The Home Buying Process
Buying your first home can be an overwhelming experience as you are faced with a multitude of decisions! When it comes to real estate, most people do not have a lot of experience or know much about it. The home buying process is actually quite simple, all you need to do is understand the basics, which will go a long way in helping you purchase your next home.
Below are the steps that you need to when buying a home.
Step 1: Get a mortgage pre-approval
The first step is understanding how much you can afford. When getting a mortgage pre-approval, your mortgage advisor will look at things such as your household income, your current assets and debts, your credit history and your downpayment. Knowing how much you can afford will allow us to focus on homes that are within your price range and reduces the risk of financial uncertainty when you find your ideal home.
Step 2: Make a wish list
Grab a piece of paper and jot down the list of things that you would like in your home and place them in one of three categories:
1. My must haves 2. My nice to have 3. My don’t even think about it
Questions to ask yourself: Which area do I want to live in? What type of home am I looking for (e.g. condo, townhouse, semi-detached, detached, bungalow)? How many bedrooms? How many bathrooms? What type of neighbourhood amenities (e.g. near a park, a school, etc.)? Do I want a home that is move-in ready or a fixer upper? etc
This exercise is critical in getting what you want!
Step 3: Find a Realtor
Finding the right Realtor is important since this is one of the largest investments you’ll make. You’ll want to find a Realtor that will put YOU first and will look out for YOUR best interests. A good Realtor will make their clients feel at ease and will guide them every step of the way.
Step 4: Time to find a home!
Now the fun begins! Many clients will often use online sources such as realtor.ca to start their search, however most Realtors will set up a automated search that is customized for you based on your needs and wants identified in Step 2. Listings will be sent you where you will have the opportunity to review the properties online before visiting them in person.
Step 5: Making an offer
You’ve found your dream home, congrats! Before making an offer, your Realtor will sit down with you and help you determine the right price. They will look at things such as comparables, how long the listing has been on the market, the condition of the home, etc. Once you’ve determined the price that you would like to offer, your Realtor will draft an Agreement of Purchase and Sale. This is a legally binding document that outlines everything from the price that you’re willing to pay, the goods that you’d like included (e.g. light fixtures, appliances, etc.), the date you would like to take possession, and conditions that you’d like to be met. Once the offer is submitted to the Sellers, they have the opportunity to counter the offer, accept it or decline the offer.
Step 6: Offer has been accepted, what’s next?
Once the offer has been accepted a deposit will need to be provided, which will be held in trust until closing. All conditions outlined in the Agreement of Purchase and Sale must be met before the deal has been sold firm. Typical conditions include:
▪ Financing: This clause is intended to protect the Buyer. Contact your mortgage advisor and let them know about your purchase and have them confirm that you’ll be approved for financing.
▪ Home Inspection: The purpose of the home inspection is to identify any major problems with the house and to familiarize yourself with your future home.
Step 7: Closing Day
The day has finally come! Your lawyer and mortgage advisor will be involved in closing the transaction. In addition to the purchase price, there are other closing costs that are factored in such as legal fees, title insurance, Ontario land transfer tax, municipal land transfer tax (if applicable), adjustments for utilities, CMHC insurance premiums (if applicable).