortgage.
Once you’re approved, you’ll need to decide what type of mortgage works best for your needs. Will you go with a fixed or variable interest rate? Will your mortgage be closed or open? What will your amortization period be? Will you make payments monthly, biweekly or weekly? Your mortgage broker or lender can help you find a mortgage that suits your needs – and saves you the most money in the long term.
Step 8: Move in and enjoy!
You can be proud of your new home and hopefully you can invite your friends over to enjoy your abode. They will be impressed with how well you have done.
Sean Upshaw, Royal LePage Kelowna
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