Purchasing Your First Home

Things to consider when purchasing your first home….

[This will be from the perspective of a first-time home buyer in Ontario, Canada.]

Firstly, it’s never too early to start looking. It’s important to have a feel for the market you’re in. This will give you an idea of what you can afford. Also, it’s never too early to get in contact with your bank or credit union to have a preliminary credit check ran, this will ensure you have an idea of what you’ll be able to afford. *Note: when the credit check is run, it will determine the value of a home you can purchase based on your income at a high interest rate.

Once you’ve talked with a representative at your financial institution, get in contact with a Realtor. You can do a private sale (without a realtor), but for a first-time home buyer I recommend contacting a realtor as they provide a lot of information and security as this will likely be one of the most expensive purchases you’ll ever make. A realtor will know about new listings on the market and is able to narrow down listings based on your affordability and interests. For example: do you need to have a garage or more than one bathroom?

When you start looking at houses take someone else with you, whether that’s someone you’re purchasing the home with or a parent or friend. It’s always beneficial to have a second pair of eyes. When Jake and I went house shopping we went just the two of us. It worked out great because I have an eye for design and he’s a builder. Jake would notice things like if the windows needed replacing, and while I would have noticed that if it was pointed out to me; I was seeing what colour I would paint the walls and the type of light fixtures I wanted. Realise, anything from a design element can be changed whether that is wall colours, light fixtures, the floor or cabinet colours; and those are not too difficult to amend. However, if the house you’re interested in is going to need new siding, roof and windows in the next six months, that’s an entirely other financial situation you will find yourself in.

Know what offer you can make on a house and what will fit into your budget. When you purchase a house, you will have to pay for your mortgage, property tax, life insurance, utilities etc. (and that’s just the basics) Be sure you’re looking at houses in your budget and when making an offer that it’s in your budget as well. In the market we’re in right now (as of Aug. 2017) most people are still up bidding on houses. What that means is, when a house is listed at $176,000 most people will offer more than said price. The first house Jake and I looked at listed for that amount and sold for $214,000. Now most situations are not that extreme of an overbid; but it does happen.

Do a home inspection, this is a little costly but it will let you know the exact condition the house is in. How are the sump pumps? How is the roof? Is there mold in the house? Do you have a mouse problem? Are your AC and heater working? After the inspector is finished you will be provided with a complete report complete with photos and a debrief on any issues in the home. Jake and I took some time after the debrief to take measurements of some of the rooms. We wanted to make sure when we were furniture shopping we knew what size couches or bedroom we needed. Embarrassingly enough for us, we took all the measurements and then when couch shopping didn’t think to look at them. We purchased a couch that at first, looked like it would fit into the basement; but after purchasing the couch and further research we found out it wouldn’t and had to redo the layout we wanted in the basement. (Note: when buying furniture, it doesn’t all have to be new. This house will likely leave you unsettled in your finances until you get a foot hold again and re-budget, it’s nothing to be ashamed of if your home doesn’t look like you want it to within the first few years)

[Financial Break Down – First time home buyers need at least 5% down payment for a house. If you’re buying for $176,000 that’s $8,800, there is a legal fee for approximately 2% of your home value, in this case it would be $3,520. Property tax is determined by the assessed value of the home multiplied by the mill rate. For example a home with an assessed value of $173,000 x 0.013 (if that’s the mill rate for you area) the property tax is $2,249 this payment is split into a 10-month period, so that’s $224.90 a month with two months off. Utility companies will require a deposit that will be added to your first bill, note: billing will start six weeks after the closing date.]

When house shopping, consider the neighborhood you want to live in. My mom liked her own space and liked raising her children, not other people’s children; which is a fair statement to make. So, my mom and dad packed all of us kids up and moved us from a suburban duplex to a country home 15 minutes out of town, where our only neighbors were old enough to be my grandparents. I am not like my mom in that respect, I am hoping my children grow up around many other children and learn to be social-able.

Lastly consider your long-term plan. Are you looking to find a place with your friends so you can move out of your parent’s basement, or are you looking to start a family of twelve? Do you plan to stay at this new home for a semester or for the next ten years? It sounds obvious but in the hustle and bustle of a quick paced market sometimes you don’t think about what a home in a specific location of town or with a slightly higher-than-your-budget price tag could mean for your long-term plans. Your home will determine where your children will go to school, it will determine if you will need a car or can use public transport. The home you buy can determine whether you can have an income property. Buying a home will determine whether you will need to work two jobs until the mortgage is paid off. This will likely be your largest purchase ever, it’s stressful for sure; but incredibly rewarding.

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