Looking for a first home can be both an exciting and stressful adventure so we've put together a list for first home buyers to help them in their decision making. Take a look at the below and ask yourself:
1. How much can you afford?
Banks and mortgage firms will always give you a tentative number derived from generic formulas. Crunch your numbers. Consider your overall expense including child care, retirement funds and your lifestyle.
Never go over board with what you can afford. Begin with a starter home with manageable monthly payments. You can always move up to a bigger home.
2. What kind do you like?
Do you want to live in a Condo, a town house, a semi-detached or a detached house. This may seem a simple choice considering the square foot area you get and the distance you have to travel everyday to your work place but, its always better to consider the added expense of buying a house with monthly maintenance fee that may vary a lot in a condominium to a town house. Determine beforehand whether you want to go in a house with maintain fee or a free hold.
A monthly maintenance fee is collected against services like maintaining your front yard, roof and snow shoveling from your side walks; which incase of a free hold is your responsibility.
Also create a list of features that are a must- have suitable to your lifestyle and the ones you can compromise on. This will help you with a much more refined search.
3. Aim to pay more down payment
Your down payment should be at least 5 per cent of the price, but it is highly recommended that all first time home buyer aim to put down 20 per cent of the value of the home in order to qualify for a conventional mortgage. For our Canadian friends remember if you have money in your RRSPs/401K, you can use up to $25,000 towards the purchase of your first home.
It may seem a big number at the time of buying but paying a 20% down payment will ensure less mortgage resulting in lesser EMI (Equated monthly Instalment) towards your mortgage. The $200-$300 saving may make up for your additional transit cost.
4. Consider your closing costs
Closing costs can range anywhere from 1.5 to 3.5 per cent of the total cost of your home. You might be expected to pay for some or all of the following:
• Home inspection fee
• Legal fees
• Property transfer tax
• Appraisal fee
• Land transfer tax
• Title insurance
• Interest adjustment
• Property and fire insurance
5. Get pre-approved for your mortgage
After you have decided on your budget, closing cost and wish list. Its time to contact a bank or a mortgage broker in order to get pre-approved for a mortgage.
This will establish you as a serious buyer and give you an additional edge at the time of an offer. In case of a multiple bidding, waving off financial condition will work in your favour.
6. Understand the different payment options
You can pay for your mortgage in a variety of ways, including monthly, bi-weekly, and weekly payment options. Paying off your mortgage sooner will save you thousands of dollars in interest costs, while a longer amortization period will reduce your regular payments and frees up cash in your budget. You can use this online mortgage calculator to help you decide what payment schedule is right for you.
Some mortgages also give you the ability to make extra lump sum payments, or the option to skip a payment. Make sure you understand what your options are and that you are comfortable with the terms.
7. Calculate your moving expenses
People often forget to consider their moving cost. You can collect quotes from different companies if you are hiring a moving company. In case you are going long distance, plan out ahead to make sure you arrive at your home with your movers.
8. Furnishing your new home
People often go overboard with selecting furniture and designing, even before they have moved in. Wait until you have closed the deal on your first home. Every home has different set of measurements and your furniture may not fit well into your new home.
It is important to take proper measurements of all your rooms before you order any furniture. The most recommended ways to design your home is to move in first and gradually add things to your design.
9. Buy with your head, not your heart
Its always tempting to go for a perfect looking high- end home. Think logically and realistically with the biggest purchase of your life. Letting your emotions overtake common sense might result in paying more for your home either at the point of sale, or over the long run and you might never recuperate your losses.
10. Once you find your home, stop looking
Once you have decide on a property, stop looking and comparing it to all the other properties on market. Its the golden rule. Once you have it try and make it your own space.
Feature Image: www.bendhomesandproperties.com
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