If you are preparing to buy your first home or just starting to think about the possibility, you understandably want to learn as much as you can about the process. Buying real estate can be stressful, but it also can be entirely rewarding and provide you with the end result that you have been dreaming about. By taking time to learn more about this process, you can decrease the stress associated with home buying, while also setting the stage for a smoother and easier financing process.
Determine (and Remind Yourself of) Your Needs
One of the most important steps that you can take to ensure satisfaction with the home buying process is to determine what you are looking for in a new house. Some homebuyers fall in love with a house based on its decor, location, or other factors. They may rush into making an offer, but may later get cold feet because they realize that it is not quite right for their needs. According to the Canada Mortgage and Housing Corporation, one of the best steps that you can take is to make a list of features that your new home absolutely must have, features that you would like it to have, and features that you do not want it to have. Bring this list with you as you begin touring homes. You can refer back to it to ensure that a home you have fallen in love with truly meets your needs. You can also update it as you walk through the process. After you begin looking at homes, you may realize that certain features that you needed are no longer necessary, or vice versa.
Review Your Budget
In addition; you should review your budget carefully. A new home can affect your budget in various ways, so it is important to consider the cost of the home fully. The mortgage payment is the most obvious expense associated with home ownership. You can use a mortgage calculator or mortgage broker to estimate the mortgage payment based on different loan terms that may be available to you. In addition, other costs related to changes in utility costs, owners association dues; property taxes, insurance, and commuting costs to work from a new location should all be factored in. You can update your budget now so that you can estimate what size of home you can buy. You should also review your budget again carefully before you place an offer on a specific home to ensure that it is truly affordable for you.
The location of the property is also critical. The location can affect your closing costs, as land transfer taxes, property insurance and other costs will be based in part on the property location. It can also affect your enjoyment associated with living in the home. The right home may be ideally located to provide you with an easy commute, access to schools and healthcare, and more. Some people have a desire to live in an urban environment while others prefer a suburban or rural environment. All of the factors regarding location should be reviewed to help you refine your search location and to ensure that you will truly love the property.
Estimate Closing Costs
You should also consider estimating your closing costs. Closing costs can include everything from the title charges and legal fees, to property insurance, appraisal fees, and more. These fees can easily cost a typical homebuyer several thousand dollars or more, so you do not want to overlook the important task of budgeting for them. Keep in mind that some fees may vary based on the property that you choose to purchase. When you get pre-approved for a loan program, your mortgage company will provide you with a more firm estimate. Estimating these charges will help to ensure that buying your new home is affordable.
Review Down Payment Sources
It is common for Canadians to pay between five and 20 per cent of the sales price as a down payment. Some may place a large amount as a down payment. There are multiple sources of funds that may be used as a down payment. Common sources include personal savings accounts, the RRSP for first-time homebuyers, gifts and equity in an existing property. You should take time to consider how much money you have available to use as a down payment. If necessary, save up additional funds so that you have enough money to pay for both closing costs and the down payment.
Shop for Financing
You should also take some time to thoroughly shop for the best financing available. There are a wide range of loan programs available to most homebuyers. These may vary based on the interest rate, the credit requirements, the down payment requirement, the loan term, and other factors. The best loan program to apply for is one that you will qualify for as a buyer. For example, some programs are designed for borrowers with a lower credit score or who are self-employed. The best loan program will also be affordable for your budget. This includes having affordable up-front costs. You can easily use a comparison website to compare mortgage rates, but you will also want to speak with a loan offer or mortgage professional to learn more about loan requirements that may not be published online.
If you are interested in buying real estate for the first time in Canada, you should consider following some of these important tips. Buying real estate is major step to take, and it is one that you need to be prepared for and educated about. Regardless of where you are in the process, you can rest assured that following these tips today will help to prepare you more fully for your first home purchase in Canada.
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