how to buy a home: 5 things you need to know

1. Know Your Financial Position

Create Your Budget

The first thing that you need to know before you buy a home, is your current financial situation.Creating a detailed budget that includes income, expenses, and savings will help you get a clear picture of where you stand financially before adding more expesnes to the mix.

Check and Improve Your Credit Score

Check and confirm that your credit is in good standing, if not, it may be a good idea to wait until you’ve raised your score to avoid taking any hard hits to your credit without getting approved by a lender. You can easily check your credit score through Credit Karma!

What Can You Afford?

There are plenty of online mortgage calculators available for you to use to ensure you can afford what you want and/or need in a new home. Mortgage calculators will give a general estimation, however, your interest rate may vary depending on mortgage terms, your lender, and your financial status. You can find a mortgage calculator while searching for your home on Realtor.ca.

2. Know Your Down Payment Amount and Closing Costs

Your Down Payment

Another important detail you need to know before you buy a home is your down payment amount. This will be your first out-of-pocket expense in the home-buying process. Down Payments usually range from 5%-20%, anything less than 20% will result in the need for mortgage default insurance. Mortgage Default Insurance is usually added to your monthly mortgage payments.

Estimate Your Closing Costs

I can’t stress enough how important it is to estimate your closing costs. Your closing costs will be based on your future home’s location, any conditions on your offer, the lawyer you choose, etc. When I purchased my first home, we had no idea that there would be more up-front costs on top of our down payment until we were already tied into the deal with the seller.

Closing costs may include;

Inspections Land Transfer Tax
Legal Fees and Disbursements
Title Insurance
Seller’s Pre-Paid Utilities and/or Taxes

3. Know Your Mortgage Pre-Approval Amount

Consult With Lenders and Compare Interest Rates

Another thing you need to know before you buy a home is your mortgage pre-approval amount. Regardless of what you think your budget is, your mortgage pre-approval amount is going to determine what your actual budget is. Talk to different mortgage lenders to discuss loans and get pre-approved. This important step may also make you a more appealing buyer to sellers. Compare interest rates, loan terms, and fees from different lenders to make sure you get the best mortgage deal.

When we purchased our home we simply picked a lender and stuck with them. We didn’t bother to shop around as we were in a rush to get out of our stingy apartment and into our own space before our first baby was born. Looking back, we wish that we researched different lenders and financing options to find the best one suited for us.

4. Know Your Priorities

Create Your Wish List

Before searching for your new home, it’s crucial to outline the essential features and amenities that are “deal breakers” for your lifestyle. Your deal breakers could include the number of bedrooms and bathrooms, a garage, proximity to schools or public transportation, or a specific neighborhood or community. On the other hand, “nice-to-haves” could include things like a backyard patio, a modern kitchen layout, or energy-efficient appliances. Your wants and needs may change over time, but you’ll figure that out as you start to view different properties.

Consider Your Future Needs

When figuring out the size of your future home, think about your family’s future. You may be planning to grow your family, get a pet, or dive into a career change that demands a cozy home office or a creative studio. Considering these possibilities not only adds a touch of excitement but also saves you from having to upgrade or renovate later on. Your home should be a canvas for your life’s journey, so let it adapt to your story.

5. Know Your Agent (Sales Representative)

Finding the right Sales Representative (or Agent as they’re commonly known) can be just as difficult as finding the right home to buy. There are many ways to confidently choose a Real Estate Agent whom you can trust. When looking for a good real estate agent, ask people you know for recommendations and check online reviews on websites and social media.

Personal Recommendations and Online Reviews

Get insights from friends, family, or colleagues who recently dealt with real estate transactions. Also, explore online platforms to read reviews about suggested agents. You can find online reviews on many platforms such as Google, Facebook, etc.

Consider Diverse Perspectives

Recognize that preferences and needs can vary. While someone may have had a positive experience with an agent specializing in residential properties, another individual’s requirements for commercial transactions might differ. Tailor your choices based on the specific type of real estate transaction you’re pursuing.

Verifying Credentials

Make sure to verify the credentials of recommended agents by checking their licensing status. Once you’ve confirmed their credentials, check for any disciplinary actions. You can find disciplinary actions on RECO’s website, reco.on.ca

Your Best Interests in Mind

Remember, as a client, your Agent works for you and is legally obligated to keep your best interests in mind. Unless, of course, you find yourself in a multiple representation situation (your agent and/or their brokerage is representing both parties in a single transaction). That makes things a little more complicated, you can read more about the ins and outs of how your Real Estate Agent works here.

Meet The Author

Hi! I'm Brooke, a first-time homeowner, soon-to-be real estate sales agent and mom of two! Join me as I share insights and guidance, navigating the exciting world of real estate. Let's explore the ins and outs together, making homeownership dreams a reality.