10 Simple Steps to Home Ownership
1. Saving for a downpayment.
Its’s best to have 20% down for any home you purchase, saving you thousands on both interest payments and insurance (as you won’t need to purchase mortgage insurance if you have 20% down) but it is possible to purcahse a home with as little as 5% down in some cases.
2. Building your credit score and having a stable income.
Your credit score is what lenders look at to determine your creditworthiness. Building this up is critical to obtaining a mortgage. You will need to have a minimum credit score of 600.
Here are a few ways to improve your credit score.
1-Avoid late payments
2-Maintain a good credit history.
3-Limit credit inquiries.
4-Keep your credit utilization rate low
Credit utilization rate CUR=total debt divided by your total credit limit across all accounts.
3. Talk to a mortgage specialist
Talking to a mortgage specialist can help you determine your affordability and mortgage approval amount.
Your downpayment amount, credit score and income all help to determine your affordability and approval.
4. Where you should buy.
Once you know what you can afford, you can start to look at where you want to live.
Top 5 things to consider when choosing where to buy.
Commute time
Public transit
Neighborhood amenities
Community safety
Schools
5. Be prepared for closing costs.
There are two main components that make up your closing costs.
Land transfer tax
Lawyer fees
The closing costs in Ontario are typically 3-5% of the purchase price.
Other things that can contribute to closing costs.
Property survey
Home inspection
Appraisal fee
Title insurance
Government registration fee
Status Certificate cost (this applies to condos)
6. Find a good Real Estate Agent
Connecting with an agent that has a strong understanding of the local market is critical for first-time buyers.
Top 4 questions to ask your Realtor
1. Are you a full-time agent or a part-time agent?
A full-time agent is able to devote more time working for you, helping you find your perfect home match faster.
2. Do you work with both buyers and sellers?
Most agents are either buyer specialists or seller specialists. Find out what your Realtor specializes in before making any decisions.
3. How long do you usually work with buyers from the first home to the closing table?
The right agent can play huge roll in the length of time it takes to find your dream home, so make sure to ask.
4. Will I be working with you individually or with a team?
It's always nice to know what to expect every step of the way. Make sure your agent is clear with who you will be dealing with during the process.
7. Start to look at properties
Now here is where the fun begins. This can be a very exciting time and it can be very tempting to expand your search and increase your budget, but it is important to stick to your price range and only look at homes
You can afford
You can see yourself living in
8. Make an offer
This is when things start to get real. You’ve found your perfect home and you want to put in the winning offer.
2 questions to ask your Agent before you put in an offer.
Can I see the CMA for this house?
A CMA (comparative market analysis) looks at about 10 properties in the area that are comparable to your perfect property to determine a home's value.
What happens if the inspector finds something?
There is nothing more disappointing than finding your dream home only to discover it has huge plumbing issues. Don’t despair usually your agent has a plan for unforeseen problems. Most often terms can be worked out with the seller in the form of repairs or concessions.
9. Offer Accepted!
You did your homework, and yours is the winning offer!
Here are 5 things to consider before your closing date.
Schedule a full cleaning before you move your belongings.
Be prepared to change the locks.
Any painting or flooring that needs to be replaced; you may want to consider doing these things before you move in.
Set up your service provider accounts for your new address and cancel your old accounts.
Tell your friends and family. Hooray!
10. Closing Time
You’ve made it to this exciting, yet stressful day. Take a deep breath, home ownership is an incredible accomplishment.
ENJOY!
Home ownership is exciting and usually one of the biggest financial decisions of your life. Although this is meant to be a joyous experience, many people can find the process quite stressful. That’s why I’ve broken down the buying process into 10 Simple Steps.
