First time home buyer? Our take on what it takes to buy a house or condo the smart way.
As a first time buyer, you need to be prepared for the real costs of home ownership. A good Lender and Realtor will arm you with the numbers – what you can expect to pay on a monthly basis, as well as what you can expect to pay when you close. Plan for contingencies – a CYA fund can be your best friend. Find out about Mortgages here.
2. Thou Shalt Reap the Rewards of Low Interest Rates
Yes, interest rates are at an all-time low and all indications are that they will remain low for the forseeable future. Each 1 point decrease in interest rate gives you about 10% more purchasing power. But don’t be caught with your pants down when interest rates inevitably rise. When you figure out how much you can afford, work out your costs at higher rates too – 5%, 6%. Who knows where rates will be in 5 years when it’s time to renew your mortgage?
3. Thou Shalt Save Some $$$
There are some great government programs for first-time buyers that can literally save you thousands of dollars; from programs to help fund your down payment through your RRSP, to help with land transfer tax payments to a tax credit to offset your closing costs. Program details can be found here: First Time Buyer Programs.
4. Thou Shalt Remember the #1 Rule: Location, Location, Location
There are some great first-timer neighbourhoods out there- transitional neighbourhoods generally provide the best bang for your buck. What’s hot for first-timers right now? Liberty Village for condos. Bloordale, Upper Beach and Brockton Village for houses.
5. Thou Shalt Covet Thy Neighbours’ House
As you prepare to jump into the home ownership game for the first time, get educated! While realtor.ca is a good source of basic home info, you should be going to open houses and working with a Realtor to see what houses and condos REALLY look like. And how much they REALLY sell for.
6. Thou Shalt Practice Safe Offers
When the time comes to actually make an offer on a condo or house, use conditions to protect yourself. A financing condition ensures that your lender is prepared to lend you the money you need for a particular house or condo – it’s not enough to just be pre-approved for a certain amount of money. If you’re looking to buy a house, home inspections can better prepare you to be a homeowner (let alone prevent you from buying a lemon). Thinking condo? A condition that allows your lawyer to review the status certificate (the legal and financial documents of the condo corporation) can ensure you’re investing in a sound building.
7. Thou Shalt Make My First Time Memorable
Pick a Realtor who works with first-time buyers – they’ll be more apt to gently take you through the process. Get recommendations for good lenders, home inspectors and lawyers – they are crucial to a good first experience.
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