Buying a new house is a really exciting time, especially if you are first time home buyers, but with all of the real estate jargon and industry terms, it can also be an incredibly confusing time. Trying to understand the process may leave you feeling overwhelmed or frustrated, but don’t worry, we’re here to help you every step of the way.
We’ve answered seven of the most frequently asked questions that first time home buyers ask us, (such as “am I ready to buy a home?” and “do I need to find a real estate agent?”) to get you started.
Am I ready to buy a home?
Buying a new home is a huge responsibility and for first time home buyers, it can be a huge change. There are a number of things that you should consider when looking to buy a new home and deciding whether you are ready for the commitment.
You first need to ensure your finances are in order.
Can you afford the down payment? Will you be able to keep up with mortgage repayments? Do you have a steady enough income to ensure you will always have the money for bills? Considering your finances is the first step to knowing whether you should be buying a home.
You should also consider the market conditions.
Is this the right time to be buying a home? Make sure you do your research and understand the optimal market conditions for making such a big investment.
Finally, you need to decide whether you’re ready to settle down in one place for a period of time. If not, then it might not be the right timing to be buying a new home.
How much can I afford to pay for my first home?
When buying a new home, considering your financial situation also means considering what you can afford from the housing market.
You need to consider the following:
- The amount your down payment will be
- Your household income
- Your current debts (these can affect the amount you’re able to borrow)
- Monthly payments associated with these debts
- Estimated housing costs, like bills etc.
- Anticipated closing costs
- Your current spending habits
A mortgage specialist will be very supportive and can help you to understand how much you can borrow and how much you can spend on your new home. You may need to make some changes to your spending habits and you should ensure your mortgage repayments are comfortable enough for you to afford each month.
Do I need to find a Real Estate Agent?
One of the biggest questions that first-time home buyers need the answer to is; do I need to find a real estate agent?
The answer is yes, it is highly recommended that you find a real estate agent. This is because your seller will pay all of your agent’s fees and they can be a real help to you in your home buying journey.
To start with, they can take the legwork out of your path to a new home. They can do all of the organizing and finding of potential properties for you! They will also bring lots of useful knowledge about the properties you’re looking at and the areas they are in.
A real estate agent can help to negotiate a better price for your new home and are legally obliged to work in your best interest. A real estate agent is bound by a code of ethics and are a great help when it comes to legal contracts.
How much do I need for a down payment?
When you consider your finances, you will need to consider the down payment you can afford on your new home. A down payment is a percentage of your total house price and varies depending on the price of the house.
For houses less than $500,000, the usual down payment is 5% of the house price. For houses costing between $500,000 and $999,999, the down payment is 5% on the first $500,000 and then 10% on anything over this amount. Finally, on houses priced $1 million or more, the down payment is 20% of the house price.
Keep in mind you may have to pay a larger deposit if you are self-employed or if you have bad credit.
Additionally, if your down payment is going to be less than 20% of the price of your home, you will need to purchase mortgage loan insurance too, also known as a CMHC mortgage in Canada.
For more information on down payments, you can check out our blog post on the subject.
As A First Time Home Buyer, How many homes should I look at before making an offer?
This question is frequently asked by first-time buyers, but the answer varies depending on what you want from your house. While it is recommended you see more than one house in your journey to a new home, there is no reason you need to see dozens if you find one you love.
Some buyers go on instinct while others have a checklist that they want their new house to meet and so every journey to a new home is different. We recommend seeing a few different options so that you can see what is out there and in your range, but there is no set number you need to see before making an offer.
Should I get a home inspection?
You may be tempted to skip this step in your home buying process, and in some cases that may work in your favour (ie. moving quickly on an offer). Where possible to do so, we strongly recommend getting a home inspection. A home inspection will give you all the information you need to make the decision on your offer. The results of the home inspection will help you to understand the condition of the house you’re buying and can ensure everything is up to standard.
Are There Any First Time Home Buyer Programs In Canada?
The First time Home Buyer Incentive helps people across Canada purchase their first home by offering 5% or 10% of the home’s purchase price to put toward a downpayment. This addition to your downpayment lowers your mortgage carrying costs, making homeownership more affordable. You must have the minimum downpayment in order to qualify for the program and because of the nature of the shared equity mortgage, the government would share in both the ups and downs of the property value.
The Canadian Home Buyer Plan allows you to withdraw funds from your RRSP to help buy or build your first home or at home for a related person with a disability. You can borrow up to $35,000 tax free from a total of more than one RRSP account as long as you’re the account owner and have 15 years to repay the funds.
For a complete list of eligibility criteria and the most up to date information, check the Government of Canada website.
Are You A First Time Home Buyer Looking for an experienced Real Estate Agent in the Niagara Region?
First time home buyer? If you are looking to hire a dedicated and knowledgeable real estate agent in Niagara Region who will give you honest advice, contact Davids & DeLaat. We practice Real Honest, Real Friendly, Real Estate in the Niagara Region and can help you navigate the ups and downs of this real estate market and get you into your very first home.
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