In this age of seemingly soaring interest rates, first-time homebuyers are uniquely disadvantaged. While everyone is feeling the pinch of recent announcements from the Bank of Canada if first-time home buyers couldn\u2019t catch a break during the times of remarkably low-interest rates, what hope do they have now?<\/p>\n
Well, we at Canadian Real Estate Wealth are pre-destined to cheer for the underdog. In that vein, we thought we\u2019d share the best advice we can offer and tapped Toronto real estate titans and top-notch REALTORS \u00ae Aleksandra Nowak and Tony Sbrocchi of The Condo House for the insider information that they share exclusively with their first-time home-buying clients.<\/p>\n
Advice from The Trenches<\/strong><\/p>\n You can shop once you know the amount of the mortgage you are eligible for. Based on this sum, only consider homes that you are certain you can afford. Don\u2019t be lured into looking at properties well beyond your eligibility amount by thinking the seller will take less in this market. To put it another way, don\u2019t fall in love with houses you can\u2019t afford.<\/p>\n Beyond that, you’ll be looking for the ideal mix between the home’s features, location, and overall condition. Remember that this is your first foray into the real estate market and that your dream home might not come up for sale right away.<\/p>\n Many people are unaware of how many details of a sale are negotiable. Unable to obtain your price? Find additional bargaining chips that can let you go with a new house and be content. To only consider price is a grave error.<\/p>\n Ask your agent for expert recommendations; contrary to what you may have heard, agents serve as ministerial fiduciaries who prioritize your needs over their own. Be prepared to contact reputable contractors or house inspectors who frequently collaborate to ensure a home’s condition.<\/p>\n In this market, go for the home inspection; even if it\u2019s a pre-inspection. An inspection report may uncover structural damage or issues with critical systems that would be too costly for the buyer to undertake. It’s not uncommon for a thorough inspection to reveal unanticipated defects. If found, don\u2019t be afraid to instruct your REALTOR \u00ae to ask for a reduction.<\/p>\n Apart from understanding all of the closing costs (psst ….. your real estate salesperson can help with this) and lawyer\u2019s fees, being a homeowner requires having a rainy-day fund. This is for repairs and other expenses that may arise, such as when your furnace breaks down in the middle of a frigid winter night.<\/p>\n Another piece of invaluable advice comes from the indelible and astute agents, Aleks and Tony. The must-do advice that they share with their first-time home buyer clients is :<\/p>\n Do not shop your credit once the bank provides you with the pre-approval. One of the biggest mistakes we see is first-time buyers going out to shop for their new home prior to taking possession and doing so on credit, ie. Leon’s don’t pay a cent event. This could lead to actually having your firm approval denied at closing due to debt services ratios increasing.<\/p>\n The Landmines to Avoid<\/strong><\/p>\n We\u2019ve corralled a list of common mistakes first-time home buyers make so that you, our loyal readers, can benefit from knowledge gained by others in their missteps.<\/p>\n Here\u2019s a short list of things to avoid when house shopping.<\/p>\n 5. Falling in love with home staging. We all know this but still, we do it. Take 3 minutes and map out your furniture in each room of the house. If it doesn\u2019t fit or fit in but you\u2019re still lovesick about the house, factor your new d\u00e9cor into your budget.<\/p>\n 4. House shopping while distracted. People often bring other folks when house shopping, be it children, parents, or friends. Consider doing this for only the short-list ones and on your second pass. Children can make it difficult for parents to have the opportunity to look into all of the nooks and crannies. Parents are often critical of a starter house.<\/p>\n 3. Not investigating the neighbourhood. You buy the house, but you marry the neighbourhood. Make sure you\u2019re ready for the long-term commitment of it. If there\u2019s a small nuisance that you find irksome at the time of your showings, it\u2019s only going to become a big nuisance once the home is yours.<\/p>\n 2. Neglecting to ask for comparables. Actually, you should expect an offer of this from your real estate salesperson for each of the properties that you\u2019re serious about.<\/p>\n The number one gem of items to avoid comes from the sage minds of Mr. Sbrochi and Ms. Nowak. It is as follows :<\/p>\n 1. Don’t let the glitz and glam fool you as we don’t have the ability to see what’s behind the walls. Homes that have been recently renovated or updated should be checked to ensure permits were pulled for major work and ensure they have been closed by the municipality.<\/p>\n Finding Funds<\/strong><\/p>\n Lastly, while it’s not necessarily free money, here is a list of some government programs meant to lessen the burden specific to first-time home buyers :<\/p>\n \u2022 The Canada Mortgage and Housing Corporation (CMHC) First-Time Home Buyer Incentive is a program that offers access to an interest-free loan, to help first-time home buyers get into their first real estate investment. They’ll top up your down payment by 5% on most homes or 10% on new builds \u2014 for a shared-equity mortgage. For more information visit, cmhc-schl.gc.en<\/em> In Conclusion<\/strong>
\u2022 The Home Buyers\u2019 Plan (HBP) allows people to purchase or construct a home, you can withdraw money tax-free from your registered retirement savings plan (RRSP). The HBP allows each borrower to withdraw making it ideal for first-time purchasers, particularly couples. Starting two years after the withdrawal, homeowners have 15 years to repay the money they borrowed interest-free.<\/em>
\u2022 Most provinces and territories have some variation of land-transfer tax rebates for first-time home buyers. Since it varies in amount and eligibility requirements by region, we\u2019ll let you dig into the specifics for your area. However, we\u2019re confident that you\u2019ll find the research puts some well-earned money back in your pocket, so it’s time well spent.<\/em><\/p>\n
Perhaps the single best piece of advice that Canadian Real Estate Wealth can offer its valued readers is to assemble a team you can trust, REALTOR \u00ae, Lender, Lawyer, and Inspector. Ask friends and family for local recommendations or interview candidates to be sure you are a good fit. There is plenty of proverbial fish in the sea. For the single largest purchase in most people\u2019s lives, you need someone with which you can put all of your faith. If it\u2019s not a good fit, just move along (without feeling guilty about it).<\/p>\n