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8 Step Guide For First Time Home Buyers

Updated: May 6, 2020

Being a first time home buyer is exciting! First time home buyers could be young adults moving away from their parents for the first time, people who have saved up for a downpayment while renting or, in some cases, a recently divorced person who has never owned a home on their own. Although exciting, it can also be overwhelming when you see housing prices increasing year after year and properties being sold in days. There is a lot of information to gather and digest so I've made an easy step-by-step guide to help.

1. Get Your Finances in Order

Being pre-approved for a mortgage will include a credit check so make sure your debts are paid off, you have good credit and a healthy downpayment. Don't forget to save enough money to include land transfer tax, legal fees, home inspections, moving costs and an emergency fund for anything that could go wrong. Land Transfer Tax is refundable for most first time home buyers. Click here for more information on how to withdraw from your RRSP under the Home Buyer's Plan and here for First-Time Home Buyer's Incentive.

2. Choose a Realtor you Trust

A realtor/client relationship is more than just looking at houses and drafting paperwork. Choose an agent who cares about you, really listens to what you want and need, is available to help you navigate this extremely important decision and can refer you to various related professionals, such as mortgage agents, home inspectors and lawyers. If you already have a mortgage agent, they can refer an agent they trust to you.

3. Choose a Mortgage Lender

Get pre-approved. Don't confuse being pre-qualified and pre-approved. In order to be pre-approved, you will need to go through an application process, provide income tax returns, pay stubs, T4 slips, letters from employers and possibly other documentation. The more prepared you are, the easier it will be when it comes time to put in an offer. If you don't have a mortgage agent, ask you realtor to refer someone they trust to you.

4. View Homes & Narrow Choices

This is the fun part! Your realtor will send you listings and schedule tours of properties. Take notes and ask a lot of questions. Go back to homes you like to gauge traffic, lighting, noise and test your commute to work. Your realtor will search comparable homes to help you decide on an appropriate offer price.

5. Choose a Lawyer

You will need a real estate lawyer to help you close the transaction. If you don't know a lawyer, your realtor can recommend real estate lawyers they work with and trust.

6. Make an Offer

Your realtor will make an offer based on the price and terms that you choose. Be patient - it may take a few tries before you win an offer so just hang in there. Adding a finance condition to your offer protects you to ensure you can get a mortgage before finalizing. Unfortunately, in a seller's market, often your offer will not be accepted in a multiple offer scenario if you have conditions. Discuss this in detail with your realtor.

7. Final Details

Once your offer is accepted, you have paid the deposit and all conditions are fulfilled, you·prepare for closing. Arrange for home insurance, finalize the mortgage details and schedule movers. Your realtor will arrange a final walk-through to ensure everything in the home functions properly. Your realtor acts as coordinator between your lender and lawyer to ensure a smooth close. You will meet with your lawyer to sign all documents and pay the final deposit sometime during the week before closing.

8. Closing Day – Congratulations!

The standard form Agreement of Purchase and Sale states 6:00 p.m. as the closing time on the date of closing. However, you may close earlier in the day. Your lawyer will transfer funds and have keys available once the deal is closed. Be prepared not to get keys until late in the day so schedule movers accordingly.

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