If you’re a first time home buyer looking to break into the real estate market then this blog is for you.
While there is no arguing that the current real estate market is much different than it was 25 year ago, there are still plenty of opportunities for first time home buyers to invest in real estate.
If you feel like you’re ready but don’t know where to start, here are 5 things you should do to help kickstart the home buying process.
Find A Local Agent
We can’t say it enough. When you’re buying a home, you want a neighbourhood expert on your side. That’s why the agent you choose to work with should know the communities that interest you—inside and out. Someone with years of local experience is more likely to have all the info you need, from price points to school districts to dining hotspots. Together, you can use this knowledge to find the neighbourhood, street, and home that best suits your lifestyle.
Before you decide to work with an agent, you’ll have the opportunity to interview them. This is the perfect time to determine whether they’re a good fit: Questions to ask when hiring an agent.
While your agent is there to help answer your questions, and guide you through the market, beginning your search locked and loaded with the information you need to make the most educated decisions will give you the upper hand.
To help prepare you for what lays ahead, we’ve laid out some of the most frequently asked questions
One of the most common misconceptions we see with first time buyers is the misuse of the terms pre-approved & pre-qualified.
When you are 𝗽𝗿𝗲-𝗾𝘂𝗮𝗹𝗶𝗳𝗶𝗲𝗱 your lender will only look at your general financial picture, asking basic questions to make a tentative assessment as to how much they could be willing to lend you. A pre-qualification is not a guaranteed loan, but is a good step to take early on, long before you start shopping.
To be 𝗽𝗿𝗲-𝗮𝗽𝗽𝗿𝗼𝘃𝗲𝗱 means that your lender has taken things one-step further than the original qualification process. The pre-approval process generally takes more time to complete, involves a full mortgage application and a wider range of specific documentation that will be further verified by the lender. You will need to provide detailed information about your financial situation.
If you are pre-approved your lender is making a commitment to loan you money (subject to some conditions such as property valuation) & some lenders will also offer you a rate hold for a specific interest rate (fixed rates only).
Being pre-approved also….
- Makes you a more attractive buyer
- Gives you more negotiating power
- Can make for a faster home buying process
Curious to know how lenders assess your buyer power? Click here to read more.
Build Your Budget
With interest rates on the rise it is important not to over extend yourself. Talk to a mortgage broker, establish your budget and stick to it. It is also important to remember that buying a home is much more than the home itself; you have to budget for repairs, maintenance, insurance and utilities. And don’t forget closing costs – as a first time buyer it is especially important to note what other costs you will incur on closing. Click here to read more.
In Canada, first time home buyers have exclusive access to programs, credits and rebates to support new home owners on their real estate journey. Here are 4 incentives to look into when buying your first home.
- First time home buyers inventive
- Home buyers amount
- The home buyers plan
- Land transfer tax rebate
Establish Your Wants vs. Needs
Once you have established affordability, a great next step would be to make a list of “must-have” items and prioritize these items, followed by the “would be nice to have” items.
A “must-have” list encourages you to write out exactly what you need in a new home and will significantly aid in narrowing down the scope of your search. This list will also foster communication on critical aspects of your new home that might not have been discussed previously, and help you identify requirements that may be in conflict with each other.
Focus your list on the high-level, pricey aspects of a home. Minor changes such as painting and smaller renovation projects can be worked on down the road, but changes that add up in time and money should be avoided (think kitchen remodels or adding another bathroom, older fixtures like a furnace, AC or roof). Narrowing down your search to homes that don’t require major changes will help ensure you choose a home that is within your budget.
Have questions about the market? We’re here to help. With over 15 years of real estate experience, our team can help guide you through the process with ease. Click here to book a consultation.