Tips of the Month – Steps to Purchasing a Home

By KRISTA TURCASSO

Making a real estate purchase is a very personal matter. With an ever changing market and the financial responsibilities that come with a mortgage and owning a home in general, it is important to approach the situation educated in all aspects of the process to ensure you are making the decision best suited to you.

1. Buying a home is probably one of or the largest financial and lifestyle decisions we make in our lifetimes so it is important to know whether owning a home is right for you at the current point in your life. Do you enjoy relocating often? Do you prefer saving money for vacations or personal hobbies? Would you prefer not having to worry about home maintenance and repairs? If you answered yes to any of these questions, you most likely aren’t ready for the commitment that comes along with home ownership.

While there are many advantages to owning a home, such as financial security through capital appreciation, flexibility in decorating and style, and stability in having a place of your own, there are also downsides. The possibilities of financial stress, increased maintenance and responsibility, and higher costs are all factors to consider.

2. Once you have decided that you are at the right point in your life to purchase a home, the next factor to determine is whether you financially are ready. Calculating your net worth, the amount left over once you subtract your total liabilities from your total assets, and determining your current expenses and debt payments are key to discovering what mortgage payment you can afford. You can find a mortgage calculator on many websites, including MLS, CMHC, local realtors and more.

3. Once you have figured out the price range you can afford, it is important to calculate all costs associated with purchasing a home. Mortgage loan insurance premium, appraisal fees, deposit, down payment, estoppel certificate fee, home inspection fee, land registration fee, prepaid property taxes and/or utility bills, property insurance, survey or certificate of location cost, water quality inspection, legal fees and disbursements and title insurance are the up front costs to be aware of prior to entering an agreement.

There are other costs that can add up once the purchase has gone through, such as moving expenses, renovations or repairs, service hook-up fees, condo fees, and appliances. Be thorough when calculating these costs!

4. Knowing what to buy is also an important step. While you may be aware of your current needs, it is important to think about what you might need in 5 to 10 years. Think about size requirements, special features that are important to you, and your lifestyle and stage in life. Choosing the right location is also important to ensure you can easily commute, that you are near amenities that suite your needs, and perhaps that you are near family and friends.

Also, you should ask yourself if you are interested in purchasing a new home, one previously owned, or building your own. While sometimes this comes down to what you can afford, it is not always the case and there are always an array of options in most markets. Understand the different styles and options available prior to making a decision.

5. Hiring a professional is a good decision when making such a large and personal investment. Real estate agents are an important role in the process, with the ability to help you find your ideal home, take care of writing your offer of purchase, negotiate on your behalf to ensure you receive a good deal, provide up to date information on the community and market, and so much more.

6. Finding the right home, once you’re pre-qualified for a mortgage and hired a professional, is the next step in the process. There are many resources you can use to find the home right for you! Word of mouth, newspapers and real estate magazines, the Internet, cruising areas you like and looking for “For Sale” signs, visiting new developments, and working with your real estate agent are just a few. Through the process it is useful to keep records of all likes and dislikes. Also make sure to go through the current financing on the property, and to take a step back to look beyond cosmetic attractiveness of the property.

7. Make an offer to purchase! You’ve found the home, following all the appropriate steps, and now you and your realtor will put together an offer to purchase. Working with a lawyer or notary in this process is definitely a good idea to ensure all the T’s are crossed and I’s dotted. Don’t be discouraged if you receive a counteroffer, as this is common. The whole process is a bit up and down, which can lead to stress, but it’s part of the process so being prepared for it is important.

8. The final steps include the closing day, which is when you reach the goal you have been working towards! You take legal possession, but there are still a few things that need to be done. Your lender will provide the mortgage money to your lawyer, you must provide the balance of the purchase price to your lawyer along with closing costs, and your lawyer pays the vendor, registers the home in your name and provides you with a deed and the keys to your new home!!

9. Before you pour that celebratory drink, remember that there is more to owning a home once the papers are signed. The financial responsibilities have begun, and it is important to be consistent with your monthly mortgage payments, stay on top of the costs associated with operating your home, saving up for emergencies and living within a set budget.

10. Now you can sit back and enjoy your new home! You’ve settled in, managed your finances, and are comfortable in your new setting. One last tip to ensure the value of your home is maintained or improved is making an effort to regularly maintain and repair, or even consider renovating. Learn about the minor repairs you may need regularly to avoid constantly hiring a professional. Congratulations!