If you’re a first-time homebuyer wondering what to do to prepare for your first home, here are three things you need to do.
1. The Deposit
When you find the right house, a deposit will be required, usually within 24 hours, unless otherwise agreed to in the offer.
The deposit is applied against the purchase price, and the amount will vary depending on what and where you’re buying.
In Ontario, a common deposit is five percent of the purchase price. So, if you’re buying a $1,000,000 house, a deposit of $50,000 is common. The higher your deposit, the greater the chance of the seller accepting your offer, but that’s not to say that your realtor won’t be able to negotiate a lower deposit or a deposit that can be provided in installments.
2. Get a Mortgage Pre-approval
The next thing you want to do is get a mortgage pre-approved. This document is a conditional offer for a mortgage from a lender, provided your financial situation stays the same when you purchase a property. It means completing a mortgage application and providing documentation like tax returns, bank statements, and recent pay stubs.
Getting a mortgage pre-approval confirms your budget. This will assist by knowing what price range to be shopping in. It will also provide insight into your monthly payments, mortgage rate, and general budgeting. Knowing the mortgage is waiting for you, you’ll be ready to go when you find the perfect home.
Getting a mortgage pre-approval also means you can lock in an interest rate for a period of time. If the rates increase, you may still qualify for that better rate when it’s time to buy.
3. Narrow the Criteria of Where You Want to Live
Finally, focus your home search on a specific area. A mistake many first-time buyers make is looking in too large of an area instead of concentrating their search to an ideal location.
Remember that when you’re buying a property, It’s not just about the house; it’s also about the neighbourhood and its proximity to your work, good schools, amenities, parks, and green spaces.
Before looking at houses, research neighbourhoods that interest you online and drive or walk around to get a feel for the surroundings and the overall vibe. If you find that the houses you want don’t exist in the initial area, expand your search to your second choice.
Having your deposit ready, getting a mortgage pre-approval, and narrowing your home search are the three best ways to prepare for buying your first home.
If you’re a first-time buyer, call KT at 1 (800) 617-0090.