Introduction
Buying a home is a process, with many steps, and not a one time event.
Click the buttons to the left to navigate through the steps we recommend as a best practice.
Homework: what can you afford? What do you need?
Buying a home is one of the largest financial transactions most people experience. To avoid disappointment, and maybe a nasty surprise down the road, make sure you know what you can afford.
We strongly recommend, and most especially for the first time buyer, that you make an appointment with a mortgage specialist at your facorite bank, or with a mortgage broker. These people are up to date on the latest rates and lending requirements. They can get you pre-approved for a loan, so you know how much you have to work with. And they typically offer a rate-guarantee - particularly important when rates are starting to creep upwards. One note of caution though - many mortgage brokers do not charge the consumer for the loans that they help them arrange - but some do. Make sure you know what kind of charges you might be in for up front.
If you'd like to get a sense of where you stand before you speak to any lenders, here are a couple of things to consider:
- Income - how much money, after taxes, do you bring in each month?
- How much debt, besides a mortgage are you carrying - credit cards, student loans, car loans and such?
- What kinds of unavoidable expenses do you have, or expect to? Think heat, hydro, water, home insurance - these are pretty hard to avoid!
- Work out your gross debt service (GDS) ratio and your total debt service (TDS) ratio. CHMC has a very useful tool for calculating these numbers on their website.
- Once you know what kind of mortgage payment you can safely handle each month, take a look at our money tools page and see what kind of mortgage might be possible for you
- How's your credit rating? If you've missed or been late on bill payments, securing a loan can be more difficult - or expensive.
Once you have a reasonable sense of your price range, do a little window shopping. Browse the local paper, surf
Realtor.ca, make use of our property search page, and drive around different neighborhoods to see if you like how they 'feel'.
All this research is going to pay off for you, because by the time you're done with it, you're going to have a pretty good idea of what is available in your price range, and what areas most appeal to you. One last thing to take of is to spend some time clearly identifying what you really need in a home, and what would just be nice to have. Armed with all this important information, you're ready to take the next step.
Sales people
Now would be a good time to find yourself a licensed real estate professional to help you. If you haven't worked with a professional buyer agent before, or for some time, you might want to read our reasons to do so and key questions to ask.
Once you find a real estate professional you are comforable with, have them put together a list of prospective homes you can view online. The information that licensed board members can access is more up to date and complete than what you can find on Realtor.ca, so a fresh list of prospective homes is worth going over.
Pick the 6 or 8 listings that look most promising, and book time to visit them with your agent. Don't be discouraged if none of the homes you see are not right for you. New listings come on the market pretty much every day. But also keep in mind that there is no such thing as the perfect home; the best compromise is probably the right choice.
Getting through an Offer
When you find the right place, you should be ready to make an offer. This means having time available to do the paperwork, and being ready to write a deposit cheque.
When you create an offer with your agent, you will need to think about how much you are willing to pay, what kind of extras you would like to have, when you would like to close, and what kind of conditions you should have included. Your agent should walk you through the offer, explaining the meaning of all the terms and conditions as you go. Once it is all signed and initialed, your agent will then make arrangements to present the offer to the seller, and the seller's agent.
This can be an anxious time for the buyer (and the seller too, for that matter). Waiting for an answer can be hard - but rushing into such a big purchase is probably not in your best interests anyway. The Seller will primarily be focused on the price, and the timing of your requested close. They will also be interested in what 'extras' you have asked for, and your conditions - especially if you have to sell your own home in order to be able to buy theirs. Most likely, the Seller will reject your offer, and send it back to you as a counter-offer with any changes they would like to see (typically price, but also the close date, the extras, and the timing of your conditions). This is a normal part of the back and forth negotiation that goes one, as each side moves a little bit closer to what the other is asking. Sometimes this can wrap up in a single night, and other times it can span several days. This is a key time for your agent to really show their worth. The more experienced your agent is with negotiations, the better!
Eventually, you'll either arrive at a deal, or you won't. If you don't, just keep shopping, and don't let it take the wind out of your sails. If you did though, be ready to write that deposit cheque up - it's often due as soon as you have an accepted offer. And pull out your calendar, because it's time to plan some more in the next step.
Conditions
Schedule some time off to deal with your purchase - dealing with lenders, performing home inspections, signing various forms - these all require you to invest some more of your time.
Your agent will usually send a copy of the accepted deal to the person you are arranging your financing with for you. Your agent's brokerage will also send a copy to your real estate lawyer.
You've probably had a requirement for a home inspection inserted into your offer. Your agent will arrange the time and date for you, and can usually provide you with a list of reputable inspectors for you to choose from if you don't already have one in mind. A typical suburban home inspection will take around 3 hours, and is best done performed in daylight. The Buyer should really be present for the inspection, as the home inspector can explain each step and answer questions along the way. Again, this will probably mean some time off work - while some inspectors work weekends, many do not.
Think of each condition on your Offer as a hurdle to be crossed. As each one is resolved, your agent will need you to sign a form that either removes that condition from your offer, or provides written notice to the Seller that the condition is fulfilled. These documents have to be provided to the Seller within specific time frames, as spelled out in your offer - so make sure the lines of communication between you and your agent a open!
Once you've removed all the condtions from your Offer, you have a 'firm deal', and you're ready to move into the next phase, which begins with... more planning! But at least it ends with back-breaking labor ...
Moving
Once you've made it through to a 'firm' offer, make a list of things to do and people to notify before you move. Here's a handy little sample for you to start with.
Rate your agent
And everyone else involved. Whether they helped or hindered, posting your opinion on a public forum can be a real help to others looking for help. If they did a good job, let your friends, family & coworkers know. Referals mean the world to most agents. If someone was less than helpful, help re-introduce them to the job market. The same goes for mortgage brokers, home inspectors, movers, lawyers and anyone else you can think of. Spread the word.
Finally, put your feet up and relax. You've earned it.
