Buying your first home is an exciting time, but one that can be fraught with questions and emotions.
Add today’s current hot market into the equation, and getting the information you need before you start the search is more than a good idea; it’s essential.
It starts with building a good relationship with your realtor, not only exploring what you’re looking for in a home, but also the myriad steps and costs that will come up during the process.
While for first-time buyers, “the biggest thing is coming up with the downpayment … it’s (also) understanding the process, understanding the amount of money down needed and potential cosigners – some have just a few years of income (history),” said Oak Bay realtor Eli Mavrikos, of the Mavrikos Collective with Pemberton Holmes.
And then there’s the other costs that accompany a home purchase. For example, in addition to the purchase price, home buyers will need to consider the legal fees (around $1,000) property inspection (about $400 to $500), the Property Transfer Tax (one per cent on the first $200,000 and two per cent on the balance) and for those with a downpayment of less than 20 per cent, a CMHC fee.
Earlier this month, Canada Mortgage and Housing Corporation released its 2015 First-Time Homebuyers Survey, coinciding with the fifth anniversary of Financial Literacy Month, recognizing that for most Canadians, buying their first home is the single, largest purchase they have ever made.
“CMHC’s survey results reiterate the central role that mortgage professionals play in providing first-time homebuyers with the information they need to manage their money and debt wisely,” said Jane Rooney, Canada’s Financial Literacy Leader.
“The more we understand the financial literacy needs of Canadians, the better we can be at providing the right information at the right time to help them build their financial knowledge, skills and confidence.”
In addition to the basic financials involved with buying a house, the older nature of homes in Oak Bay means many offers will also include a perimeter drain scope and oil tank inspection, to ensure the property is free of buried oil tanks. Asbestos is another issue that can arise during a home inspection. All areas are negotiable, but prospective buyers should be prepared.
“It’s really finding that comfort level for the buyer,” Mavrikos said. “Communication from Day 1 is huge for this and educating the buyer throughout the process.”
Because first-time buyers are often buying properties that need some work, Mavrikos suggests working with your mortgage professional to get the funds for the mortgage and improvements, allowing you to do some of the work now.
Be sure you have spoken to your bank or mortgage broker to obtain pre-approvals, and ensure there’s good communication between all involved as decisions in this market often need to be made quickly.
“In this market, if someone wants to see something you have to go that day, if you wait a day or two, it will be gone,” Mavrikos says.
At the end of the day, perspective is key. “Find that number your happy to lost it for and the number you’re happy to get it for,” and at the end of the day, “if it didn’t happen, it didn’t happen for a reason,” Mavrikos said. “Emotions are pretty key. Try not to get too invested or emotional (about a particular home),” he added. “There’s many ways to get a positive transaction I find, and it’s not always price,” he said, pointing to factors such as adjustable possession dates and even being telling your story about being first-time home-buyers.
For more information on the First-Time Homebuyers survey visit cmhc.ca/FirstTimeBuyers