How Do You Know When You’re Ready To Buy A Home

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Are you ready to buy a home?

Getting ready to buy home can be daunting. How do you know when you’re ready to buy? This is one of the largest financial decisions of your life. Here’s a guide to help you get ready.

Choose the Right Realtor

Not all realtors are the same. Don’t be afraid to interview a few different people before you choose someone to represent you. According to the National Association of Realtors the top three characteristics that buyers look for in an agent is honesty, trust, and respect. It is likely that you will spend many hours working with your agent and it’s important to hire one that you feel comfortable with.

First Time Home Buyers Plan

If you’re a first time home buyer, you may be eligible for the Canadian first time homebuyers plan, which enables you to withdraw up to $25,000 from a registered account such as a RRSP tax free. This often makes it a lot easier to come up with a down payment.

First Time Home Buyers Tax Credit

First time home buyers may be eligible for a first time home buyers tax credit of $5000. Depending on the tax bracket of the home buyer, this could be a savings of approximately $750 in their taxes in the year of their first home purchase.

Get Preapproved

Buy with confidence knowing exactly how much you can be approved for in a mortgage. Avoid the disappointment and frustration of finding a home that you love, only to find out that there are complications obtaining financing and you miss out on the opportunity. Remember that getting “prequalified” is not the same as getting “preapproved.” To have full peace of mind be sure to be preapproved.

Go with a mortgage broker

Mortgage brokers have access to many more lending options as they work with several different lenders. Oftentimes a mortgage broker can get you a mortgage that can better meet your specific needs. They can oftentimes also get better rates for you.

Lock in your rate

When you get preapproved, make sure you get your interest rate locked in. Lenders can often reserve an interest rate for you for 90-180 days. If interest rates go up, then you will be glad you locked in while they were still low. If the rates go down before you buy your home, no worries, your lender can forfeit the reserved rate in favor of the lower ones.

Buy Vs Rent

Buying your own home can be a good decision which allows you to build equity over the long term through mortgage repayment and value appreciation. Owning your own home also can give you a certain pride of ownership. Renting on the other hand however can be a more stress free way to live, with little to no financial risk. Beyond taking basic care of your unit, you don’t have to worry about maintenance issues. The down side of renting however is you’re paying off someone else’s mortgage and not building equity for yourself.

Ready to Buy New?

Buying a new home from a builder allows you to enjoy the look and feel of a new home along with the peace of mind of a 7 year warranty by the builder in accordance with the Ontario New Home Warranties Plan Act. It can also be an opportunity to experience significant appreciation in home prices as the community becomes more established. The downside however is, in all likelihood, you will be living in a construction zone for a year or two as they finish construction including landscaping and street repair.

Ready to Buy Condo?

Condos come in different shapes and sizes, but are commonly apartments or town row houses. Condos provide an easy way of ownership where most often you are responsible for everything inside your unit and the condo corporation is responsible for everything on the outside like lawn care, plowing, common areas, and the building exterior. There is a cost however and owners must contribute monthly in the form of condo fees. When considering to purchase, make sure the condo’s reserve fund is adequately funded or that there are no special assessments.

Ready to Buy Resale?

Buying a resale home gives you a lot more to choose from. Depending on the market, there is usually something to be found for everyone. The challenge is to prioritize what’s most important to you in a home and focus on those features when looking to purchase. Don’t get hung up on the little stuff, and remember that you can personalize the home to suit your own style after you purchase.

Minimum Down Payment

The minimum down payment to purchase a home in Ontario is 5% of the purchase price (subject to maximum price restrictions.) This amount should come from your own financial sources but there may be alternate options for you to consider. One idea would be to accept a gifted amount from a family member. Your lender will likely ask for a letter from the donor to confirm that it is not a loan. The 5% can also be borrowed with an additional default insurance premium added to the mortgage, subject to lending qualifications.

Don’t Be Surprised By Closing Costs

As a buyer, you are responsible to pay certain costs before closing. These costs could include land transfer taxes, legal fees, appraisal fees, inspection fees or survey fees. A good rule of thumb would be an additional 2% of the purchase. Check with your lawyer for a more detailed estimate of actual closing costs.

CMHC & Sagen (formerly Genworth)

A “conventional” mortgage is one where the buyer has at least 20% down payment. In scenarios where there is less than 20% down payment, the lender obtains insurance on your mortgage through additional premiums charged to you with your regular mortgage payments. These types of mortgages are sometimes called “high ratio mortgages.”

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About The Author
David Robertson

Since 2011, Dave brings integrity and professionalism to his clients in Ottawa when helping them buy and sell real estate. Every client matters to Dave.He doesn’t just sell you a home; he builds relationships for life by treating every client with the respect and honesty he would give his own family. Even after the sale of your home, he will continue to be there to answer all your real estate questions and recommend preferred vendors. As an Ottawa native, Dave understands the changes in the local market. Dave's previous industries in banking and home equity have sharpened his expertise in real estate trends. He will professionally explain the real estate process and paperwork involved. As team leader of LIFE Real Estate Group, Dave offers his clients a team of dedicated agents and administrators. Why hire a single realtor when you can hire a team? LIFE Real Estate Group's innovative marketing strategy and commitment to excellence has propelled them to be one of the top teams at Solid Rock Realty! Dave's passion for serving people is the foundation of his success. His goal is to earn the right to be your real estate professional for life. Whether it is creating a customized plan for creating generational wealth through real estate or even home maintenance tips, he is available for all his clients. Message Dave for past testimonials to see how he has helped local families.

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