I have many friends that have asked me how I bought my first home and even though there is a lot of information on the internet, nothing will compare to actually going through the process for yourself. Here is my experience.
It took me almost 2 years to find and buy my first home. It was a 3 bedroom 1.5 bathroom semi-detached home, which is typical for a first time home buyer in my city. I looked through the MLS.ca website every day and after a year I started working with a Real Estate agent. Working with my first agent was not as exciting nor as helpful as I had thought it would be. She showed me several homes within my modest price range, however most of them were decrepit homes or homes that were turned into rentals. She made me feel obligated to make a quick decision and I admit, I felt pressured into putting an offer on a detached century home with a shared driveway. In going through the process, I did not know the financial steps that I needed to take and the offer fell through. The agent was “cold” and felt more sorry for the sellers than for me. So, I dropped her like a hot potato! It was a stressful and disappointing time, but I managed to shake it off and start again.
After another year of searches online again, I decided to find another agent. This time, with more knowledge and confidence, I spoke to the new Real Estate agent, told him exactly what I was looking for and what my set price range was. I told him upfront that I was in no rush and I didn’t want any pressure tactics. He appreciated my straight forward approach and we emailed listings back and forth.
During the house searches and open houses on the weekends, I took my savings and called my bank for a mortgage. I was turned down as I wasn’t working in my company for more than a year yet so as per their policy, I was not eligible. Around the same time, my agent was listing the semi-detached home. He acted as both selling and purchasing agent. Now, sometimes real estate agents get a little greedy when they have a client that wants their listings, however I lucked out and my real estate agent was extremely patient and we had a great rapport. With a few financial bumps which included going to a mortgage broker, I managed to purchase the home at an extremely high interest rate and 2 mortgages, which they call “B” lenders.
Mortgage brokers can get a bad rep because they see clients that have issues with banks (“A” lenders) and your mortgage can be covered with extremely high interest rates comparing to the banks. I have a love-hate relationship with these types of brokers. In the end, my interest rate was at 18% compared to, at that time, 8% at the bank. This was not an ideal situation and I was strapped financially, but after another year I finally was accepted at my bank with an interest rate of 5.4% WOOHOO!
So here are some quick tips that I would suggest:
– Clean up your credit – pay off or make regular payments on your credit cards as this will be added to your total debt which will affect your lending capacity
– Go to your bank and ask a bank manager exactly what steps you need to take financially to be approved through their institution
– Your time working at your job is crucial to most lenders as they want to ensure stability for your mortgage payments
– Closing fees for lawyers include transfer of deed, taxes, etc. usually about 3-4% of the cost of your home
– Save a hefty downpayment – the bigger your downpayment the better, banks/lenders/sellers will take you more seriously and you’ll get closer to being approved.
– Aside from your downpayment – make sure you have money to set up your utilities, phone, cable – when setting up new accounts for these, most companies ask for at least a $200 deposit.
– Find a good Real Estate agent, there are tons out there, good and bad, so only work with an agent that you feel has your best interests in mind. Don’t be afraid to drop an agent if they are not a good fit for you. Having a great agent makes the house search a more exciting and happier experience, so don’t let them pressure you…REMEMBER THEY WORK FOR YOU…and they are easily replaceable.
– Best time to purchase is usually between late Spring and the end of Summer, even if you don’t have children, this is an opportune time because most sellers will list around school schedules..it’s called a “Buyers Market” which means there are more listings available around this time.
– HAVE FUN, this will be a roller coaster ride of emotional and mental ups and downs, we all go through it with our first homes, reach out to family members or friends for support. It’s great to talk with people who have been through the process and they may have some valuable information and resources for you.
I’ll make another post regarding Tips for Selling Your Home, soon.
Hope this helps! 🙂