Things To Think About When Buying Your First House
First-time homebuyers should prepare carefully before looking for a new house Here’s how to get ready.
Deciding to buy your first house is a major life decision. While house ownership sounds marvelous, there’s much to consider and plan before starting to hunt for your first house. You should carefully prepare before you start looking for your new house.
Employment and Household Finances
Are you working at secure employment? If your work is impermanent and goes from contract to contract, or you have just started a new job, it might be best to wait until your job is more secure before purchasing a house. You might not be able to secure a mortgage as your income is irregular. You could find yourself with monthly mortgage payments you cannot pay if you suddenly become unemployed.
You must pay additional costs as well: insurance, utilities, and property taxes. Have you the resources to pay these costs if you job is unstable?
Down payments. You make a down payment on your purchase and finance the rest of the cost of the house with the mortgage. Down payments must be a minimum of five per cent of the purchase price. Down payments less than 20 per cent of the purchase price require you to obtain a high ratio mortgage. That requires that you obtain mortgage insurance too. The mortgage insurance’s cost must be included as part of the mortgage. It’s usually one to three per cent of the purchase price.
Budget for closing costs. These include lawyer fees, property tax adjustments and title insurance. They usually amount to two or three thousand dollars, and are due when you take possession of the house.
What Type of House Do You Want To Purchase?
New or resale? A new house has obvious appeal. There are no previous owners or existing issues to contend with. You will usually have a new home warranty. However, you must pay GST on the purchase price. This is usually substantial, especially as the price of the house rises.
Attached or detached? A detached house is generally more expensive than an attached home. This is because detached houses don’t share any walls with your neighbour, making them quieter and giving you both more privacy from each other.
Single home or condominium? Buying a condominium does not mean you are buying your home or the land it is constructed upon. Instead, you own a unit and shared ownership of the common property the condominium sits on.
You must pay your share of the common property’s maintenance expenses. This usually takes the form of a monthly fee. Additional fees may be levied if the property falls into disrepair and needs urgent repairs.
House buyers usually are unfamiliar with the market or the procedures that must be followed to arrange financing, find a property to purchase, make an offer and negotiate the details of the purchase. You will need the help of two professionals:
· A licensed real estate professional to help you locate a property and deal with the property owner
· A licensed mortgage broker to help you arrange a mortgage
The best way to find trustworthy help is to search online for potential candidates or consult with friends to see if they can recommend anyone. Then interview those who sound most promising to see if they are right for you.
It’s also a good idea to contact and possible retain an experienced real estate lawyer as well. They can offer advice about any agreements you want to sign with mortgage brokers or real estate professionals as well as purchase agreements.
Now you’re ready to start house hunting!