So, it’s time to break free from the rental market as you look to purchase your very first home – how exciting! But what exactly do you need to know about the home buying process? Well, there are many things to consider (especially if you’ve never done it before!), which is why our experts at Soni Chachad Real Estate have compiled 7 tips for first-time home buyers in the GTA to help your transition into homeownership go as smoothly as possible.
1. Be Proactive
The first thing you need to do if you’re looking to purchase a home is to be proactive with your finances. Anytime you buy a home, you need to put down between 3 to 20% of the total price as a down payment. As a result, we recommend that you start saving early and consistently over time to ensure you have enough to cover this cost. Another way you need to be proactive is to start working on your credit score as soon as possible. Almost everyone has room for improvement when it comes to their credit score, so before you reach out to a lender, we recommend reviewing your credit report to see where you stand.
2. Consider Your Needs and Set a Budget
Beyond proactively getting your finances together, you also need to take some time to consider your needs and set a budget. Ask yourself questions like, ‘What type of neighbourhood would we like to live in?;’ ‘What are our non-negotiables for the house?;’ and ‘What are some areas we’re willing to compromise on?’ From there, you can decide how much home you can afford and set a budget. Remember to factor in other expenses, such as insurance, property taxes, utility payments, and maintenance costs.
3. Look into First-Time Home Buying Programs
Did you know that both Ontario and Canada have incentive programs for first-time home buyers? For example, (after applying), the Government of Canada will provide first-time home buyers who receive qualified annual incomes of $120,000 or less with 5 to 10% of the cost of their new home. Ontario, on the other hand, offers eligible first-time home buyers a refund of the provincial land transfer tax that’s part of the closing costs you’ll be required to pay. There are also additional tax relief benefits for first-time buyers who purchase a new or existing home in Toronto. So, even if you don’t live in the GTA, it’s always a good idea to look into the first-time home buying programs that are available to you to help you save some money on your first home!
4. Compare Mortgage Lenders
One of the most important parts of buying a home is securing a pre-approval. We know it’s tempting to go with the first lender that approves you; however, we always recommend that you compare mortgage lenders to find the best overall fit for your needs. Investigate the different types of mortgages, compare mortgage rates from at least three different types of lenders, and look at all the terms of the mortgage to decide if it’s a good time to move forward. Then, once you’ve settled on a lender, you can go ahead and get pre-approved for a mortgage.
5. Don’t Skip the Home Inspection
So, you’ve secured your pre-approval, and now it’s time for the fun part – house shopping! Once you’ve found your dream home and are ready to move forward, the most important advice we could give you (seriously, if you take nothing else away from this article, at least remember this): don’t skip the home inspection! A thorough home inspection conducted by a professional can reveal issues that are not so apparent on the surface (even if it’s a new build!). Although you, as the buyer, don’t necessarily have to attend the inspection, it could be useful to be there. You can ask questions in real-time and ensure the inspectors can get to every part of the house, such as the roof and crawl space. Just keep in mind that standard inspections don’t test for things like radon, mould, or pests.
6. Negotiate, Negotiate, Negotiate
Something that a lot of first-time home buyers are nervous about doing is negotiating with the seller. However, when you know what price you can afford and what you need in a home to be happy, it’s worth negotiating to get it. You may opt to hire a real estate agent, such as our experts at Soni Chachad Real Estate, to help negotiate strategically on your behalf. Remember that it will depend on the current housing market; for instance, in a hot market with low inventory and multiple offers per property, a lowball offer isn’t going to work. On the flip side, if it’s a buyer’s market, you may be able to save money while still getting what you want by negotiating with the seller.
7. Prepare for Additional Expenses
Finally, something that many first-time home buyers are not aware of is that they need to prepare for additional expenses. Beyond the inspection fee and closing costs, there will also be loan fees, appraisal fees, and home maintenance costs to consider. Not to mention property tax, home insurance, and maybe even HOA fees (if applicable). Plus, did you know that some newer neighbourhoods charge more taxes to cover building new schools for the community? With everything already piling up on your plate, you don’t want the added stress of forgetting about these additional expenses, which is why we recommend budgeting for them early on.
Final Thoughts
Buying your first home is a long but very exciting process. Start off on the right foot by proactively getting your finances together, identify your needs and set a proper budget, and be sure to look into first-time home buyer incentives. Don’t forget to compare different mortgage lenders, and please, don’t skip the home inspection. Remember that it’s okay to negotiate to get what you want and to always be prepared for additional expenses that might pop up. Ultimately, we hope these tips have given you some actionable pieces of advice that you can utilize in your next real estate transaction, and even if you’re not prepared to purchase a home just yet, these are all important things to consider when you are ready.
If you’re searching for an experienced, reputable realtor in the GTA to represent you as a buyer or seller in your next home transaction (whether you’re a first-time home buyer or not), be sure to check out my featured listings and do not hesitate to reach out to me directly!
