Buying Your First Home

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 First Time Buyer Guide

Buying your home, especially your first home, is a huge decision and one of the biggest financial moves that you will ever make. When you buy your first home, you are absolutely leaving your comfort zone and finding a new place to call home. This may be the place you get married, start a family and do the whole ‘grown up’ thing. Buying your first house practically screams “I am an adult!” and “Look how much money the bank gave me!”

But before we get to that part, a number of steps, phases and people are involved, and having this handy guide around, as well as my help, will take you through this journey.

  • Step 1 – Set up a meeting with your mortgage specialist

     The first step to buying a house or condo is finding out how much the bank will lend you for your mortgage. When you pre-qualify for a mortgage, your lender will look at your income, your debts, your down payment and your credit history. The pre-approval should be in writing and will include a guaranteed interest rate (usually valid for 90 days). Knowing how much money you can comfortably borrow is one of, if not the, biggest factors when purchasing a home. This is also a good time to go over the closing costs associated with buying a house. Aside from the down payment, you will have to pay lawyer fees, the land transfer tax, possibly CHMC insurance, and other costs as well, depending on the situation

  • Step 2 – Decide what you are looking for

     Deciding to buy a house is a big step, but now you have to decide what you want. “Yes,” you think to yourself I’m pumped! Let’s get this homebuying going!” Well, easy there fearless homebuyer, there are some important decisions to make before we start running around Winnipeg throwing offers around. Making some of these decisions will greatly aid the homebuying process and also help keep you from being overwhelmed and going cra-cra (as my daughter says).

Some decisions to make are: 

 ■ Where do you want to live? What area of town? Do you want to be near family, friends or certain schools?

■ Do you prefer a house or a condo? 

■ What about the house itself? Bungalow or two storey? Newer or older? Character home or more modern? Finished basement? How many bathrooms? How many bedrooms? Are you willing to do some work or do you want it renovated already? How big of a yard? Garage? Pool? Service quarters for the hired staff?

■ When are you able to move? Did you just sign a new lease and need to sublet?

■ How long do you plan on living there?

Then we have to decide on what you need compared to what you want. Remember, if this is your first house the chances are that it won’t be feasible to get everything that you WANT, but we can do our best to get what you NEED. Common needs would be choosing a particular area of the city, number of bedrooms, house layout and yard size. Common wants would be a pool, a double garage or a finished basement. While these may be nice to have, it may not be feasible at this point in your life.

  •   Step 3 – Know who you will be working with

     Keep in mind that there are different parties involved. Aside from a real estate professional you will also need the services of a lawyer, banker/mortgage broker and a property inspector Your agent can assist you in finding these but perhaps you already know someone who you know and trust.

  •  Step 4 – The Hunt Begins

     Now that you’re pre-qualified for a mortgage, narrowed down your search and picked your team, it’s time to start looking! This is the fun part! We get to go to different houses and see what you like and don’t like. House hunting will involve screening and previewing properties online and then finally going out to look at homes. This is your opportunity to get a feel for the different neighbourhoods, refine your wish list, and ask questions. It is very common for people to change their lists of needs and wants after viewing a few properties. Perhaps having a finished basement was really important to you, but after viewing a couple houses without, you can see yourself living without one. Or you really wanted an open concept kitchen but after seeing one or two with formal dining and living areas, you decided you liked that set up as well.

  •  Step 5 – Make an Offer

    Writing an offer can be very intimidating and can look very complicated. However, the Offer to Purchase (OTP) generally just sets out the guidelines of the purchase. Included on the OTP are : your name and address, the sellers name and address, both agents names, the agents brokerages, the day of possession, what is included in the sale, the offer price, the amount of the deposit, the conditions, the names of lawyers, and if there are any encroachments on the property. This can vary from sale to sale, but that is the general outline.

    I would like to clarify a couple of parts, mainly the deposit, what is included in the sale and the conditions. By "deposit" I am referring to the amount of money that accompanies the offer as a token of "good faith". This is different than the down payment. The deposit demonstrates to the seller that you are serious about the transaction. On an average priced house of $300,000 or so, a deposit can typically be between $5000 and $10000. If the sale goes through, the deposit would be subtracted from the downpayment. The deposit is made out to the listing brokers trust account and is deposited the day after the offer is accepted. If, for some reason, the sale does not go through due to the conditions not being met, the deposit is returned to you with no penalty. The only time the buyer would not receive the deposit back is if all the conditions were met and the buyer reneged on the sale and failed to take possession. In that case, the seller keeps the deposit and can also sue the buyer for breach of contract.

    In terms of what is included in the sale, it is generally regarded that the seller leaves everything that is "fixed" to house such as fixtures, sinks etc, and take with them everything that is not "fixed". By fixed, I refer to anything that is attached to the house by nail or screw. However, it is not uncommon for the buyers to request some items to be left such as appliances and garage door remotes. Those items can be negotiated in the offer. As well, at times, the seller may request to take some fixtures with them, such as a stained glass window or mirror.

    Most offers will contain conditions of some sort. A condition is set out in the offer and is a requirement that must by the buyer be met within a set amount time in order for the sale to be completed. Common conditions are the condition of financing and the condition of an acceptable home inspection. Generally speaking, the buyer will ask for a few days to get these met. Essentially, the buyer is saying to the seller "Yes, I want to buy your house, but please allow me 3 days to ensure that I can obtain financing and also get a home inspection to make sure the house is ok."

  •  Step 6 – Meet Conditions

     Conditions are requirements written in the offer that must be met for the sale to go through. In your offer, you may have included a condition for financing, a home inspection or the need to acquire any other pertinent documents or information. This can be quite a hectic time as you only have a few days to get everything to your mortgage broker and also find a home inspector. Once the conditions have been met, the deal is finalized and it’s just a matter of time until moving day! You will meet with your lawyer shortly before the possession date to sign all the necessary paperwork and also provide the balance of the downpayment. You will usually be able to pick up your keys from your lawyer on the day of possession. 

  •  Step 7 – Close the Deal

    You’re almost a homeowner! Closing is the point at which the ownership and possession of the property are transferred from the seller to you. It takes place once all the legal and financial obligations have been met. Closing the purchase will be a team effort: in addition to yourself, your lawyer and your lender will all be involved in helping close the deal.

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