Tips for buying a new home

Purchasing a new home is an exciting experience, especially if it’s your first one! However, there are some important things to consider when buying a new home. The home-buying process takes time, but at the time, you might feel like you’re moving at the speed of light. This can often be overwhelming, especially if it’s your first time doing so.

Without proper guidance, you won’t know what to do when buying your first home. Terms like mortgage and down payment might not be familiar to you, but maybe they are. Regardless, you should take the time to understand what you’re getting yourself into. Buying a new home isn’t as simple as calling up a real estate agent and making a purchase. That’s why BrokerLink has prepared a quintessential list of home-buying tips to make purchasing your new home a breeze.

Steps to buying a house

When the time rolls around to begin your house-hunting journey, you should follow a few important steps. This will eliminate the hassle involved in the home-buying process. The real estate market is constantly changing, so connecting with local professionals is essential to your success. With that said, let’s discuss the process of buying a house and our tips for success below:

Ensuring you’re ready to buy a home

Purchasing a home is the most significant investment you’ll make in your lifetime. With that in mind, you should be prepared and make sure this is a decision you’re ready to make. Consider your long-term goals before making the commitment to buying a home. Homeownership is a big responsibility. Between keeping up with monthly mortgage payments and finding the right property and purchase price you can afford, there’s a lot to think about.

Reviewing your credit score

In order to qualify for a mortgage loan, you have to have a good credit score. Mortgage lenders will use your credit score to determine the terms and rates of your loan. Get a credit report to show your mortgage lender that you have a good credit score. Having decent credit will lower the interest rates placed on your mortgage. In a competitive market, you will need to have an edge, so spend your younger years building credit to have a good standing when you are ready to buy a house. You should do the following when reviewing your credit score:

• Check your credit score to see where you stand
• See if there are any errors or omissions in the credit report
• Determine if there are debts you can pay to improve your credit score

Save money for a down payment

A down payment is the amount of money you pay upfront for a home. By paying a down payment of 20 percent or more, you can avoid having to pay for private mortgage insurance. Mortgage lenders can occasionally offer mortgages without private mortgage insurance with lower down payments. However, this will require higher interest rates. When it’s time to buy a house, take the time to shop around and find a home that you can afford a decent down payment on.

Set a budget

On top of the purchase price and the down payment, you have to budget for additional costs. When buying a home, you have to take everything into account. Homeowners association fees and regular maintenance can add up over time. Before you go out and find a real estate agent, you need a mortgage broker to help you determine how much you can afford. Review your current monthly budget to see if you pay for everything on top of your mortgage. When creating a budget, you should keep these things in mind:

• Know the savings you’ve set aside for a down payment
• Compare your household income against debt payments and monthly expenses
• Use an online mortgage calculator to determine if you can get pre-approved
• Utilize a mortgage affordability calculator to find out monthly mortgage payments

Shop around for a mortgage

A pre-approved mortgage can work wonders for home buyers. Not only will it show you what you can afford, but it will also assist you when you decide to go through with a purchase. After your offer is accepted and you apply for official approval, you do not have to use the same mortgage lender who issued your pre-approval. Feel free to shop around with different companies. It will help determine the terms and rates that work best for your needs. There might be special incentives for first-time buyers. When attempting to get a pre-approved mortgage, you can do the following:

• Reach out to your bank or mortgage broker to get the required documents
• Review mortgage options after you have been pre-approved for a loan

Reach out to a real estate agent

Having a real estate agent who advocates for you is important when buying a home. After all, it will save you the time and money of looking around for houses on your own. Real estate agents know the real estate market and can be very helpful. They can negotiate with the seller on your behalf to get you the best price for your future home. Before making your final decision, you should ask your real estate agent about their track record in the area you’re looking for. Family members and friends can also provide helpful recommendations. Here are some tips to help you find a real estate agent:

• Get advice from family and friends
• Meet potential real estate agents until you find one you are comfortable with
• Discuss what your wants and needs with your agent

Start your house-hunting journey

Looking at house photos online is helpful, but nothing tops seeing it in person. You can get a feel for the neighbourhood and the home itself by visiting potential homes. You can see the local amenities and understand if they meet your and your family's needs. Comparing your options is a great way to make a decision, especially in today’s competitive real estate market. Additionally, it will allow you to avoid having to deal with unexpected surprises. When you’re looking at properties, there are a few things you can do to simplify the process, including:

• Let your real estate agent know when you’re available to look at houses
• Discuss conditions that sellers may have
• Find out if a deposit is required to win a bidding war

Put in an offer on a home

If you think you’ve found your dream home, it’s time to put in an offer. Knowing how to make an offer attractive to sellers is essential, especially when they have multiple offers to contemplate. Your real estate agent will help you prepare a package that includes your offer price, preapproval letter, proof of funds for a down payment, and any other conditions. You will only have to pay once the offer is accepted and you sign the purchase agreement. If you’ve made it to this stage, you’re almost there. Assuming the offer goes through, you can think about the following:

• Closing date ranges that suit your needs
• Taxes, insurance, maintenance and repair costs that you are responsible for if you become the homeowner

Purchasing a home is a significant milestone and a substantial financial commitment. Crafting a well-informed and compelling offer is crucial to increase your chances of securing the property you desire. Here’s what to expect after you’ve put in an offer on a home:

Awaiting the response to your offer

After submitting an offer on a home, you will be playing the waiting game. The seller has likely received multiple offers and must consider the pros and cons of each one. However, you will receive one of three responses to your offer regardless. They can be found below:

• The seller can reject your offer. This is likely because they accepted another one, but you can ask your real estate agent to see if there was a misunderstanding
• The seller can counter your offer and ask for a different price, conditions, or closing date. In this case, ask your agent to work with you to either negotiate or accept the counteroffer
• The seller can accept your offer. When this happens, you can move forward with contacting a real estate attorney and the steps to follow

Have a home inspection

Having a home inspection contingency in your offer will give you a bit of protection. If there are mechanical or structural issues with the home, you request that the seller make repairs or ask for a lower purchase price. If neither of these conditions can be met, you can rescind your offer, assuming the term is noted in your contract. Ask your real estate agent for home inspector recommendations and ensure they are certified with your provincial association.

Having a home inspection is a good precaution to take because things like water damage can sometimes go unnoticed. During a home inspection, the home inspector will examine the following:

• Interior
• Exterior elements
• Plumbing systems
• Electrical panel
• Roof

Make negotiations for repairs and credits

The home inspection will reveal if there are issues that need to be repaired before you purchase the home. Significant issues can affect the ability of your mortgage lender to finalize the loan. In this scenario, you have the option of asking the seller to pay for the repairs or credit you for the costs. Your real estate agent can assist you with this process. It is often a collaborative effort between your agent and the seller’s agent.

Review financing options

There is a difference between a preapproval and an official approval. You will need to keep your finances and credit in check to get the final loan approval during the underwriting phase. Avoid opening new lines of credit and making expensive purchases before the final paperwork is signed. You also shouldn’t change jobs before the closing. Be vigilant and submit paperwork shortly after it’s requested. Bank statements, tax returns and additional proof of income may be required.

Complete a final walk-through

Once all is said and done, it’s time to do a final walk-through of your future home. You can address any remaining issues before the house becomes your responsibility. Your real estate agent can go with you as long as you schedule an appointment. You will need your home inspection checklist and important documents, such as repair invoices and receipts, to ensure all the work is completed. If there are still issues, the seller and mortgage lender will be notified.

Paying closing costs

If all the conditions of your purchase have been met, your mortgage lender will approve your loan. Upon paying the closing costs, the home will officially be yours. Once the relevant paperwork is signed, you will receive the keys. Three business days before the closure, your mortgage lender will provide a closing disclosure that includes the loan details, like the monthly mortgage payments, type of loan and term, interest rate, loan fees and the amount of money required for the closing. At this time, you will also have to pay your closing costs and down payment.

Move into your new home

After all the paperwork is signed and everything has been approved, you will be given the keys to your new home. It’s best to schedule the move a few days after closing, but it doesn’t mean you can’t start packing early. You can put everything into labelled boxes and bring it over to the new house once moving day arrives. It’s best to contact a moving company or get a truck rental beforehand so you’re ready to bring all your stuff over when the time comes.

So that’s the process of buying a house. Purchasing any piece of property takes time, but with a great team by your side, you can navigate the process with ease. All of this is a lot to take in, but when buying a house, you want to ensure everything is done right. With that said, we have also compiled a list of tips to give you an edge in this competitive market.

Ready to buy your new home? Let BrokerLink guide you through the process and provide you with the perfect home insurance to protect your investment. Call us or visit our website today to get started. With BrokerLink, your dream home and peace of mind are just a call away!

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Helpful tips for purchasing a new home

You will have to deal with a mortgage payment and down payment whether you’re purchasing your first home or not. However, there are some key things to keep in mind when you’re buying a new house. Following our tips will prepare you for the process and make things feel less overwhelming. Here’s what you need to know:

Determine if homeownership is right for you

This one is probably a given, but before buying a house, you should determine if homeownership is right for you. Although owning a home might seem like a lifelong dream for most, it’s not for everyone, and that’s okay! Before making a decision, you should think about the costs that come with owning a home that don’t apply to renters. By understanding these factors, you can understand the difference between buying vs. renting. Here are some key considerations to help you determine if homeownership is the right choice for you:

Upfront costs

When purchasing a home, there are multiple upfront costs. These include the deposit, legal fees for a down payment, closing costs, and furniture. You will need to have a decent amount of money saved before you decide to purchase a home. Keep these things in mind before dipping your toes into the real estate market for the first time.

Ongoing payments

Similar to renting, owning a piece of property requires ongoing payments. You will have monthly mortgage payments, maintenance costs, property taxes, home insurance, and utility bills to pay. Costs go beyond the home’s purchase price, and home buyers should be aware of this when making a move into the housing market.

Unexpected expenses

When you live in a rental unit, the owner is responsible for repair and maintenance costs. When you’re a homeowner, you are responsible for these expenses. Paying for things like a new roof, replacement appliances, furnace repairs, and more can add up over time. When you begin your home-buying journey, keep this in mind.

Time commitment

Homeownership costs time and money. You are responsible for maintaining your home, and this takes up time. Between shovelling snow and mowing the grass, there’s a lot to do. No one else besides you is going to take care of your home. Don’t forget this because you’ll have a lot to do unless you can afford to hire a groundskeeper.

Picking a home that suits your needs

Home buyers should realize that having all the bells and whistles isn’t necessary to be a happy homeowner. It’s best to prioritize what you need over what you want. If it’s your first home, you should be proud that you are taking this step at all. With that said, here are some factors to consider when purchasing a new home:

Location

When you watch any house-hunting TV show, you always hear the phrase “Location, location, location!” Although it looks like they’re putting on a show, this statement couldn’t be more true. Think about whether you want to live in the city or the suburbs. What’s close by? Are you in proximity to schools, shopping centres and parks? Remember that popular neighbourhoods are more expensive.

Size

The number of bedrooms and bathrooms makes a difference. Perhaps you need space for a home office, a large pantry, or a big basement for storage. The chances are one house won’t have everything you want, but having enough space for you and your family should be a top priority. Making additions to a home can add up quickly.

Type of home

Many types of homes are available: single-family, detached, semi-detached, bungalows, townhomes, and condos. The one you choose can make a difference when it comes to size and privacy. Some people prefer to have some space between them and their neighbours, while others don’t mind sharing part of their space.

The future

Home buyers should think ahead to the future before committing to a house. The home might seem big enough at the moment, but what if you decide to have children down the line? Will there be enough space? Would you consider moving your elderly relatives in with you if necessary? You have to think about whether or not you want extra space, to begin with or are willing to move in the future to get that extra space later.

See if you qualify for first-time buyer's incentives

In Canada, there are many incentives for first-time home buyers. If you qualify for these, you may be able to get your first home for a better price. After all, these are put in place to make it easier for people to buy their first homes. Here are the incentives available across the country and their eligibility criteria:

Home Buyer’s Plan (HBP)

The Home Buyer’s Plan (HBP) is an opportunity for first-time home buyers to use funds from their Registered Retirement Savings Plan (RRSP) to purchase their first home. In order to qualify for HBP, you’ll need to meet the following conditions:

• Be a first-time home buyer
• Signed a purchase agreement to buy or build a qualifying home
• Be a Canadian resident when the RRSP withdrawal takes place and until the home is bought or built
• Be intent on occupying the new home as a primary residence within a year

Home Buyer’s Amount (HBA)

The Home Buyer’s Amount (HBA) is a nonrefundable income tax credit that can be used on certain qualifying homes and is processed on annual income tax returns.

GST/HST New Housing Rebate

The GST/HST New Housing Rebate gives qualifying home buyers a GST/HST rebate. This can be used toward the purchase price of a newly built or extensively renovated home. To receive this benefit, you will have to have the following:

• Have built or substantially renovated a qualifying home or bought one from a builder
• The home is your primary residence

Tax-Free First Home Savings Account

A Tax-Free First Home Savings Account (FHSA) uses features from both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). Contributions will be tax deductible, but withdrawals will not be when used to purchase a qualified home. Here’s what you need have to be eligible:

• Be a Canadian resident
• Be at least 18 years old
• Be a first-time home buyer

Choose the type of mortgage that suits your needs

The mortgage payment is the most important part of any home. That’s why it’s important to know the different types of mortgages available. The one you choose will mainly be based on what you can afford when you decide to buy a home. Here are the ones you can choose from:

Open mortgage

An open mortgage payment gives you the gift of flexibility. You will have the opportunity to renegotiate, repay or refinance your mortgage if needed. However, you should be aware that open mortgages come with a higher interest rate.

Closed mortgage

If you’re looking for consistency, a closed mortgage might be a better option. That’s because you cannot change anything outlined in the terms of the mortgage. This is advantageous because interest rates will not go up over time.

Low ratio mortgage

A low-ratio mortgage is when you pay a down payment of 20 percent or less than purchasing the home. With this type of mortgage, you don’t have to pay as much upfront. However, it’s important to note that your monthly mortgage payment will be higher as a result.

High ratio mortgage

If you can afford it, putting a more significant down payment on a home is ideal. When you do this, you’re likely opting into a high-ratio mortgage. This is when your down payment is higher than 20 percent of the purchase value. It allows you to benefit from lower monthly mortgage payments.

Fixed-rate mortgage

Interest rates tend to fluctuate from time to time. This can be for better or worse, depending on whether the odds are in your favour. When you choose a fixed-rate mortgage, you don’t have to take the risk of paying more because of this, but you sacrifice the possibility of a lower interest rate.

Variable or adjustable mortgage

Having a variable or adjustable mortgage is as straightforward as its name. When you select this option, your interest rates can change throughout the course of your mortgage term. This is a double-edged sword because you could pay more or less depending on the market rates.

Home equity line of credit (HELOC)

Are you looking for an alternative to a traditional mortgage? If so, a home equity line of credit might suit your needs. It allows you to borrow money against your home’s equity, which means you can choose to borrow, spend and repay when you choose. However, your home will be used as collateral if you don’t pay back the credit.

Get home insurance

After you have secured a home and monthly mortgage payment, you should purchase a home insurance policy. Having home insurance will protect you in the event that your home gets damaged in some way or another. Some mortgage lenders require you to have home insurance before they approve you for a loan. So, although it’s not mandatory, it’s important to have because, without it, you will have to pay for damages out of pocket. In some cases, leaving things in disrepairs can invalidate home insurance. Here are the different types of home insurance policies available:

Basic home insurance

If you’re looking for the most affordable option, consider basic or standard home insurance. The policy’s coverage will vary depending on where you live. However, in most cases, it will provide coverage if your home is damaged by fire, lightning, wind storms, or hail. Always review your policy because this one will only cover the perils that are specifically listed.

Broad home insurance

The next level is broad home insurance, which is fairly general while providing specified risk protection. Besides protection from the elements, broad coverage can compensate you for damages to your home that result from theft and vandalism. It will also help in the event of unforeseen circumstances, such as a pipe burst. Speak with your broker to determine your coverage limits.

Comprehensive home insurance

Cover all the bases with comprehensive home insurance. It covers the previously listed perils and much more. If you’re worried about your home getting damaged, this is the way to go because it helps you in a variety of situations. Basically, if your home gets damaged in any way, you will be covered if you have comprehensive home insurance.

Meeting your needs is the most important thing to think about when purchasing a home. However, you have to take many factors into account before making your final decision. By taking the time to understand what buying a house entails, you won’t have to worry about making common mistakes. However, some people still do. In the next section, we will discuss mistakes to avoid purchasing a new home.

Common mistakes to avoid when buying a new home

When you’re purchasing a new home, there are a few critical errors to avoid. Making these mistakes could cost you your home if you aren’t careful. By being aware of these things before you buy a house, you can purchase a home without worry. Here’s what you should never do when buying a new home, whether it’s your first or not:

Not having enough money put away

The down payment isn’t the only expense that comes with buying a home. There are a couple of other aspects to keep in mind. You will need enough to pay for the closing costs (2%-3% of the purchase price), moving expenses, land transfer taxes, PST or HST if you’re buying a new home, repairs and more. You will also have to think about expenses that you’ll be paying in the long run, such as property taxes, maintenance costs, utility bills, garbage disposal and home insurance. Have a budget and enough money put away to have some left for an emergency fund.

Neglecting to get pre-approval for a mortgage

The amount you think you can afford probably won’t match what the bank is willing to lend you. This is especially true when you have bad credit or an unstable income. That’s why you should get pre-approval for a mortgage loan before making an offer on the home. However, remember that your loan can still be denied even if pre-approved. Avoid making big purchases on your credit card or borrowing money before closing.

Being too quick to put in an offer

House hunting isn’t something that should be rushed. The chances are, unless you’re looking at high-end custom homes, another house you like will come on the market. You should continue looking before putting an offer in on the first house you look at. After all, one home could require a plethora of repairs, and you could come across one that’s move-in ready not long after. Take your time before putting in an offer because you don’t want to pay too much, even in competitive markets.

Not having a home inspection as a condition of purchase

The real estate market is competitive, and buying a house without a home inspection may be tempting. Don’t do it, though! You are taking several risks if you don’t have a home inspection. The purpose of a home inspection is to identify potential repairs that need to be done before you buy the property. Structural issues and problems with electrical and HVAC systems can add up, and you don’t want to pay for them out of pocket. Purchasing a home is expensive enough without the costs of additional repairs.

Purchasing a home at the top of your budget

Even if you are pre-approved for a certain amount, you don’t have to top it. In fact, most people can’t afford to spend the highest amount they are approved for. Take several factors into account when assessing your budget. Yes, you should have enough to pay your mortgage each month, but you also need to take other expenses into account. Having money left over is essential because otherwise, you risk being house-poor.

By avoiding these common errors, you can purchase your next home with confidence. The Canadian housing market is changing all the time. It’s important to be aware of what’s going on when you’re house hunting because being naive will lead you to make irrational decisions. However, if you follow our tips, you don’t have to worry about anything.

If you’re buying a new home, contact BrokerLink for your insurance needs!

Buying a new home is a big decision that shouldn’t be taken lightly. There are processes you have to follow to avoid making costly mistakes. However, you can overcome any obstacles with the help of market professionals. This is especially true when it comes to knowing what to look for when buying home insurance and avoiding mistakes when buying home insurance.

Assuming you took all the necessary steps to purchase a home, you’ll want to keep it safe. That’s where a home insurance broker can help you out. BrokerLink brokers can connect you with local insurance companies that offer policies that suit your needs and budget. Contact us today for a free quote.

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