From the Realtor.ca Living Room Blog:
Buying a home isn’t necessarily something that you can do on a whim—there are months of preparation involved when transitioning from renting to homeownership.
With so many moving parts in play, from loan approvals to placing purchase offers, navigating home buying for the first time can be an overwhelming task. In the age of the coronavirus pandemic, when some real estate processes have changed, buying a home can seem especially daunting.
Luckily, we’ve developed this handy 12-month calendar for first-time homebuyers that will help to keep you on the straight and narrow when making your home purchase. From the beginning of the process, down to the final months and weeks, we’ll guide you through what you need to do and when.
12 months out
One year from the time you hope to buy, it’s important to determine how much house you can afford and how much you might need to save in advance.
An online affordability calculator is a great way to get started. Simply plug in your household income, loan payments and living costs, and you’ll get a breakdown of how much mortgage you could possibly take on, plus how big of a downpayment you’ll need. Based on this information, plan for your downpayment and moving expenses, whether it be devising a savings strategy or rejigging your monthly budget.
Don’t forget to check your credit score as well—mortgage lenders will be looking at this when you apply for a loan. Be mindful lenders will need to see a healthy score within a specific range in order for you to get approved. If you’re not sure how to improve your credit score, make an appointment with a financial advisor.
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Nine months out
Jot down a list of your wants versus your needs. For instance, you want a property with an inground pool in the backyard, but you need a home that has at least three bedrooms and is less than a 45-minute commute to work. Research what neighbourhoods you’d like to live in, and note their characteristics like community amenities, municipal taxes and conveniences. You could even spend some time dropping into virtual or live streamed open houses to get a feel for the homes in the area. If you can’t make it to the neighbourhoods themselves, the map feature will give you a closer look and Google Street View is always a handy tool.
Start budgeting for miscellaneous home buying expenses during this time. Remember, you’ll need to set aside money to cover legal fees, movers, home inspections and other buying-related costs. Begin to contribute to a savings account specifically for home maintenance, and start getting used to contributing to it every month.
Six months out
At the six-month mark, it’s time to start gathering your loan paperwork.
Lenders will need information on your income, debts and credit history. In advance of getting your mortgage pre-approval, you’ll need to collect your personal tax returns from the last three years, your most recent pay stubs, bank and credit card statements, loan information and your addresses for the past five to seven years.
Take some time to research mortgage lenders, and start searching for a REALTOR® to help guide you through the next stages of your home buying journey. From negotiating your offer, to providing you with listings that meet all of your ‘must-haves,’ REALTORS® are a crucial source of information and support for first-time home buyers.
Three months out
Now the saving and research groundwork is done, it’s time to get the ball rolling on buying your first home.
With the help of a mortgage professional, apply for a mortgage pre-approval, which will tell you the maximum amount you’re able to borrow from your lender. It’s important to get your loan pre-approval before you start house hunting, so you’ll know exactly what property price point you should be looking at.
Your REALTOR® will assist with setting up virtual home showings and virtual or live streamed open houses, and will also regularly send you new listings to look at.
Two months out
If you find your ideal home after a few weeks of shopping around, get ready to place an offer to purchase.
Following the guidance of your REALTOR®, determine what offer price you’d like to submit to the sellers, along with any conditional clauses and a closing date. Your REALTOR® will walk you through offer submission lingo and processes, and will find the best strategy for presenting and negotiating your purchase offer to the other party.
Once your offer has been accepted, you might opt to conduct a home inspection for peace of mind on any possible repairs or issues with the property. If major flaws are found, you could be in a position to renegotiate the offer price to cover the cost of repairs, or require the sellers to make fixes prior to closing.
In the final weeks of buying a home, you’re ready to tie up any loose ends prior to the closing date.
Triple-check your financial and lending documents are in order, and touch base with your financial institution to arrange a wire transfer or issue a cashier’s cheque for your closing. Be sure to arrange for home insurance too, and hire a professional moving company if needed. Make sure you have a lawyer to help finalize your closing. Finally, you’ll be entitled to a buyer’s visit at your new home prior to closing. Use this appointment to take measurements, inspect any repairs, and check to make sure the home is in the same condition as when you last saw it.
While the journey to becoming a homeowner can be a long one, this 12-month calendar helps to outline all of the necessary steps you need to take along the way. With this guide in hand, along with the professional advice of an experienced REALTOR®, progressing from a renter to a homeowner can be a seamless process.