Buying your first home is exciting and stressful. Like it or not, there are a series of hoops that you must jump through in order to get that golden set of keys that will open the door to your new house or condo.
Yet there are things that you can do and know ahead of time that will help you along the
Before we get going, I want to refer you to the Glossary of Real Estate Loan Terms that I recently posted on this blog. On it you can find easy to understand definitions of most terms related to buying your home. Please check it out and do not hesitate to contact me to ask me to add a term to it.
To start: Do you know what you want?
Many first-time home buyers know very well what they want, but others think they do, and may end up changing their minds halfway through the process, to the distress of their agent.
You should consider these factors:
What kind of home do you want? A house with a yard, a townhouse with a small garden and/or patio, a flat in a multi-family building, or maybe a condo? The choice is yours. Always keep in mind that houses, townhouses and multi-family dwellings will require you to engage in maintenance and repairs of the building, garden and yard. In a condominium those things are handled by condo association, yet for that you will pay a monthly fee (the condo fee). Keep In mind your lifestyle and that of your family when deciding what kind of home you want to buy.
Where do you want to live? Are you a city person, who enjoys having everything outside the door or a short walk or ride away? Or do you want to get away from the hustle and bustle of the city at the end of the day? Please think this carefully, as the location of your home will greatly affect how you live in it. If you are a city person who wants to live outside the city, I would recommend that you try and live in the suburbs or outside the city before you pursue the purchase of a home.
How much do you qualify to borrow?
Do you know how much mortgage you can afford? Every lender has a mortgage calculator online to help you find this out, but it is a very rough calculation. The best way to know what income you will need to pay a mortgage and possible condo fee is to calculate your own budget. That way you will take into account things like money that you set aside every month for rainy days, savings, or other purposes.
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| A budget will help you know how much you can pay each month on your mortgage |
If you already have a lender of choice, you could speak to the real estate loan officer to pre-qualify you. This is the process of examining the credit history and payment ability for you and the person or persons who will be making the purchase with you (i.e. husband, wife, significant other…), and telling you the maximum amount you can afford. Not only that, the real estate loan officer can give you a letter of qualification that you can share with sellers and your agent, to help you on your home purchasing process.
If you do not have a lender of choice, though, keep in mind that these pre-qualification examinations may incur a fee. While you can shop around, getting these letters will cost you; have a good idea of who offers better rates before you start.
How much do you actually want to pay?
This may seem redundant but it’s a very important factor. The fact that you qualify for a mortgage for a certain amount does not imply that you should automatically search for homes in that high a range. For instance, do you like to spend a relatively generous amount on travel, or on sports, or on vacations at the beach each summer? If you do, then you should ensure that you can keep sufficient income to maintain that lifestyle once you have bought your home. Not only that, there is no point in mortgaging yourself out just because you can.
Next step: the search
Now that you know what you want and how much you want to spend, you should find an 
As an added bonus, keep in mind that for you - the buyer, the use of an agent is free, as the agents’ costs (both the buyer’s and the seller’s) are usually paid by the seller in the form of a commission bases on the sale price of the house. Of course, take this with a grain of salt, as your agent will want you to get the most expensive house you can afford.
Another thing to remember when shopping for a home, when you are in one that you really, really like, keep that poker face in front of the seller and the seller’s agent. You do not want to give away that you really want the property, as they may use that leverage to get you to pay more. Not only that, be careful if you do fall in love with a home, it may lead you to ignore problems that may haunt you in the future.
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