5 Things to Consider Before Buying Your First Property

With inventory at an all time low and surging prices, real estate has become the most talked about topic (second to the pandemic) across the nation. Bidding wars and restrictive bank loans are only making it harder for first-time home buyers to purchase their first property. If you happen to find yourself in a fortunate position to buy, there are a few things you should know. Here are the five things you should consider:

Income Security

The most important aspect of purchasing a home is being able to pay for your mortgage and home expenses continuously. Just like a car, houses require maintenance. Yes you’ll have to replace the lightbulbs, but also consider you may have to replace a furnace one day or worse, a leaky roof. If you do not have a secured source of income, you SHOULD NOT be looking to purchase a home. Not having a steady job can lead to mortgage default and bad credit only making it harder to purchase another home in the future.

Get a Pre-Approval

You can’t make a significant purchase like a home without knowing what you can afford. The first step is to get a bank or private mortgage broker to get you a pre-approval. This step is very important as it accounts for your income to debt ratio and credit score to determine your purchasing power. A word of advice – contact at least two different lenders and compare as they all offer different interest rates. The lower the better!

Pre-Approval vs. Affordability

A mortgage pre-approval is a great tool that can point towards your top price point. However, remember earlier when I mentioned that houses require maintenance? This is the step where you want to consider budgeting. Calculate your monthly expenses and do your research on property taxes, house insurance, utilities costs and any other monthly payments. This will help you determine the mortgage payment that you are comfortable with. Keep in mind that the mortgage you were pre-qualified for is not always the mortgage that you can afford!

Find Your Realtor

Let me clarify something here. As a buyer, you DO NOT pay us realtors for the services that we provide. It’s totally FREE! Now, why do you need an agent you may ask? Well, when you hire a real estate agent, that agent is legally required to represent your best interest. This is especially important when you are ready to put in an offer on a house and negotiate. The reality is that the seller’s agent is looking to get the most amount of money for their client.

Price isn’t the only variable that is negotiated during the buying process. Conditions, deposit amount, closing day and inspections are all part of the negotiation process. Your realtor is also the coordination hub between all parties that will be involved in the process (e.g Lawyers, appraisers, lenders, home inspectors). Interview a few agents before deciding to hire one so ask your circle for referrals!

Feel Out The Market

Now for the exciting part. Start looking for your new home! Do yourself a favour and make a list of features you need, want and don’t want. Think of your life today and what your goals are 5-10 years from now. People often rush into places that don’t meet their needs and very quickly find themselves looking again. Talk to your realtor about neighbourhoods, their future plans and surroundings. Take your commute into consideration. Are you willing to travel an extra 40 minutes to work and save some money on the purchase price? Creating this list will help you narrow down the type of home that is right for you. Once you complete the list, share it with your agent and ask to book showings. A house/neighbourhood may look good on paper because it meets some of your needs, but your opinion may change after the visit. Think of that time you met someone in real life that looked better on social media…

Buying a home can be made simpler, if you are prepared. The process always starts with your savings and being able to obtain a mortgage. But it doesn’t stop there, having knowledge of your affordability and hiring an experienced realtor will help to make the journey seamless and enjoyable. Until next time!