Buying a home for the first time is quite challenging and thrilling at the same time. You’re excited because you’re making a critical decision in your life. And you’re frightened because of a significant investment you’re about to make.
Worry not! I will share some tips for first-time homebuyers to make the entire buying process smooth and easy so you’d plan wisely.
Before we go into details, I’ll share some necessary information about the incentives offered to first-time homebuyers:
Incentives for First-time Homebuyers
Let’s start learning the tips to buy your first home!
Tip#1 – Why do You Need to Buy?
You may laugh at this tip, but it is a question you must answer before buying your first-ever home.
Do you plan to buy a condo for living, rent or sell?
All three buying decisions follow a similar process (almost) but have different outcomes.
So, if you plan to buy and occupy, you need to answer the below:
- Affordability - Condos are relatively inexpensive than single-family homes. And they’re usually the first option for first-time buyers.
- Area - Do you prefer living in the city or town?
- Location - In downtown areas, you have more access to public transportation, restaurants, malls, etc. But you are surrounded by the hustle and bustle of big cities. Whereas, in the suburbs, you got peace.
- Type of house - There are many options, including condos, single-family homes, townhouses, etc. Choose the one you could afford and love the most.
- Type of neighbourhood - For a friendly community, condos are better. And if you prefer staying away from the masses, bungalows suit you.
And if you plan to buy and rent, your questionnaire would look like this:
- How much access amount do you have? Depending on your investment, you need to consider how much you’d afford as of now? Do you have a hefty amount to invest in a single-family home or just enough to buy a condo?
- Which one is high in demand? Before COVID-19, condos were trendy. But the trend has shifted towards single-family houses. However, experts say that this trend will soon return to its norm.
- Who would be your potential tenants? Individuals, couples, or immigrants usually occupy condos, whereas families prefer single-family homes.
If you plan to buy and sell, you must consider the following:
- The real estate trends – Understand what the real estate market has to stay for the year (and beyond). What is the country’s average home price and expected yearly increase?
- Buy one or two? Single-family homes are more expensive than condos. Suppose you could afford to buy one single-family home (let’s assume) in Toronto. In that case, you could alternatively buy two condos and sell them one by one as and when required.
- Find the best location – The best place is usually larger cities. However, the current trend shows a preference for suburbs over downtown areas.
Tip#2 – Managing Finances
Let’s assume that you plan to buy and occupy.
So, now that you have decided to buy a principal home instead of investing, you need to start managing your finances:
Set a monthly budget
Based on your current monthly income, prepare a monthly budget with a hefty portion set aside as your savings.
Your budget will also help you decide if you can afford a condo or a single-family home.
Save more for the down payment.
The down payment is your significant contribution in the beginning. The law says you need at least 5% of the total house price as a down payment. But 20% is the optimal value. With 20%, you secure yourself from taking mortgage loan insurance.
Improve credit score
The simple rules to maintaining good credit scores include:
- Pay bills early.
- Keep credit balances low.
- Close unused credit cards.
Read more if you plan to buy a condo: 3 Key Elements to Consider When Buying a Condo
Tip# 3 – Mortgage Selection
Types of mortgages
The most common types of mortgage are:
- Fixed: the interest rates remain the same throughout the mortgage term period.
- Variable: the interest rates vary over the period.
- Hybrid: they incorporate the effects of fixed and variable interest rates and keep you safe in case the interest rates go up.
Get pre-approved mortgage
A pre-approved mortgage doesn’t mean the lender will approve your mortgage, but it helps refine your search for the right one.
It helps you in:
- Deciding what you could afford.
- Estimating your expected interest rates.
- How much would you be paying?
Tip# 4 – Home Shopping
One challenging part is down, the other to go – selecting your dream home.
Home shopping is best done when you initiate your search on the internet. Technology is taking over, and we can’t deny its importance.
Start your research by visiting several realtors’ websites. For instance, if you plan to buy a condo in Toronto, you need to search for condos for sale in Toronto. Refine your search by applying filters based on requirements and budget.
You could also read different blogs from these professional real estate agents and learn about the country’s housing market.
Once you have a good knowledge of the real estate market, you now need to call the real estate agent near you. These professionals would further advise you on the best option you need to consider.
Tip#5 – Home Inspection
Don’t miss this tip to save a few hundred (or less) dollars. The professional home inspectors would help you identify the house’s problems and may guide you if you should fix them or look for another home.
You might need some renovations or fixes for build-to-occupy homes (or condos). However, for ongoing (pre-construction) projects, you’d rest assured that no renovations or fixes would be required.
These tips are essential when you plan on buying your first home. So, review all the central elements, and revise the content if something is missing:
- Why do you need to buy a home? Is it an investment, or you’re purchasing a principal home?
- Manage your finance - this is always crucial. You should permanently save something from your income so you don’t have to look here and there to make the purchase.
- Selecting mortgage - I’d highly recommend consulting a professional broker for in-depth knowledge.
- Home shopping would give you a good idea about the real estate market, the right home option for you, and the future expectations.
- Home inspection - spend a few dollars to save for more considerable expenses later.