1. Get pre-approved. You have heard this before and you will hear it again. Get to a bank before you start looking at houses. The bank is going to look at income, credit rating, down payment and work history. Who knows you might even be pleasantly surprised if the bank approves you for more than you thought.
2. Do not base what you can afford for a mortgage payment on what you are currently paying in rent. Banks have strict guidelines on qualifying people, very different from landlords. Years ago a young couple that told me they could pay $1200 month for mortgage payment because that is what they were paying for rent. The mortgage lender had very different ideas.
3. Keep your dream list reasonable. I have had people tell me their list of must haves, like a gas fireplace, hardwood floors, finished basement, an ensuite all on half an acre for $$xxxx and when I put the criteria in the computer to search you know how many houses come up? A Big Fat Zero
Maybe make 2 lists - Must haves and Would be nice to have. Like if you 2 small children under 5 years old you probably want three bedrooms all on the same level. And for safety reasons you don’t want to be on a busy street. Those are Must haves.
A finished basement or hardwood floors goes on the Would be nice to have list- things that can always be changed later
4. Buy a house based on things you cannot change about the house. This goes along with the previous tip and what I mean by this is if you see a flashy newly renovated house that is all beautiful inside and has granite countertops and brazilian hardwood floors and a gas fireplace and the whole nine yards but it is beside a factory, or a 10 storey apartment building think long and hard about that house. Don’t get glossy eyed because of the shiny finishes because you cannot change the next door factory or apartment building, but you could buy a plain ordinary house with a nice lot on a quiet street and then put flashy finishes in it.
5. Don’t try to find the perfect house. It doesn't exist, it’s like a unicorn. Grade the houses you see on a scale from 1-10. If a house has many of the items that are on your aforementioned lists and it ranks about a 7 out of 10 you should seriously consider it. You will never find a 10 but look for a house that you can make your 10. After a few years you will discover what you like about the house and what you don't like and you can use that information when it comes time to move up to your next house.
6. Do not use the listing agent to buy a house. Get your own agent, it doesn’t cost you anything. So why wouldn’t you? Your own buyer’s agent will be looking out for your interest. Not the seller’s. Don’t be misled by an agent or something you read in a book telling you that you can get a better deal by buying through the listing agent because they will reduce their commission. They may reduce their commission (or maybe not) a bit but everybody knows that this so everybody wants piece of that reduced commission. The seller knows it. The buyer knows it, by the time the reduction is calculated out and everyone gets their sliver. It is hardly worth not having your own agent. 99% of the time it doesn’t cost you anything to have your own agent who will be looking out for your interest. Get your own agent.
7. Don’t fall in love with the first house you see. Or any house for that matter. There will always be another house come along. I know us real estate salespeople are supposed to capitalize on a buyer falling in love with a house and go for the close. You may look at a few more houses and come back to that first one and say - This is the one for me. That’s fine, just be sure to see what else is out there,.
8. Calculate enough money for closing costs. Closing costs are generally 1.5-2% of the purchase price of the house. And these costs can include: Lawyers fees. Lawyer’s disbursements, PST on your CMHC fee if you are putting less than 20% down payment, Land Transfer Tax and if you are buying in Toronto you will pay double Land Transfer Tax (lucky you)
9. After you sign your Agreement of Purchase and Sale do not go and buy a bunch of stuff on credit. Such as furniture, appliances. Do not pay for a year deal. Or a new car. The lender will do a credit check on you just prior to closing to make sure you still fit their lending guidelines. and if you don’t, there could be trouble
10.Have liquid cash to put down as a deposit When you make an offer on a house and come to an agreement with a seller to buy their house, you have to put down a small deposit. This is not your down payment but just a deposit on the house. It could be anywhere from a couple thousand dollars to say $40,000 or $50,000. And that has to be paid right as soon as the offer is accepted or you risk losing the house you just bought. You don't want to be scrambling to come up with that money when the pressure is on. So think about it now. What bank account is it in, can you easily get a cheque or bank draft? Will you have to move money from one account to another. Work this out when you first start looking at houses.
11. Look at a home more than once. I know in some markets you may not have the chance to go back a second time but make the effort to go back and take a second look if you can. If your first time was in the dark and you couldn’t see the yard, go back during the day. And I don't mean at the home inspection. The home inspection is not the time to be making a decision about whether you want the house or not. If you put an offer on a house you better be sure that is the house you want. I was always told, never buy a used car in the dark.
So there you have it, my list of 11 tips for new home buyers