5 tips for first time home buyers

Being a first-time home buyer can seem daunting. You have no idea where to start in the process and what to put your focus towards. The process should be an exciting one but can often be a time consuming and stressful when you’re uncertain where to start. Potential home buyers can prepare for house hunting in a variety of ways, but these five tips for first-time home buyers will make the process a whole lot smoother!

1. Pay off current debts

When looking at making the leap to buying a home, it would be pretty sweet going into it without any debt. We typically brush off how expensive owning a home can be and neglect to try to pay off current debts before entering into homeownership. A house is an expensive investment that goes beyond the monthly mortgage payment. It involves maintenance and upkeep throughout the year to keep it running. Those extra costs can add up, which is why paying off any current debts can prove to be beneficial. When you enter into homeownership without any other debt, you won’t feel as stressed out if something were to happen. You know you have the funds available and won’t feel pressured about fitting it into an already maxed-out budget.

2. Figure out how much you can afford

Figuring out how much you can realistically afford goes hand in hand with paying off your current debts. When you’ve paid off all your current debts, you’re able to fully assess how much money you can put towards a house each month. An easy way to figure out how much you’re able to afford is by multiplying your monthly paycheck by 25%. This will give you a ballpark idea of your monthly mortgage payment. Once you’ve figured out how much you can realistically afford, you can start looking for houses in your price range. Without an idea of your price range, you could end up falling in love with a house that’s way out of your budget. It’s better to have realistic expectations and look at homes you are truly able to afford. You could also be eligible for the Canadian First Time Home Buyer Incentive, which you can read more about here. 

3. Save up for down payment and closing costs

Down payments are an important part of buying a home. The more money that a homebuyer puts down initially, the less they will have to take out for a mortgage. This means less debt a homeowner is carrying around and smaller monthly payments. With the down payment, home owners must also pay for the closing costs. The closing costs are often an overlooked part of buying a home but include appraisal fees and home inspection fees. Closing costs roughly make up 3-4 per cent of the purchase price of a property, and homebuyers should put the same level of intensity to save up for them as they do to pay off debts.

4. Get Pre-Approved

Another one of our important tips for first time home buyers is the pre-approval. Preapproval is a valuable instrument when buying a home. Not only does it tell you how much you’re able to afford, but it also shows you’re a serious buyer. In a competitive housing market, buyers that are pre-approved are much more desirable than those not pre-approved. Sellers will take note if a potential buyer is pre-approved and are more likely to work with them.

5. Walk the neighbourhood

A physical house is one important piece to the puzzle when buying a home, and the neighborhood is the other. A home owner can be absolutely in love with a house, but the neighbourhood may not fit their style and work with their day to day life. It’s important to research the area you are looking to buy a home in and maybe visit it. Talk to the neighbours and maybe go visit a restaurant or coffee shop nearby. The more research you do on a community, the better.

Working with a mortgage professional is an easy way to make the process less stressful and bring the excitement back into it. They will help you strategize to make the dream of homeownership a reality. These are our biggest tips for first time home buyers. When you’re ready to put the excitement back into house hunting, give us a call at Clinton Wilkins Mortgage Team! You can get in touch with us here.