Attention all first time home buyers! This new venture in your life is most likely one of the biggest financial decisions you will ever make. You want to ensure you are well prepared and in the know before you decide to purchase your first home. Some important factors you will want to consider are your current income/ finances, your current debt level, What your proper home budget should be, what area will be most beneficial for you to live in, how to write an offer, how to get preapproved for a mortgage loan, property transfer taxes, ongoing property taxes, working with a realtor and much more.
GET PRE APPROVED
Your first initial step in the home buying process should be to go and get pre qualified with your lender. They will be able to give you a proper budget in which you are able to shop in. This ultimately prevents you from going to look at homes which you cannot afford to purchase and saves you alot of time and frustration. On the other end it also may give you a better budget to shop with than you thought you might currently have. Key factors to note are to have a good credit score ideally 720 or above and maintain a low debt level. Your lender will be giving you a rather large sum of money for this home and want to ensure you can pay them back. If your debt level is too high or your credit score is poor they may not be able to provide you with a good enough budget to shop with, or a loan at all. CMHC is a great option for first time home buyers to explore with their lender as it allows you to give the bank peace of mind knowing that if you default on your loan they will get paid. There are insurance premiums which are attached to this, but the cost of them varies depending on the size of your down payment. If you are a new business owner most lenders require 2 years of income taxes filed to consider giving you a loan. This is not always the case but it can help you significantly in your purchasing power. DO NOT have too many write offs on your income taxes as this can affect your borrowing power as well. They will consider your actual income when approving your budget. Check out this guide/ Checklist to buying a property right from the CMHC website. quite a handy tool!
WORKING WITH A REALTOR
The next step in the process should be to get in touch with a realtor (such as myself) who can show you properties and has a good understanding of the market you are looking to shop in. Having a good agent on your side who can help steer you through the markets, help you watch out for pitfalls and draft a legally binding offer will help ensure you get into the right property at the right price and not wind up with a headache or regret in your purchase. I always like to help my first time home buyers understand the importance of buying a property, which is not just in their budget, but also functional for them and their lifestyle too. With the way prices are here in british columbia and what limited supply we have in the Sunshine Coast Real estate market its important to consider your first home does not need to be perfect. Perfect is the enemy of the good and will only hinder you from obtaining a great opportunity to get into the market and start building some equity now. Getting into a home with a 5 year plan can make it so that once you've built up some equity you can then move to another property which may be more suitable to your liking. I also educate my clients on current and past stats and trends and inform them on what fair market value is for purchasing a home. Writing low ball offers can sometime offend sellers and make them not want to negotiate with you at all. This is not always the case but more often than not this can occur.
DON'T FORGET YOUR COSTS..
Always keep in mind your property transfer tax, appraisal costs, building inspection and closing costs when you factor in what you are able to afford. These costs will need to be paid at each step when they are due. You will want to factor in anywhere from 500 to around 2000$ for a building inspection depednign on the size of the home you are looking to purchase. I will always recommend that you have one of these done before you purchase the home, as it can show you all the things you typically don't see when viewing a home. My building inspectors go through the home with a fine tooth comb and generate a full report for you to look over. This tells you areas of concern or things they see coming due in the near future. Trust the experts and they will guide you into a better situation and help prevent you from making a bad purchase. appraisal costs can be anywhere from $500 to $1000 and may be required by your lender depending on the size of the loan they are giving you. Closing costs are fairly standard and range in around the $1500 mark. These will be paid to a lawyer or notary of your choosing and is mandatory. They will be transfering the title of the property into your name and are required to close the deal. Property Transfer Tax is the big one being at 1% on the first $200,000, 2% on anything greater than $200,000 up to $2,000,000 and a further 2% on any residential property which exceeds $3,000,000. I.e. a $1,000,000 home would be subject to 1% on the first 200k = $2,000 + 2% on the next 800k = $16,000. Total property transfer tax due and payable = $18,000. There are exemptions for properties under $500,000 and partial exemptions for 550k if you are able to find one to buy.
CHOOSING TO WORK WITH ME
All in all the process can be a bit complex but it doesn't have to be entirely so. Picking the right Agent can help immensely as they will guide you in the right direction and ensure you know exactly who to speak to and help you purchase your first property. I enjoy making this process as easy and as stress free as possible for all my clients and always go the extra mile. whether its by digging up info on the property from the local municipality or just simply explaining how the offer/ contract works I'm here by your side throughout the whole process. I pride myself on maintaining the proper knowledge and understanding the market you are planning to buy in. Making it possible for you move forward and succeed in your realestate venture. It makes me smile knowing I've helped you achieve your goals! :) Feel free to reach out for any questions you may have about your first time home buying process! Happy Home Hunting!!