You have decided to buy your first home. It’s likely the biggest investment you have made so far in your life and your emotions are probably ranging from excitement to panic. There’s a lot you are going to have to learn, but with careful preparation, you can avoid feeling overwhelmed.

Before you go and start falling in love with houses, these tips for first time homebuyers will help you start your journey towards home ownership.

1. How much can you afford?

When buying your first home, one of the first things you should consider is finding out your credit score. This will give you some time to resolve any unknown issues. Some things you can do to boost your rating include: pay down your credit card debt, do not apply for other loans (i.e. car) or make large purchases on credit, and try not to carry a balance of more than 25 percent of your card’s limit.

As of February 2016, new minimum down payment rules require home buyers to pay 5 percent down payment for the portion of the home’s price under $500K. For homes that are valued above $500K, buyers must pay 5 percent on the first $500K and 10 percent for any portion of the home’s price above that. But, if you can put 20 percent down, you will avoid paying CMHC’s mortgage default insurance (up to 3.25% of the loan value), as well as saving thousands in interest over the lifespan of your mortgage.

There are also programs in place to help first-time homeowners:

• The Home Buyer’s Plan
• First-Time Homebuyer’s Tax Credit
• Land Transfer Tax (LTT) Refund
• GST/HST New Housing Rebate
• Energy Efficient Housing

2. Have you been pre-approved?

Being able to walk into a potential home with the knowledge that you can make an offer is a great feeling. Getting a mortgage pre-approval is free, and it will give you an idea of what you can afford. Plus, when you find the home that feels right, you will want to make an offer right away – before someone beats you to it. Your pre-approval should be in writing, with a term of 90-120 days, and a guaranteed interest rate, which is helpful in case mortgage rates increase during your search.

3. What do you want out of your home?

Now that you’ve covered the financial aspects, it’s time to think about you. Make a list of what is essential and what you are willing to compromise in your new home to help tighten your search and save time and energy.

Think about location, especially when it applies to commuting – is an extra twenty-minute commute worth having the extra space, or would you prefer a smaller space that you could get to and from quicker?

You are also picking a neighbourhood, not just a house. Does it have your desired lifestyle features (coffee shops, nightlife, gyms, good take-out etc.)? What about your neighbours – are there toys or a Zen garden in their yard? Look for telltale signs of people who are just like you, so that you feel part of a community.

If you’re looking for a condo instead of a house, check out our tips for buying a condo, right here. 

4. Keep your expectations in check.

They’re called “starter homes” for a reason. Depending on your financial situation, be ready to take on minor fix-ups and don’t worry about wallpaper and cupboards right now. Ensuring the plumbing, hot water tank, and the roof’s condition are durable – will be essential for your peace of mind down the road.

Consider lifestyle expenses like childcare and continuing your RRSP contributions and buy what you can afford, not what the lenders offer. It’s practical to budget for home ownership costs such as property taxes and upkeep, and put aside an emergency fund for repairs.

Also, plan for life’s unexpected changes. If you were out of work, would you still be able to afford your mortgage for several months? A good rule of thumb: one-third of your income should go towards mortgage payments and carrying costs.

5. Knowledge is power.

The more you know, the more confident you will feel. Chances are you have family and friends who have purchased homes and been through the process. Now is the time to talk to them and get the benefit of their experiences as well as recommendations. Having a strong support system will ensure your peace of mind if any issues develop.

In addition, seek out professional advice from real estate agents, mortgage brokers, credit counsellors, insurance agents, home inspectors, etc. If you are being properly educated, the process should be enjoyable and less stressful.

We hope these tips have given you the knowledge to begin your quest for your first home. If you’re considering buying your first home or have questions, please contact us at info@christensengroup.ca or call 416-441-2888 and we will do our best to ensure your journey into home ownership is as smooth as possible.