Buying your First Home

You’re buying your first home – congratulations! There’s no doubt this is an exciting time in your life and it can also feel a little overwhelming. On top of all the time you’re spending house hunting and getting pre-approved for a mortgage, you’re faced with having to battle it out with other prospective buyers in hopes that you will be able to land your dream home. Then, add in all the anxiety about the uncertainty of home ownership and it can all seem very stressful. April is the busiest month for home buyers so we’re sharing a few ideas on how you can best prepare for this exciting milestone.

Get Pre-Approved for a Mortgage

We recommend to anyone who is house hunting to get approved in advance of starting their search. There are a few great reasons for this:

• it helps narrow your search to include only homes that you can realistically buy saving you and your realtor a ton of time
• it prevents you from finding a home you love just to be disappointed when you find out you can’t afford it
• it gives you the chance to be quick on the draw and make an offer with confidence
• it allows you to exclude financing as a condition giving you a competitive advantage
• it gives you the chance to get a head start on planning your finances including what your new budget is going to look like as a homeowner

Clarify your Wants vs. your Needs

Once you know your price range, sit down with you partner and decide what exactly you’re looking for in a home. Sure, it would be nice to have a pool and a brand new kitchen, but is that really a need and does it fit in your budget? Consider needs such as the number of bedrooms or bathrooms, whether you require a garage for storage, the type of neighbourhood you want and whether it’s close to schools, etc. Decide what you are willing to live without and anything beyond your needs list will be a bonus.

Consider all your Costs

There is so much more involved with owning a home than simply your mortgage. Here’s an overview of some of the costs you should expect throughout the buying process:

• Home Inspection – although not legally required, we highly recommend members get a home inspection to help identify any potential issues with any home. They usually run around $300 to $600.
• Appraisal – although not always needed, you might be required to pay for an independent appraisal of a home to get an appropriate estimate of its market value. An appraisal usually costs between $300 and $500.
• Legal – there will be a number of legal fees associated with the registration and processing of your house purchase, plus any adjustments for taxes or utilities that the previous owners have already paid. These costs typically range between $1,500 and $2,500.
• Home Insurance – you will be required to set-up house insurance. This cost will vary depending on the value of your home and the type of coverage you choose.
• Title Insurance – you can decide to purchase title insurance which is designed to help protect you against mortgage fraud and it will usually cost between $250 to $350.
• Condo Fees – if you’re in the market to purchase a condominium, typical monthly maintenance fees can range anywhere from $200 to $500.

Other Costs to Consider:

• Moving Costs – if you choose to hire a moving company, you can expect to spend anywhere from hundreds to thousands of dollars depending on the time involved and how much you have to move.
• Utility Costs – some companies will charge set-up fees for services such as hydro or cable which you can expect to hit your first monthly bills.
• Renovations – although this comes after you take possession, you’ll want to think about a budget if you’re buying a home knowing you want to renovate or are setting your sights on a true “fixer upper”. These costs can add up quickly! If you’re not able to spend the money on renovations right away, be prepared to be patient and renovate over time.
• Furniture – you may want or need to buy new furniture such as a couch, bed or kitchen table. These costs will vary based on your needs, but are important to consider.

Educate Yourself on the Home Buyer’s Plan (HBP)

First-time homebuyer’s can take advantage of the HBP offered through the Government of Canada. The plan allows you to use up to $25,000 from your RRSP as part of your down payment to buy or build a home. The best part is you can withdraw it tax-free! To avoid incurring any interest or penalties, you are given up to 15 years to repay the same amount back into your RRSP. Click here for more information about the HBP.

If you’re looking to get started on your journey to home ownership and want some advice, we’d love to help. Contact us to make an appointment with a Member Service Representative today.