Move over landlord, become a home owner!
You have saved some money, have help from your folks, and are thinking about buying your first home. Buying a home can be thrilling, exciting, but can also be confusing and daunting. A lot goes in to buying a home but hopefully after reading this article, you’ll find some clarity and perhaps soon after, you’ll be on track to becoming a home owner!
Working with a Realtor is FREE for buyers
Your search for a new home begins with the help of a trusted Realtor. A Realtor acts as your agent, representing your interests to third parties, as a fiduciary, which means putting your interests first and foremost. You’ll be working, texting, emailing and communicating with your Realtor lots, so make sure you choose one that connects well with you. Start by asking your friends or family for recommendations, and scan through reviews online to find the right fit for your needs, wants, and dreams.
Renting vs Buying?
Is buying an apartment for you? There are pros and cons of both renting and buying a place. One of the biggest advantages of buying your own place is building equity in a safe and secure investment and taking advantage of gains in value of the property in the future. Having your own place gives you the freedom to decorate or renovate as you please, a luxury you may not have while renting. However, you will also be responsible for the maintenance and upkeep of your property.
What can you afford? Are there benefits for first-time home buyers?
There are two simple rules from the Canadian Mortgage and Housing Corporation (CMHC) that can help you determine whether or not you can afford a home.
Your monthly housing costs should be no more than 32% of your average gross (before-tax) monthly income. Housing costs include mortgage payments, property taxes, and other costs such as strata fees.
Your monthly total debt payments should be no more than 40% of your average gross (before-tax) monthly income. Total debt can be made up of credit card payment, car payments, and other items such as student loan payments.
Down payment
What you can afford monthly depends on these numbers and what you have saved as a down payment. The hardest part for many first time home buyers such as yourself is to have enough in the bank for a down payment. Good news is that supports such as the First Time Home Buyer Incentive allow qualified home buyers with annual incomes of up to $120,000 to finance a part of their home through a shared equity mortgage. Depending on what you are looking to buy, you may be eligible for a 5 to 10% incentive amounting to your downpayment. You must repay the Incentive after 25 years, or when the property is sold, whichever comes first.
Other costs to consider include closing costs. These include items such as a Property Transfer Tax, cost of services of a lawyer who processes the transfer of ownership, and a property inspector. As a first time home buyer, you may be able to take advantage of British Columbia’s First Time Home Buyers’ program that can reduce or eliminate the amount of Property Transfer Tax on your new home.
Still don’t have enough for a down payment? No worries! You are able to borrow up to $35,000 tax-free with the RRSP Home Buyer’s Plan.
Get pre-approved for a mortgage!
Before you go shopping, you need to know your credit limit. A mortgage broker can help you understand how much you can afford, what your monthly payments will be, interest rate and terms of the mortgage. When you put in an offer and are pre-approved, you send a green light to the seller and listing agent, they know you can afford the property and are a seasoned buyer! This way your offer will be more attractive than someone whose offer is subject to financing.
Searching for your new home
This is the most exciting part. A new home means new beginnings and a new lifestyle. Some of the things to consider in your search criteria are the neighbourhood, size, features, lifestyle and the price. I like to sit down with my clients and find out what it is exactly that they are looking for, not just their budgets but hopes and dreams of what their new home feels like, and then begin the search. The more exciting part is when you like a property, we can go tour it! If you’re thinking of a major move to a new neighbourhood or city, consider Airbnb in the area so you can soak in the local vibes and decide first-hand whether the area is the one for you.
Bye rent, hello new home!
Ultimately, owning a home comes with a lot of perks and the process can be fun. Once you have found your home, your Realtor will help you write an offer, and guide you through the process until completion which is facilitated by a lawyer. You are not alone in this process, you will be working with your Realtor, Mortgage Broker, Lawyer, Inspector, friends and family to make it happen. The entire process can seem cumbersome, but I am here to help, and provide trusted guidance centred on you. So, what are you waiting for?
Let’s start some trouble!
Dream Bigger Vancouver