Are you a young professional looking to get into the real estate market but you are just not sure what the actual process looks like? Perhaps you’re even a little afraid to miss a step and decrease your chances of successful home purchase?
In this blog post I will talk about top 5 things to know about the process of purchasing a property and how to avoid missing important steps that could lead to unnecessary stress and even missed real estate opportunities.
Do your budget and decide on what you can afford without becoming so called ‘house poor’, be diligent, take all your expenses into consideration including fun activities, vacations, shopping for clothes etc…You want to make sure you will still be able to live comfortably after purchasing your new home.
Figure out your down payment, the more you can put down the better! Just as a side note: for first time home buyers 5% is the minimum on the first $500,000 of your mortgage, if the home you’re purchasing is over $500,000 then the minimum deposit goes to 10%, so it works out to 5% of 500,000 and then 10% on the remaining amount, if say your purchase price is $750,000 then it will be 5% of 500,000 which is $25,000, and then $750,000 minus $500,000 is $250,000 and 10%of that is another $25,000, so your minimum deposit on a $750,000 property would be $50,000. That type of downpaymnet will require CMHC premium , if you want to avoid that, lawyer fees, deposits, land transfer, mortgage insurance, appraiser fee, inspection fee, moving costs, and penalty on the current mortgage if you already own a property), please note that there are no fees for realtor services for buyers.
See a mortgage broker, better yet, see couple of them, choose somebody you’re comfortable with, find out what they can offer and how their processyour minimum would be 20%. Also, getting larger downpayment qualifies you for better interest rates.
Figure out the expenses associated with the purchase of the property (things like: looks like, what can you expect from their pre-approval, do they go through full process like checking credit, employment history etc or do they start that process only after you purchased the property, is your pre-approval conditional (usually it is, but find out what the conditions are), get their pre-approval in writing . on aside note we talked about appraiser fee in step 3, that fee could be waved by the lender sometimes, so it is worth inquiring about when interviewing mortgage brokers.
Decide what property suits your life style and your budget. Don’t overlook anything. Every kind of property has its pros and cons. Review all, and see what matches your requirements best.
Now that you are more familiar with initial preparation for buying a property you might find my next week’s post very useful. I’ll write about different ways to make your search for a property an efficient and productive experience!