You have finally achieved a state of financial stability in your life where you feel that you can make one of the biggest financial moves you’ll ever make in your life: buying a home. After years of paying rent and having nothing that you own to show for it, you feel that it’s time to become a homeowner. This is a great step toward securing the future that you want for yourself and your family, but it is also a sizable investment.
For many Canadians, the home-buying process will be the first time that they are working with such large amounts of money and for such an important purchase. While there is no one approach that will work for every aspiring homeowner, there is in fact a series of steps that everyone should take to ease their stress and even save them some money.
Step One: Get Pre-Approved
Getting a mortgage pre-approval is not the same as actually being approved by the lender for a mortgage. By discussing your income and debts, as well as other details of your financial situation with a lender, you will be given a figure that reflects how much the lender would feel comfortable loaning to you for your mortgage. Getting this done ahead of time shows lenders that you’re serious about buying a home, and allows you to search the market based off a calculated price point.
Step Two: Create your Team
Though it isn’t required by law, a realtor and a real estate lawyer are valuable allies to have as you start your journey toward home ownership.
- A realtor will connect you with sellers that are trying to sell properties within your price range and personal specifications.
- A lawyer will work on your behalf to help you with the documentation, payment arrangements, and any bidding wars that take place for a property that you’re considering.
You will want experienced professionals helping you along this process, so it’s best to look into your local market, ask friends, family and colleagues for their personal recommendations, and conduct plenty of research before deciding on who to hire.
Step Three: Find your New Home
With the help of your realtor, you will likely see several homes before deciding on the perfect one. This home should fit within your financial limits (look to your mortgage pre-approval for reference) and check most of the boxes on your “things my new house must have” checklist.
Step Four: Make an Offer
Your lawyer will be able to help you make an offer that is reasonable and fair, though there may be some negotiating between buyer and seller. Your offer should include:
- Your name, the seller’s name and the address of the house
- The purchase price (your offer) and the amount you’ll be paying in a down payment
- The date of closing day, where the purchase will be finalized
- The day that the offer will expire
- Other conditions that you would like to have met before the purchase is made final (for example, a home inspection)
Step Five: Get Financed
Once the seller has accepted your offer, it’s time to return to the lender that you got pre-approval from to finish the mortgage financing process. The signed offer will be mandatory to bring to your lender, as well as important documentation like utility costs, a full appraisal, a legal description of the property, and the most recent online property listing. Your lawyer will help you to obtain these documents and present them to your lender.
Step Six: Closing Day
Closing day is the most exciting day for new homeowners, because that’s when they get the keys and their house is now legally registered in their name! The date of closing is previously agreed upon by the buyer and the seller, and will have both lawyers present during proceedings. Any final expenses, including the payment for the house, are paid and finalizing documents are signed.
It can be an intimidating and downright frightening experience to navigate through the real estate market for the first time. That’s why the recruitment of a realtor and lawyer, while sometimes costly, can be one of the most important assets that you’ll have during this process. Make use of their highly specialized knowledge to best protect yourself, your investment, and your future.