Seven Tips for
First-Time Home Buyers
March 11, 2013
Buying a home can be stressful, especially for first-time home buyers. One of the biggest concerns that prevent renters from taking the leap to home ownership is affordability. Here are some tips to give you the confidence you need to begin the search for your dream home.
- Know your credit score: Your credit rating says a lot about you; it’s a record of your financial history. If your score is low it’s worth taking the time to improve it before you apply for a mortgage.
- Research down payment options: If you have less than a 20% down payment you’re required to get extra insurance through the Canada Mortgage & Housing Corporation. The premiums can be high, but for many first-time buyers they’re worth it. You can use your RRSP towards your down payment under the Home Buyers’ Plan. Gifts from family can also be used to help.
- Don’t obsess about interest rates: While rate is important, it’s not everything. A mortgage has to make sense for you and your lifestyle. Too many people buy because rates are low. Instead, buy when you’re ready for the responsibility of home ownership. The cost of the house, the type of mortgage, the amortization period and payment options often have more of a bearing on costs than interest rates.
- Get pre-approved before you go shopping: Getting pre-approved for a mortgage means you know exactly what you can afford. It also signals to your real estate agent that you’re serious about buying, and will be ready to make an offer when you find a home you love.
- Don’t skip the home inspection: Some first-time buyers skip the home inspection because they’re in a rush to buy and want to close the deal as soon as possible. Slow down and have an inspection done, you’ll never regret it.
- Budget for the unexpected costs: Your Libro Coach will go through all of the unexpected costs you’ll incur as a home owner. These include property taxes, insurance, regular upkeep, and renovations.
- Don’t forget about closing costs: Assume another 2% of the cost of the home for closing costs. This could include the home inspection, legal fees, property tax, utility costs, and moving costs.
If you take your time, do your research, and leverage advice from experienced professionals, your search is bound to be successful.
Are you a first-time home buyer? Do you have any interesting experiences or tips to share? Please share in the comments below.