Tips For First-Time Homebuyers
Home buying is one of the biggest financial decisions you will make in your lifetime, so arming yourself with knowledge about the process and market in which you reside can help prevent costly mistakes from happening.
Knowing the difference between needs and wants can save money. A swimming pool or gazebo might be nice to have, but they're not necessary necessities.
1. Make a List of Your Needs and Wants
If you're on the market for a new home, it's wise to create a list of your needs and wants before beginning your search. Doing this can help narrow down your options faster than searching randomly online for properties.
Start with the essentials, like finding an appropriate number of bedrooms for your family, a suitable school district and an easily manageable commute. Also keep costs such as property taxes and gasoline in mind.
Start by listing all of your wants, like having a pool or guest bedroom. It can help to divide these desires into "need-to-haves" and "nice-to-haves." If a home meets all your need-to-haves and you can afford it, give serious consideration to it; otherwise continue searching. When buying a home, sometimes some compromise is inevitable, but understanding what constitutes needs and wants will help prevent future disappointment.
2. Know Your Budget
First-time homebuyers should carefully consider their budget before beginning the home purchasing process. Determining what you can afford involves more than just mortgage payments; take into account other recurring costs like property taxes, insurance premiums and utilities when planning.
Budget for unexpected expenses when purchasing a home. An unexpected roof leak or air conditioning breakdown could quickly add up, as can repairs on an older model unit that won't start.
General advice suggests that monthly expenses should comprise no more than 28% of your gross income, as well as saving funds for down payments and closing costs - having this reserve can allow more flexibility when purchasing in a competitive market.
3. Work with a Lender
Purchase of a home can be a massive financial commitment that requires extensive planning. Saving for down payments, closing costs, and other expenses is essential to successful home ownership.
First-time buyers can gain an edge by getting prequalified for a mortgage and understanding its process. This will allow them to avoid house hunting outside their price range and demonstrate to sellers they are serious about buying.
As part of their underwriting process, lenders will review your credit, bank statements and employment history. They'll also assess whether you can afford your new house. Furthermore, lenders are required to send a Closing Disclosure at least three days before closing, giving you time to review any charges and ask any pertinent questions about them.
4. Look for a Real Estate Agent
Selection of an agent can make or break your homebuying journey. Seek advice from friends and family, and search for someone with an outstanding success track record in your locality.
An experienced real estate agent can help keep you within budget while also providing guidance through the complex homebuying process. In addition, they may inform you about local programs available through housing finance agencies that cater specifically to first-time homebuyers with lower to moderate income levels.
Real estate agents can also help simplify the paperwork involved with home purchase by helping to decipher through it all and connect you with trusted guides such as lawyers or inspectors.
5. Get Pre-Approved
Pre-approval for a home loan should be top of mind before beginning house hunting - it provides confidence about what mortgage you can afford!
Establish your maximum spending limit, demonstrate to sellers your intent to purchase, and identify issues with your credit early so they can be corrected before submitting an offer.
Even if you qualify for the same type of mortgage loan, be sure to shop around - fees and interest rates can differ significantly, saving you thousands over time. Explore options such as 15-year loans that reduce payments while simultaneously saving interest costs; these may be ideal for first-time homebuyers with limited budgets.
In summation, by understanding the market, researching a real estate agent, getting pre-approved, and enlisting the help of qualified experts such as Mr.Tulman, Mr.Sekhon and Mr.Krieser, Toronto mortgage brokers can help facilitate a smoother homebuying process. Taking time to understand the nuances of the housing market and the steps to buy a home can save thousands of dollars down the road.
