Being a first time home buyer can be daunting. You may be wondering how to buy your first home. Is it the right time and place? Can I afford it? Do I have enough for a down payment? How do I know I am getting the right price for my home? Where do I find a trustworthy realtor?
These are all normal questions for the first time home buyer.
Step by Step Guide on How to Buy Your First Home in Vancouver BC
Buying a home is a big life step. However, it is the perfect opportunity to make a home your own and build your dream life for you and your family. Plus, it is one of the best investments in your life!
While there are some benefits to renting, the move to owning gives you many life advantages. You build your future assets. You also have freedom to renovate the home to your unique wants and desires.
However, it’s not a small or simple task. It is significant and requires a lot of effort. That’s why we have broken down a step by step guide on how to buy your first home.
Before We Begin – Save Money and Talk to Your Bank
If you are considering buying a home, start to save money now! Once you have a chunk of money, you will be able to determine the range of property that you can afford and the amount you will be able to put for a down payment. It is important to understand the costs involved.
Upfront Costs: down payment, taxes, realtor commission, closing costs
Ongoing Costs: property taxes, maintenance, utilities, mortgage payments, insurance fees, major repairs
The Canada Mortgage and Housing Corporation (CMHC) suggests that “Your monthly housing costs should be no more than 32% of your average gross monthly income. This percentage is known as your gross debt-to-income or gross debt service (GDS) ratio”.
Also, talk to your bank and check your credit score! This comes into consideration when looking at a mortgage approval. You want to ensure that you have good credit for this.
Speak to your bank about options for a loan if required to make your down payment. Try to pay off any existing debt or consider consolidating current debt for easier payment.
If you feel financially stable enough to afford the costs of being a home owner, you are ready to begin the real process!
Step 1: Get Pre-approved for a Mortgage
The first step is to get a mortgage pre-approved. Contact a mortgage broker, either independently or through your banking institution. Speak to them about getting pre-approved for a mortgage.
This lays out exactly how much you can afford on a home. It also tells you what your interest rate will be and your potential monthly payments.
However, it does not guarantee you will be approved when you find the home you want to buy. If you have less than 20% saved for a down payment, you may also be required to get mortgage loan insurance. The premium depends on the size of the loan.
First Time Home Buyer Programs
If you can already see the dollar signs flying out the window, there is a light at the end of the home buyers’ tunnel! As a first-time home buyer in BC you are entitled to the First Time Home Buyers’ Program which reduces or eliminates the transfer tax with a value of up to $7,500. On a national level, you may also be entitled to the First Time Home Buyer CMHC Incentive Program.
Check your eligibility online or with your bank/mortgage broker.
Are you financially prepared to arrange a down payment, mortgage and upfront costs for your new home? Well, then it is time to begin the search for your perfect home!
Step 2: Find a Realtor You Want to Work With
It is a great idea to find a realtor to represent you. They have connections to appraisors, surveyors, inspectors and lawyers. They guide you with extensive knowledge of the real estate market. A realtor ensures nothing gets missed and they provide valuable market knowledge.
With a real estate expert and experienced realtor, you get the best bang for your buck! You get the best possible price on your first home. Isn’t that what everyone wants?
Working with a realtor is entirely based on personal preference. Thus, the importance is finding someone you trust.
Look into an agent’s qualifications, recent listings/sales, customer reviews and knowledge of your area of interest. Thorough research ensures that you work with an experienced and trustworthy realtor.
Step 3: Find a Home You Want to Live In
Work with your local realtor to determine the criteria of your dream home. Figure out what you want and what is realistic given the current situation. Make sure you are on the same page with your realtor and be honest with them about your needs. This is your future home!
Your search continues from the comfort of your home. Your realtor sends many listings available to view online or you find listings on various platforms.
Next, drive around to open houses and private showings. Scope out a variety of choices that meet your home needs.
Don’t buy the first home you see!
It may seem like it has everything you want. But, it is important to compare amenities and costs! You may not even realize it was missing something until you see it somewhere else. Once you find the right home – or two – it is time to make an offer.
Step 4: Make an Offer
When you are ready to make an offer, your agent and chosen lawyer draws up a Contract of Purchase and Sale. This includes your personal information, offered price, deposits, conditions and closing dates.
Price negotiations are also likely to occur until a price can be agreed upon that is beneficial to the buyer and the seller. Once a price is decided and conditions are lifted, the offer is finalized.
Next, you provide your mortgage broker with necessary paperwork and finalize your mortgage.
Step 5: Time to Move in to Your First Home
The week before closing, you meet with a lawyer or notary and finalize the purchase. The lawyers transfer the property title to your name and also take care of all the financials.
Then, it is time for closing day where payments are made. You receive the deed and key to your first home. Congratulations!
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If you are selling your first home, make sure you head over here and also read up on some important information!
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For more information on real estate market in Vancouver, current trends, buying a home or selling a home, contact Leo Wilk – Your Top Vancouver Realtor.
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