For a first time homebuyer, realizing you’ve finally saved up enough for a down payment is a proud and exciting day. But where so you begin? There are many things you’ll want in your new home, and maybe a few different neighbourhoods you would consider living in.
Begin by searching a neighbourhood or city you are interested in, within your price range. This will give you some idea of the amount of homes available within your budget, even if you don’t necessarily find anything you love right away. Secondly, you should contact a mortgage broker. A broker will tell first time homebuyers exactly what you can afford, which may mean adjusting the budget you already had in mind. A broker will take into consideration what you have saved, your credit, your currently monthly debt bills and the ball-park cost of utilities in your new home. From these numbers they will generate a percentile, similar to what the banks will use, to determine your eligibility for a mortgage.
Depending on what the broker decides you can afford, you will have many housing options to consider. It is vital to note that you don’t have to buy ‘a house,’ in the traditional sense. There are townhomes, condos and even duplexes that you can look at – all of which can make a suitable home for first time homebuyers.
As a first time homebuyer, there are some advantages. In Canada, first-time buyers only need 5% of the total cost of a home, for their down payment. Additionally, first time homebuyers don’t have to pay land transfer tax fees and above all else, they have one major advantage over other buyers in the market: they aren’t trying to sell a home.
Buying a house can involve lots of negotiating with the sellers, and this often includes the closing date of the sale (or when you officially take possession and move in). Because a first time homebuyer doesn’t need to worry about selling another home before they can move into a new one, it gives them the upper-hand in negotiations where other buyers are competing for the same home. Another buyer may place a condition on their offer stating that their offer is dependent upon the sale of their own home (usually within a certain period of time). A first time buyer doesn’t need to put this sort of condition on their offer, it makes their offer cleaner, less complicated and more attractive to a seller.
Remember, being a first time homebuyer is exciting and although you may not know much about buying and selling, and your budget may be limited, there are many benefits for you! Stay positive, contact a broker and fine a real estate agent you can trust to make the process stress-free and enjoyable.