Home Buyers - Lindsay Joanne Real Estate

Buying a home is often an overwhelming experience for a first-time buyer.

It’s the biggest purchase most people will make, and because emotions are always involved, avoidable – and potential costly – mistakes could be made along the way.

But, buying a home doesn’t have to be a stressful experience. We’ll guide you through the home-buying process, and our experience will help you avoid the pitfalls in finding the home that is right for you.

Here are the 4 key steps to get you started:

1. Get pre-approved

This is an important first step in the home-buying process. You don’t want to start house-hunting and fall for a home you can’t afford. This will also ensure there are no problems with your credit that you may be unaware of.

Your credit is one of three factors that will be considered before you get approved for a mortgage. The other two are income and your down payment.

Of course the bigger the down payment, the smaller your loan (and overall interest charges) will be. One way to help boost your down payment is to borrow money from your RRSP. First-time buyers can pull out $25,000 tax-free and have 15 years to pay it back. If you’re buying with your partner, you can contribute $50,000 together.

2. Find a real estate agent

While having a real estate agent is not necessary when buying a home, it is recommended — especially if it’s your first time going through the process. Having someone who is knowledgeable about the market leading you through the process could take a big weight off your shoulders.

3. Stay mindful of your budget

Just because a bank approves you for a certain amount, doesn’t mean you have to spend it all.

“One of the biggest things you have to consider in this decision is your lifestyle,” said Trisha Fineza Forbes with RBC. “And what that requires from a cost perspective.”

“You may be able to afford [your own home],” Daniels added, “but you’re also going to have to realize that you might be giving up going out for drinks after work or out for dinner with friends because you’re going to be paying a mortgage now.”

The B.C. realtor suggests asking yourself: if you lost your job and weren’t working for three months, would you be able to afford your home? Or are you stretching yourself too thin?

4. Be open

We’ve all seen the real estate shows with the gorgeous multi-million dollar properties. Your first home will most likely look nothing like that.

Wallpaper can be removed, walls painted and cupboards changed. The things you should be more concerned about is the size and layout, along with the condition of the roof, plumbing and hot water tank.

For a first-time homebuyer, it is important to avoid common pitfalls.

Here are some tips to keep in mind:

1. Don’t think you’ll be in that home forever

“The reality is, on average, people only live in their first two homes for seven to ten years,” said Sherrod. So, remember that not everything has to be 100 per cent as you’d always imagined. They call it a “starter home” for a reason.

2. Don’t be too emotional

Experts say this can be quite common with first-time buyers. Check the emotions at the door and think with your head. Always keep in mind the resale value of the home you want to purchase, and remember that in real estate it’s all about location, location, location.

3. Don’t make big purchases before getting approved for a mortgage.

That may seem fairly obvious, but you’d be surprised.

“I’ve seen it happen time and time again where buyers run out and finance a car or spend a large amount of their savings and then the bank will adjust their loan terms unfavorably or flat out deny them a mortgage,” said Sherrod.

4. Don’t forget about closing costs.

Closing costs can add up. The CMHC recommends putting aside anywhere from 1.5% to 4% of the purchase price to cover them.

Oh, and don’t forget to also save for a rainy day. You never know when that hot water tank could break down!

Renting vs. Home Ownership

This is a decision that is not as easy to make as it may sound.

As a homeowner, you can reasonably expect the equity in your home to increase over time as your mortgage is paid down. In contrast, while renting over the same period of time leaves no property investment, renting may provide lower living expenses and the opportunity to invest in other opportunities.

In the owning vs renting decision it is important to add up all of the figures, including the cost of your home, the size of your down payment, utilities, immediate repairs, interest rates and insurance, and compare them with how much you are currently spending on rent.

Of course, you also have to place a value on the enjoyment and satisfaction that you will derive from owning your own home.

Cost Saving Tips

To save money on heating costs, reduce the temperature of your home a few degrees at night and when you’re away.
Keep blinds, shades and drapes closed during the hottest part of the day in the summer.
Open south-facing blinds on sunny winter days
Use area rugs on cold floors – if your feet are cold, your body will feel cold.
If you feel cool, put on a sweater rather than simply turning up the thermostat.
Clean or replace the air filter on your furnace every month to improve efficiency.

To save more on central AC costs, try cooling your home to only 24 or 25 °C instead of the low 20’s. Each degree below 26 °C will noticeably increase your electricity use!
Turn off unnecessary lights in the house (they produce a lot of heat which works against the AC.)
Conservation can be as easy as planting a tree. Plant some leafy (deciduous) trees on the sunny side of your house. During the summer they provide shade, and in the winter they will shed their leaves to let the warming sunshine through.
Plant pine or fir trees on the north side to provide an energy-saving windbreak

Questions? I’d be happy to answer them!

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