Making the decision to buy your first home might be one of the biggest decisions you will make in your life. The financial undertaking is massive with a slew of responsibilities ahead of you. Though ultimately, buying your first home will be one of the smartest investments you will make for yourself.
As exciting as it is, the process of buying a home can seem both overwhelming and stressful. Without the right advice and experts on your side, you could end up causing more work for yourself than you need to.
As a real estate expert, I have worked with many first time home buyers who thought they could do it on their own, only to find that the process was more time consuming, and ultimately, more expensive in the long run. Many times my clients simply did not know where to turn to get the answers to their real estate questions.
In this step-by-step guide, I will walk you through the in’s and out’s of buying your first home and provide you with tips on what you can expect during this exciting process.
Make sure you’re financially ready
This may seem like the most obvious, but you would be surprised to hear the number of clients I have spoken to who thought they were ready to buy a home, but their credit score and savings accounts proved otherwise.
The first step in buying a home is making sure you’re financially prepared to take on a large loan from the bank as well as having the piece of mind in your savings to know that you can cover any surprise costs that could come up when owning a home.
For example, if your hot water tank breaks in the middle of the night, you’ll need to have the financial means to get it fixed sooner than later (unless you enjoy cold showers in the middle of winter!)
Get pre-approved for a mortgage
Assuming you are financially ready to own a home, you will want to get pre-approved for a mortgage.
There are a number of ways to do this, you can;
- shop around online for mortgage lenders who have great rates, and even better reviews
- inquire about mortgages with a financial institution you’re comfortable with — this could be going straight to the bank you’ve had an account with since you were five years old
Whichever route you choose to take, ensure that your mortgage specialist has the experience to answer any and all questions you may have. After all, if you are a first time home buyer, you might not understand fully what having a mortgage means to you financially.
Selecting a mortgage
One thing to note is that there are a variety of mortgage options which you can select. I can walk you through two of the most common.
- fixed rate mortgage
- adjustable mortgage rate (or “ARM)
First is a “fixed rate mortgage”. This is the most common of mortgages for many first time home buyers as it guarantees your mortgage rate to stay the same for a fixed amount of time – typically between 1 and 5 years. The rates for a fixed rate mortgage tend to be on the higher end but it is easier to budget for during the length of the mortgage.
An adjustable mortgage rate, also known as an “ARM”, is a mortgage rate which is adjusted in intervals. The upside of this mortgage type is that you have the opportunity to lock in a lower mortgage rate should the rates drop. Inevitably the downside is that you will need to be more flexible with your monthly spend if the rates increase.
Your mortgage specialist will work closely with you to determine what is the best mortgage for you.
Find a real estate agent you like — and trust!
You might already have a real estate agent in mind – perhaps they were referred to you from a friend or family member – whatever the case may be, be sure to find a real estate agent with the expertise in locating you the home in the neighborhood or city you’d like to reside in.
Your real estate agent should be the local expert for the area.
Not only that, but they should understand and respect the budget you’ve laid out for yourself.
As a real estate expert serving the Greater Vancouver area, I have learned the in’s and out’s of each city and neighbourhood, working closely with my clients to provide them with homes that meet their needs.
Make a list of must have’s and can-do-without’s
The options to view the latest listings are growing. Online is the first place many future homeowners will turn to find their next or first home.
In your search, stay within budget. You can also start to get a sense of which amenities and features you absolutely need to have and others that aren’t worth the hefty price tag. Make a list of these amenities and features and stick to it!
Shop, view, and repeat
Okay, I’ve talked a lot about the nitty-gritty side of the home buying process. Now here’s where things get exciting – you can start viewing homes and attending open houses.
It is quite rare that you will find your dream home within the first viewing. Your reality is that you will view many homes before finding the one.
One thing to keep in mind is that you may have to move fast on making an offer.
In hot markets like the Greater Vancouver area, homes don’t stay on the market for long. Make sure you have your ducks in a row to make an offer quickly!
Submit an offer
You’ve done it.
You’ve found a place you like and you’re ready to submit an offer to the seller. But first, you will want to discuss a reasonable figure with your real estate agent. Your agent will know the market rates as they will be able to tell you what homes are selling for in the area. You can then base your offer on that number.
Other factors to consider before making an offer are;
- determining when the closing date will be? If the seller is looking to close quickly, you may have some wiggle room for the offer
- whether you would like to keep some of the additional bells and whistles with the home? You may have to offer more to keep these added bonuses
- if the seller is willing to include the inspection or will this be a cost you will need to undertake?
Your real estate agent will work closely with you and the seller’s agent to determine a suitable number which both parties are comfortable with.
Seeing as how you might not have all of the time in the world to lock down your new home, start shopping around for homeowner’s insurance.
In many cases you need to have homeowner’s insurance secured before a deal can go through.
Get a home inspection
I can’t say this enough – have a professional inspector look over the home!
A home inspector can save you thousands of dollars as they will be able to find any future or immediate repairs that will need to be completed on the home.
Have a lawyer look over everything
Getting yourself a real lawyer is a smart investment as they can look over any and all agreements to check them over for any unsightly, unexpected additional costs that could come back you in the near or distant future.
Closing the deal
Finally, the time has come to close.
During this time, you will review and sign many documents before you get to accept the keys and move into the home.
Depending on the terms of the closing, you may get to move in right away or wait out the duration of the closing term. You can work with your real estate agent and lawyer to review these documents closely to ensure a seamless transition between the seller and the buyer — you!
The decision to buy a home is exciting, and with the right people by your side, it can be a relatively smooth process. Whenever it is that you decide that you’d like to buy a home be sure to;
- have enough money saved for your down payment and keep a good credit score
- find yourself a real estate agent who you like and trust
- make a checklist of reasonable amenities and feature you must have and you can do without — stay in budget!
- shop around and ask questions
- work with your real estate agent to come up with a reasonable offer
- have a real estate lawyer look over everything
- read the fine print in your closing agreements — this can determine when you can expect to move into your new home
If you’re looking to buy your first home, reach out to our team today! Text: 778-320-6495