Good morning Dinks. Are you thinking of buying a house? We are here to help. Our friends at Rate Supermarket are back to help you buy a home with a step by step guide of everything you need to know.
Step 1 – Seek out a mortgage broker / compare the market
Start by exploring your financing options. Mortgage brokers are ideal because they will take your personal financial situation into account, and will help you find a rate best suited for your needs. Be sure to ask if they have access to all market rates, or if they’re working for a specific lender only.
Step 2 – Get a pre-approval
This is one of the smartest things you can do – not only will you have a defined sense of your budget, but being approved for mortgage qualification can give you a leg up on other buyers in bidding war situations (a seller may be more likely to go for an offer with financing already secured). Some mortgage products offer rate holds of up to 120 days – plenty of time to find your dream home.
Step 3 – Get an agent
A good agent is worth their weight in gold; not only will they help you locate a home with your specifications, but they’ll help you organize your offer, draw up your agreement of purchase and sale, and will assist you in closing the deal. Make a list of needs and wants for your dream home, so your agent knows what they’re working with.
Be prepared to fight for the home you want to buy. Many agents will warn homebuyers about getting into bidding wars. This can push the asking price of a home through the roof. A real estate agent can help you manage counter offers from other buyers. You should be flexible with your dates and factor in a little extra costs when buying a new home.
Couples should also keep in mind that it may take much longer to find and close on their new home than anticipated, and this can incur a cost. Ask yourself – Will we have to pay rent in the meantime? Will we have to make arrangements for a lease?
Step 4: Make an offer
Once you’ve found your abode of choice, sit down with your lawyer or real estate agent and draft up your purchase agreement. You’ll also need to decide on a deposit amount (NOT the same as your down payment), and determine other conditions, for instance, if the sellers must include a home inspection.
Despite your best intentions, you will likely pay more than you anticipated. Saving for just your down payment will not be enough. Once you’ve factored in your closing costs, legal fees, unexpected expenses, you could be looking at paying another $10,000 on top of your down payment.
Penelope Graham is the Editor of Money Wise, RateSupermarket.ca’s learning resource and blog. RateSupermarket.ca is Canada’s comprehensive financial rates comparison site, offering consumers transparent access to the best mortgage rates, credit cards, GICs, insurance and more.
Photo by Stephen Bush