This guide should provide first-time home buyers with some important information they may need to initiate and complete the home buying process. The information is provided in a chronological step-by-step format which first time home buyers may wish to follow so that their home buying experience is as easy as possible.
1) Mortgage Pre-Approval.
Getting pre-qualified means that a lender (a mortgage broker, or bank) will endorse you for a mortgage of a specific value. It is important to get pre-approved because you will know what your price limit is and you can focus on homes that you know you can purchase. You will not be dissapointed by a later mortgage rejection. You may also save money on other home buying services such as home inspectors if you know you are not able to purchase the property.
2) What type of home are you looking for?
Most first time home buyers do not get everything they want with their home purchase. Set your priorities before you look at properties:
- What is my price limit?
- What does my new home need for me to be content?
- What areas am I interested in?
- What features am I willing to do without in my new home?
3) Know about closing costs.
Closing costs can often be a suprise to first time home buyers. They can be as much as 2.5% of the cost of the home. Know what they are so that you can prepare and save for them.
What are closing costs?
Closing costs are costs that are incurred during the finializing of your homes' purchase (or sale). These costs can include items such as lawyers fees, legal disbursements, property tax adjustments, bank or mortgage broker fees, surveyors certificate, fuel adjustments, deed transfer fee, home insurance, and utility hook-ups.
Are all of these fees necessary?
Most of these fees are not optional and some closing costs such as a surveyors certificate may save time and money down the road.
What are tax adjustments?
Property taxes are assessed from January to December and are due in June each year. If the previous owners have paid the current taxes then you must reimburse them for the portion of the year you live in the home. For example, on August 1, you would have to repay the previous owner for five months taxes (August to December).
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