9 Steps to buying your first home!

13 04 2010

The benefits to owning your own home:

– The satisfaction of owning your own home

– Say goodbye to your landlord

– Start building equity

Owning your own home can be exciting and stressful. The 9 steps:

Step 1: Make a decision of whether you want to own a home or not

– How long do you want to live there for?

– Does buying make financial sense?

– Can I afford the house I need?

– Am I planning on having children?

– Am I going to start my own business?

– Neighbourhood and schools I want to live in/near?

– How’s the real estate market/economy that we’re in? Is it a good time to buy?

– Do we have time to maintain and upkeep my home?

Step 2: Seek professional advice

– Contact loan officer/bank/mortgage broker, to see how much you can afford. Its the biggest investment you’ll ever make, so choose someone who you trust. Perhaps seeking a second or third opinion to see whats the best rate you can get.

Step 3: Get pre-approved mortgage

You need:

– Credit scores and credit history to determine amount approved, interest rates (2 years of credit history, 3-4 tradelines on credit report, maintain good standing in your credit history)

– Employment history: Two-year job history

– Personal Assets: Bank accounts, stocks, mutual funds, RRSPs, etc. Also have 2 months worth of savings for closing costs or emergency.

– Property value: The purchase price of the home you’re looking and the loan amount  must be suitable to your income. The debt-to-income ratio will determine pre-qualified loan amount.

– Additional documentation: Two years of T4’s, last few pay-cheque stubs and/or two months bank account statements.

Step 4: Start house hunting!

– Research based on the criteria you set for where you want to live, search online/newspapers/mls/craigslist/kijiji, etc.

– Once you’ve limited your choices, set up appointments to go see these properties with your real estate agent.

Step 5: Find your dream home!

Make a list of “wants” and “don’t wants” so you get a better idea of what you should get.

– Refine your search, somethings are more important than others.

– Goals of achieving your dream home can depend on each individual.

– Remember: You may move 2-3 times before you reach your actual dream home.

– Save up for your downpayment! Should be at least 5% of the purchase price.

Step 6: Negotiate the deal!

– Your real estate agent will help you with the negotiations.

– Before negotiating, set your limits of how high or how low you will go.

– Detach your emotions from house for now, as buyers remorse and stress can result unnecessarily.

Step 7: The closing period.

– Work with mortgage broker to close the loan.

– You will need the proper paper work for the property so that the broker can close the loan.

Step 8: Close the deal

– Prepare for closing costs. Have some reserve funds for lawyer fees, moving costs, taxes, etc.

– Agree upon a closing date, be respectful of the seller as they may be closing on a new home or waiting for kids to finish out the school year.

Step 9: Move In!

– Congratulations! You own your first home!

– Make sure you get enough help to move into your new home!!

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