First Time Homebuyer Checklist
mortgages.ca presents the First Time Homebuyer Checklist; a guide to important elements that need to be looked at before purchasing a new home.
Buying a new home is a very exciting milestone, especially for a first time home owner. However, in all the excitement, key steps tend to be overlooked or forgotten. To help owners make a sound decision on their property purchase, we’ve put together a list of pre-purchase things you should do to ensure you have a smooth purchase.
Go over the obvious things…again!
Buying a home isn’t exactly grocery shopping. By the time you come down to the house you are looking for, you’ve probably asked a thousand different questions. Does this property fulfil my long-term needs? Is it in a developing or already developed neighbourhood, to ensure a good investment? Your list is probably a book long. With that said, before moving forward with any home it’s always good to revisit your needs, wants, and goals. While you won’t necessarily check every box on your list, your priority items should definitely be met by the home you are considering. Once you sign the dotted line, there really isn’t a ‘reset’ button to undo everything.
In addition, you should recheck your finances. Purchasing a home is a major financial investment, one that will dictate your future cash flows for years to come. It is therefore important to be confident about your finances and if you are ready to be a homebuyer.
First Time Homebuyer?
- Learn how to fund your new home – CLICK HERE
- Learn about Government incentives to save you money! – CLICK HERE
Don’t Just look at It. Inspect it.
A home inspection is a very valuable step towards the purchase of a new home. For homebuyers considering the purchase of a resale property, a home inspection provides a detailed analysis of a property’s overall condition, often looking at things such as the various utility systems and the roof. Prices of an inspection vary, often based on the experience of the inspector.
The process provides a homebuyer with a better understanding of their potential new home. Also, what elements of the property will require attention and resources, and if it is a good investment in the long run. It will require you to hire a home inspector, whom you should vet through references, past projects, and possibly your real estate agent. The home inspection field does not have any guidelines per say, so it’s easy for anyone to just call themselves an inspector. Do your due diligence.
Also, while a home inspection does provide insight into various things, it may not provide a dollar figure for potential costs. Have a vetted contractor in mind to provide you with a better understanding of costs related to issues found through the home inspection. Some contractors offer home inspection services as well. But unless their reputation exceeds them, mixing contractor work and a home inspection is a conflict of interest. Keep that in mind.
Understand ALL your obligations
The costs of purchasing a home don’t end with the dotted line. Apart from the obvious mortgage in the horizon, there are other things homebuyers need to plan for before jumping right in. Here are some of the costs you must consider:
- Closing Costs: These costs occur once a real estate transaction concludes, or ‘closes’. These costs can be paid by either side, and often include costs such as legal fees, brokerage commission, mortgage application fees, home inspection fees, and more. These costs vary, often fitting in the 1-5% margin of the selling price.
- Land Transfer Tax: This tax is collected when you purchase a property, or ‘land’, defined by the Ontario Ministry of Finance as “any buildings, buildings to be constructed, and fixtures”. Land Transfer Taxes are a significant post-purchase expense, and can vary from city to city. In Toronto, they are twice the norm at close to 3.2%.
Find out how much Land Transfer Tax to pay by using the Morgages.ca Online Calculator – CLICK HERE
- Mortgage Costs: Yes, we did mention it was ‘obvious’ a moment ago. However, mortgage costs begin right after your close. Interest will begin on closing day, and your payments will happen based on whatever payment schedule you have set up right after that. The important thing to take away from here: you have increased financial obligations right after closing, and you should ensure you have planned for it in the long-term.
- Renovation Costs: A home inspection may reveal issues with the home that need to be fixed ASAP, such as a roof that needs replacement. These are expenses needed to make the property livable, and will occur after closing.
- Preparation Costs: There are going to be costs associated with you moving into your home that come after potentially large renovations. These include painting, interior decoration, curb work, drive-way work, installing new tools and resources (appliances for example), etc. These costs are not usually based on issues, but on personal requirements. Try to postpone some of these costs as much as possible, to reduce financial burden in the beginning.
- Moving Costs: While moving costs sound simple, they are not in reality. Expenses for moving, packing, and storage can rise up to and beyond a $1,000 if proper planning is not done. A mover alone can charge $400-500 for a single move. Getting advance quotes from movers helps budget for these expenses.
- Other Expenses: Some expenses that definitely get forgotten include mail forwarding services (which can be over $80 for a single year), and changing the address on personal ID cards (such as your driver’s licence). Make a list of things that need to be changed and attend to them as soon as you can.
Recommended Further Reading:
- New to Canada Financing
- Need to Know about Mortgage Pre-Approvals
- Important Questions to Ask When House Hunting
Have questions about getting pre-approved for a mortgage before you start your house hunting adventure? Contact us today and speak to one of you mortgage professionals today.