As first home buyers, sometimes you feel like you need a guide to lead you through the jungle of mortgage financing and paperwork. With so many steps involved, the process can feel overwhelming. From securing the mortgage you need to finalizing the purchase, each stage comes with its own set of challenges and decisions.
By partnering with an experienced mortgage broker and following a well-organized plan, you can turn this complex journey into a manageable, fun and rewarding experience. To help you each step of the way, I’ve created a comprehensive checklist for you that covers everything you need to know, ensuring that your path to homeownership is as smooth as possible. And, remember, if you’ve got questions, I’m a phone call away when you need me.
Step 1: Assess Your Financial Health Before Becoming a First Home Buyer
First things first, can you afford a new home and a steady mortgage payment? Even though you bring in a healthy income, there are hidden costs and expenses involved with buying a home. Using my mortgage calculator will give you a good idea of your spending limits and how close you are to your home ownership dreams. After you’ve decided whether or not the most basic numbers work out, these are the next things to look at on your to-do list:
Review Your Credit Score: Your credit score plays a significant role in mortgage approval. Obtain a copy of your credit report and address any discrepancies or issues.
Budget for Your Home Purchase: Calculate your monthly income, expenses, and savings to determine how much you can afford. Don’t forget to include property taxes, insurance, and maintenance costs. If you need help with this, talk to a financial advisor or mortgage broker.
Save for a Down Payment: Typically, you’ll need at least 5-20% of the home’s purchase price for a down payment. The more you save, the better your mortgage terms will be, and make sure you take full advantage of government programs that give you a leg up when buying your first home.
Consider Other Costs: Budget for closing costs (usually 2-5% of the purchase price), moving expenses, and potential renovations you’ll want to make as soon as possible, and a little while down the road so you have an idea of how much you’ll need long term too. Consult my closing costs calculator to get an idea of what you’ll need.
Step 2: Get Pre-Approved For Your First Mortgage
Before you start house hunting, it’s a good idea to have your mortgage pre-approval locked down. Not only does this give you a budget to work with, it allows you to make an offer with added security for the seller. In order to get pre-approved for a mortgage you’ll want to:
- Research Lenders or Mortgage Brokers: Whether you compare mortgage rates, terms, and conditions from various lenders yourself, or work with a mortgage broker who will do it for you, you need to find the best fit for your needs.
- Gather Necessary Documents: You’ll need proof of income, employment history, tax returns, and information about your assets and debts.
- Submit a Mortgage Application: Once you’ve chosen a mortgage broker or lender, submit your application to get pre-approved. This gives you a clear idea of how much you can borrow and shows sellers that you’re a serious buyer.
Step 3: Define Your Preferences As A First Home Buyer
Now that you’ve gotten your financing in order, it’s time to nail down your likes and dislikes so you can start seriously looking for your dream home. A few things to consider are:
Location: Decide on the neighbourhoods you’re interested in based on proximity to work, schools, amenities, and lifestyle preferences. Take a drive through them to see if you can picture yourself living there.
Type of Home: Consider whether you would prefer a single-family home, condo, townhouse, or another type of property and see if it fits your financial plan.
Must-Haves vs. Nice-to-Haves: Make a list of essential features (e.g., number of bedrooms, outdoor space) and features you’re willing to compromise on.
Step 4: It’s Time To Begin Your House Hunt
Once you’ve got the basics figured out, it’s time to begin your hunt for the perfect home. Although it seems like you’re going to find the perfect option on an internet hunt, there are some other things you need to do:
Find a Real Estate Agent That You’re Comfortable With: A local real estate agent can guide you through the home-buying process, help you find listings that match your criteria, and negotiate on your behalf. Ask friends and family for referrals, or research ones whose listings you prefer. Send an email to introduce yourself. If and how they respond will give you a good idea if they’re someone you can work with.
Attend Open Houses and Showings: You can do this without a Realtor and it will give you extra insight into the neighbours and the traffic patterns. Visit as many properties as possible to get a feel for the market and narrow down your options.
Stay Organized: Keep track of the homes you visit, noting pros and cons, and compare them against your budget and preferences.
Step 5: Did You Find The Right Home For You? It’s Time To Make an Offer
Making an offer as a first home buyer seems like an easy step in the process but it probably involves the most paperwork and communication. Working closely with your mortgage broker at this point will help you understand what kind of offer you can make and how far to stretch your dollars. Some of the steps you need to take include:
Consult Your Real Estate Agent And Your Mortgage Broker: Your agent will help you determine a fair price to offer based on comparable properties, market conditions, and the shape the home is in. Your good mortgage broker won’t just give you a pre-approval amount, they’ll also look at your overall budget and help you understand all the costs involved.
Submit the Offer: Your offer will include the purchase price, any contingencies (e.g., home inspection, financing), and a proposed closing date. Remember to take into account any improvements you will need to make (ie. does that old wall-to-wall carpeting have to go?).
Negotiate if Necessary: Be prepared for the seller to counter your offer. Stay flexible, but stick to your budget and priorities.If you are competing with other buyers, determine what you are willing to pay and what concessions you are prepared to offer.
Step 6: Securing and Finalizing Your Financing As A First Home Buyer
Even though you have a pre-approval in hand, you now have to go to your lender or mortgage broker with your chosen property’s details. The value and condition of the home may affect your mortgage rate. If you’re working with a mortgage broker, they can find a new lender if necessary. These are the steps to getting your final mortgage details in order:
Finalize Your Mortgage: Once your offer is accepted, work with your mortgage broker or lender to lock in your mortgage rate and finalize the loan details including your payment schedule.
Get a Home Appraisal: Most mortgage brokers or lenders will require an appraisal to ensure the home’s value matches the purchase price.
Conduct a Home Inspection: Hire a professional inspector to assess the property’s condition and identify any potential issues. Skipping this step is a mistake many first home buyers make but you never know what hidden problems a home could hold.
Step 7: Prepare For Closing On Your First Home
You’re almost there! As a first home buyer, you should know that there are some important steps that will prepare you for the final closing:
Hire A Real Estate Lawyer to Review Documents. The law in Ontario requires the involvement of a lawyer to complete the process of buying a home because a lawyer is needed to register the transfer of property from the seller to the buyer.
Review the Closing Disclosure: This document outlines the final terms of your mortgage, including the loan amount, interest rate, and closing costs. Review it carefully with your lawyer to ensure everything is accurate. If you have any questions, talk to your mortgage broker.
Conduct a Final Walkthrough: Before closing, do a final inspection of the home to ensure it’s in the agreed-upon condition. Generally, you will be allowed 2 to 3 walkthroughs before you finalize the sale. It’s a good idea to take full advantage of this.
Gather Required Documents: You’ll need identification, proof of homeowners insurance, and funds for the down payment and closing costs.
Step 8: Time to Finally Close the Deal
As a first home buyer in Ontario, you need to know that this process will all be handled by your legal representative. They will help you perform these final tasks:
Sign the Paperwork: At the closing, you’ll sign several documents, including the mortgage agreement and title transfer.
Pay Closing Costs: These typically include lender fees, title insurance, legal fees, taxes, and other associated costs.
Receive the Keys From Your Lawyer: Once the paperwork is signed and funds are transferred, you’ll officially be a homeowner!
Step 9: The Last Step For A First Home Buyer – Move In and Settle Down
Phew, it seems like a long way from the first step to the last one but you’re finally able to make your move! As a first home buyer, you may think that this is an easy thing to do, there’s still some planning involved.
Plan Your Move: Schedule your moving date, hire movers, line up friends and family to help out, and start packing. Be sure to label all boxes with their designated rooms and have a plan for large pieces of furniture.
Set Up Utilities and Services: Transfer or establish accounts for electricity, water, gas, internet, and other services.
Make It Your Own: Personalize your new home with furniture, décor, and any necessary improvements. If possible, schedule delivery of new furniture so it arrives after the movers have finished and unpacking has begun.
Looking For The Best Mortgage Rates And Options For First Home Buyers? Give Me A Call To Get Started.
Buying your first home is a significant achievement, and following this roadmap can help you get through the process with confidence. With careful planning and the support from a mortgage broker, like myself, along with the help of a few other trusted advisors, you’ll soon be settling into a home that meets your needs and dreams. Contact me today at 705-315-0516, or book a consultation, and let’s get you pre-approved for the mortgage you need so you can start your house hunt as soon as possible!