Tips on Buying Your First Home

When I graduated from high school just over a decade ago, I only had one thing on my mind, buy a home. This would have been considered a fairly unusual goal for an 18 year old to work towards, but being a fairly mature young adult, I had already done a significant amount of research into renting versus purchasing. And though I lived in one of the most desirable cities, the condo market had cooled off significantly. It was a buyer's market, and I was on the hunt for some new digs. But way before I made the phone call to a real estate agent, I followed several steps that led me to successful home ownership.

1) Can I Afford This? An alarming number of people are so enamored with the idea of owning a home, they run off to the bank to get pre-approved for a mortgage well before they've had a good look at their budget to see if they can actually afford to take on a mortgage! Your paralegal salary may be enough to keep you in Jimmy Choos, but buying a home is so much more than mortgage payments! If you are contemplating home ownership, you owe it to yourself to work through your budget with a fine tooth comb, leaving absolutely no possible financial roadblock unexplored. After you've paid the rest of your expenses, tucked away some money for retirement, and some for savings, what's left? What's left is what you'll have to work with when you pay for your new home every month. If you don't have this number in the forefront of your mind, you leave yourself open for a rude awakening when the first mortgage payment hits.

2)  Getting Pre-approved. I've always thought of getting pre-approved similar to getting engaged! You go through all the planning of buying a home, but at the end of the day, you still need to close the deal! When you get pre-approved, the bank or lender is essentially letting you know how much you can spend on your new home. In Canada, a mortgage broker will generally calculate your down payment into this pre-approved figure.

3) Thoroughly explore mortgage options. There are any number of allotments of time given to pay off a mortgage. Here in Canada, home buyers generally opt for a 20 or 25 year mortgage. I believe in the USA, a standard mortgage is generally around 30 years. A financial adviser will not only help you determine the best amortization rate, but will explain the benefits and drawbacks of a fixed or variable (adjustable) mortgage. Knowing what you can spend helps narrow down your search, and immediately lets you know what neighbourhoods you can afford!

4) Shop for a real estate agent. Once you get pre-approved, and you're ready to hit the ground running, it's time to find an agent. This can be as tricky as finding a good lawyer! You want to find someone that you feel you can trust. The first thing I did when I started shopping for a new home, was ask friends and family, and found someone fabulous! Going with a larger agency like Remax or Century21 is beneficial because you gain access to individuals with vast property knowledge, and in many cases, specializations. For example, if you are looking at purchasing a property in a particular area, you'll want an agent who's going to know the in's and out's of that neighbourhood.

5) Understanding the offer process. There is nothing more exciting than finding the house of your dreams, but there's nothing more heartbreaking than watching it slip through your fingers as someone outbids you. There is some strategy to putting down an offer, if your real estate agent is good, they'll up your odds. Keep your cool, and for the sake of your health, always be prepared to walk away from the deal. There are hundreds of thousands of houses, and there's no reason to self-destruct financially. Be patient, and you'll get what you want.