5 Simple Steps to Buying Your First House
Buying your first home is a momentous time in your life, and it is a significant steppingstone towards independence.
As a first-time home buyer, you’re eager to begin the process of buying a house, so it’s tempting to start scouring through MLS, attend open houses, and view listings.
However, those are the final steps you take when it comes to buying a house.
Temper your excitement with these 5 simple steps to buying your first home.
Step 1: Start Budgeting
Like any major investment, it’s vital to incorporate the purchase of a house into your overall financial plan.
When we’re overzealous about something so thrilling, it’s common to rush our decision-making process. This almost always leads to financial stress due to debt and the inability to make ends meet.
The golden rule with any substantial venture is to plan out your finances accordingly – compare your expenses to your earnings and determine the amount of disposable income available to you each month.
Step 2: Eliminate Debt and Build Your Credit
If you’re buying a house for the first time, it’s unlikely you’ll be paying it outright with cash. Unless your bank account is flush with seven figures, of course.
Very few are worth over $100 billion like Amazon’s Jeff Bezos, which means the average Canadian must rely on a loan of some form to buy a house.
And it goes without saying that money lenders are less than keen to hand out mortgages to those with pre-existing debt.
The higher their risk, the less likely they are to sign off on a mortgage approval.
That means your top priority is to wipe out any current debt and bolstering your credit score by:
- Paying down lines of credit
- Maintaining a positive credit card balance
- Eliminating government loans such as O.S.A.P.
Pro Tip: If you’re holding debt on multiple credit cards, focus on paying off one at a time rather than distributing additional payments across them all.
Being completely debt-free is unrealistic for some, especially in today’s economy, but if you’re making the minimum payments on time, it shows that you manage your money responsibly.
Step 3: Talk to a Mortgage Professional
Now that you have your finances in order and your credit is in good standing, the next step is to get an idea on the size of loan you’re eligible for.
Before you book your appointment, it’s important to decide which type of mortgage professional you want to hire.
A mortgage agent works directly with your financial institution, while a broker deals with multiple vendors.
A broker has access to additional resources such as foreign banks, real-estate syndicates, and pension funds; agents have a deep understand of your bank’s processes.
Regardless of which route you take, it’s essential that you provide them with as much information as possible to get a more accurate estimate of the loan you’ll be accepted for.
This includes a detailed list of your assets, income, expenses, and investments.
Step 4: Determine Exactly what You Can Afford
Closely related to determining the size of mortgage you’re qualified for is taking a realistic look at what you can actually afford.
This means circling back to your budget and being honest about what you can pay each month without putting yourself in the rears.
Just because you’ll be approved for a $500k mortgage, that doesn’t mean you buy a house valued at $495k.
There are plenty of mortgage calculators available online to help you make a more responsible decision when buying a house for the first time.
Remember, accidents happen at the most inopportune time, and the larger the loan, the greater the risk.
Step 5: Speak with a Real-Estate Professional
Finally, it’s time for the fun part, attending open houses and viewing your potential home!
A real-estate professional (agent, realtor, or broker) keep their fingers on the pulse of the market to offer you invaluable insight.
They take all your needs into account and make your home-buying experience as easy and enjoyable as possible. Not only that, but a real-state professional has access to information you and I do not such as correct knowledge on things like the first-time home buyer incentive.
- Provide you with a curated list of homes that check off all your must-haves
- Arrange showings at times most convenient for you and your family
- Negotiate on your behalf to ensure you get the most value out of your investment
Start Your Home-Buying Journey with Bickerton Brokers
Consider these 5 simple steps to buying your first house as the Cole’s Notes version of the process. For a more in-depth handbook on how to buy a house, look at the 12-step Guide on our website.
Or tell us about your dream home by filling out this short survey – after reviewing your response, an agent will be in contact right away!