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10 Essential Tips for First-Time Homebuyers

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Buying a home is an exciting venture, but it's also a decision that requires careful consideration. Before starting it’s vital to be well-prepared, so here are 10 tips to guide you through the home buying process, ensuring that you make informed choices and find the perfect place to call your own.

1. Be Sure You’re Ready

While it may sound like common sense, the first piece of advice we can offer is to ensure you are truly prepared to purchase a home. The typical mortgage loan term is 15 to 30 years, and although you are not obligated to stay in the house until it’s paid off, a home is undeniably a huge commitment. Take the time to be absolutely certain that you are ready for homeownership before going further.

2. Be Aware of All Costs Involved

The purchase price is just one part of the expenses involved in buying a home. There are other costs, such as legal fees, mortgage insurance fees, house inspection costs, moving expenses, and more.

Plus taxes which can be an unpleasant surprise if you’re not expecting it. For more detailed information on administrative costs, federal, provincial, and municipal taxes, see our recent our blog post.

3. Take Advantage of First-Time Homebuyer Programs

There are a few programs available to help first-time homebuyers. These include:

  • The RRSP Home Buyer's Plan allows you to withdraw up to $35,000 (or $70,000 for a couple) from your registered retirement savings plans (RRSP) to finance your down payment, and if you repay it within 15 years, the withdrawal is tax-free.
  • The First-Time Home Buyers' (FTHB) Tax Credit offers a $5,000 non-refundable income tax credit for a qualifying home, with the potential for up to $750 in federal tax relief.
  • In British Columbia there is the first-time home buyers' refund, which provides a rebate on the property transfer tax paid, as long as the property's fair market value is less than $500,000.

4. Get Pre-Approved for a Mortgage

Before even starting your home search, don't assume your price range. Speak with a bank or mortgage broker to know exactly how much you can afford and get a mortgage pre-approved. You can use an online mortgage calculator to get a general idea, with many lending institutions having their own free calculators to use.

You can also check relevant and reputable websites like Realtor.ca for helpful resources. By obtaining pre-approval, you'll know the maximum mortgage you qualify for, understand the monthly payments, prevent unnecessary delays, and even lock in an interest rate for a designated period. It can also give you an advantage when making an offer, showing sellers that you can afford the house.

5. Maintain Your Credit

Maintaining your credit score is important when going through the home buying process. Your credit score has a big impact on your mortgage, so don’t do anything which could potentially cause harm.

This means no new lines of credit, no personal loans, and no new credit cards. Lenders closely scrutinize your credit report during the pre-approval process, and any changes could hamper your chances of obtaining the best possible mortgage offer.

6. Work With a REALTOR®

While this may be a biased tip, it is also a vital one. Work with a professional REALTOR® to ensure your house purchase process is a smooth one. Not only does a REALTOR® show you properties in areas and budgets that fit your need, but we also help you decide how much to offer for a property, submit the offer letter, negotiate as necessary, review documents, ensure that the closing is all in order, plus a myriad of other aspects that are involved in the process.

Buying a home is a significant endeavour and having a professional by your side helps to alleviate stress and uncertainty. Make sure you find a REALTOR® that has experience, understands the market, and has your best interests at heart, so you can navigate the complexities of buying a home with confidence and peace of mind.

7. Define Your Priorities

Before you commit to a house, determine what is important to you. It’s easy to say ‘3 bed 2 bath and a garden’, but there is more to it than that. Consider factors beyond the house itself, such as the ideal neighbourhood and street characteristics. Decide what will be the most important room and pinpoint non-negotiable features that align with your lifestyle and long-term plans.

Be honest about your willingness to take on renovations or modifications to make the home truly your own. Assess proximity to essential amenities like schools, stores, and transit options. Factor in your desired commute time. How will the home accommodate your needs and lifestyle not just in the immediate future but also in the long term?

While the future cannot be predicted, having a clear understanding of your preferences and motivations can aid the home buying process, guiding your decisions and ensuring that the home you choose aligns with your vision of an ideal living space.

8. Go to Open Houses

Take advantage of open houses, even if they are not in your preferred neighbourhood or price range. They offer valuable opportunities to explore different properties and help you determine what features you’re looking for, including layouts, styles, and amenities.

If you don’t have time or aren’t capable of visiting online, do online 3D tours. Although they may not provide all the information that in-person visits do, they serve as a useful tool to narrow down your list of potential properties to visit.

9. Organize your Documents

A lot of paperwork is needed to purchase a home, so organizing your documents will be helpful, ensuring a smooth and efficient process. Start by gathering essential financial documents in a dedicated folder to provide easy access and allow you to share these documents seamlessly.

The key documents you'll need include a government-issued photo ID (such as a driver's license or passport), proof of employment and income (pay stubs, T4s, income tax returns/CRA notices of assessment etc), and documentation verifying the source of your down payment (from savings accounts, RRSPs, property sales, or gifts).

You should also compile information about any other assets, and gather details about your existing debts, such as credit card balances, car loans or leases, lines of credit, student loans, or any financial obligations like spousal or child support.

10. Get a House Inspection

Before officially purchasing a home, an inspection provides you with the opportunity to uncover details that won’t be apparent to the untrained eye, giving you insight into the future viability and structural soundness of the property, and bringing to light any potential problems or red flags. This not only gives you leverage when negotiating, but it can also help you make your final decision. 

However, it’s important to understand that if a safety inspector is doing their job well, they will uncover a number of minor issues, even with newer homes. So keep in mind that there are often going to be smaller problems such as improperly installed wiring, worn roofing, and plumbing issues. 

These should all be relatively simple fixes and are common occurrences likely to come up across a number of homes in your search. Your focus should be on obvious, difficult, or expensive to fix, and potentially value affecting issues. See our previous blog for a full list of reasons why a home inspection is so important.

Purchasing your first home is a significant milestone, and being well-informed is key to ensuring a successful and rewarding experience. At Madsen Langlois, we are committed to being your support. From the initial showings to the final closing and everything in between, we are here to guide you every step of the way. If you are ready to take the next step towards finding your perfect home, get in touch!

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