7 Important Things You Need to Know When Buying a Home

So, you have saved for your down payment. Now what?

Buying a home is one of life’s exciting events. But at the same time, it can be stressful. There’s a lot at stake, big decisions, unfamiliar territory, and lots of paperwork involved.  Here are 7 tips on making it a little easier.

Step 1 – Get Pre-Approved for a Mortgage

Prior to starting your house hunting journey, one of the most important steps is to get pre-approved for a mortgage which allows you to know how much you can afford and if you will be comfortable with the size of the mortgage payment.  It also may be a valuable asset when making an offer to purchase or negotiate with the seller as it shows you are serious and have your finances in place. Locate a competent mortgage broker who is familiar with a range of options and products for you. Keep in mind that pre-approval doesn’t guarantee you will get a mortgage on the property of your choice.

Step 2 – Build your Wish List

It’s important to consider what your wants and needs are when choosing a property. Taking into consideration your budget, what are the ‘must haves’ that you can afford. What are the most important features or qualities of the home you want to purchase? Consider your wants vs needs and list in order of importance. Taking the time to narrow down this list in level of importance will help steer you in your decision making when you start looking at homes.

Step 3 – Hire a Real Estate Agent

With the above information in hand it’s time to find a real estate agent who can assist in the process of finding the right house. You might ask: Do I need a realtor to buy a home? Technically no, you don’t. However, the buyer’s agent will work in your best interest to help guide you through the process, help you avoid any potential pitfalls, write and negotiate a legally binding contract, and assist with facilitating completion and possession of your new property. Best part, it doesn’t cost you anything to use the buying agent as they are paid through the closing of the sealed deal from the seller. Why would you want to do it alone if you can get the help of a professional without having to pay.

Step 4 – Start your Search

One of the many benefits of hiring a real estate agent is that they can set you up with an automatic custom search to receive new listings that come to market with your parameters set up in the system via the Multiple Listing Service (MLS). This will save you time from having to look yourself. If something should pop up that ticks some of your ‘must haves’, it’s time to go view the properties. Most buyers view multiple properties prior to narrowing it down to a short list. And often if possible, they like to view the property a second time. If your revisiting multiple properties it’s a good idea to note down what you like and don’t like about each property, and or take pictures as sometimes you walk away and forget specific details.

Step 5 – Yes! We Found Our Dream Home – Time to Make an Offer

The preparation of an offer requires discussion about some key elements, such as price, deposit amount, dates (completion and possession, subject removal) & subject clauses. Your real estate agent is an excellent resource in helping guide you through this process. Including doing a comparative market analysis on what recent sales of similar properties in the area have gone for to determine price. While also discussing the pros and cons of common subject clauses to include in the offer such as financing, inspection, insurance, reviewing documents such as title, strata and property disclosure statements.

Step 6 – After the Offer is Accepted – Conduct Due Diligence

If you have included subjects within your offer and it has been accepted, it is time to conduct your due diligence. Subjects are usually given a 7-10 day period to perform the due diligence. For instance, if you included Subject to Financing, this allows you time to check in with your lender to appraise the property and ensure the property is worth what the accepted offers says it is and to confirm that the buyer can afford the mortgage. Once you get confirmation in writing that the financing or mortgage is approved you can remove the subject.

Once the removal of all the subjects has taken place, and the contract becomes unconditional, you have technically purchased the home via a legally binding contact. At this time, you will need to submit your deposit cheque.

Separate from subject clauses, in January 2023, new rules were implemented for the ‘cooling off’ period,  whereby the buyer has 3 business days after the seller’s acceptance of the offer to decide if they still want to proceed with the purchase. Should the buyer change their mind for any reason and decide to rescind the contract of purchase and sale, the buyer must pay a recission fee of 0.25 of the purchase price to the seller.

Step 7 – Completing the Purchase – Prepare the Transfer Paperwork

Part of the process will include hiring a real estate lawyer or notary public that will make sure that the paperwork is correct, assist with transferring the title of the property into your name, along with the money transfer and final mortgage documents protecting your interests. This is referred to as Completion Day. It’s also very important to get property insurance, from this day forward, even though the Possession Date is most likely a day or more after the closing date. The reason for this is that should anything happen to the property in that transitional time, it is now technically your property and therefore your liable if something was to happen to the property.

Keep in mind there will be other closing costs on top of the lawyer fees, such as property transfer tax, property tax adjustments, appraisal costs and inspection costs, just to name a few.

And finally comes the big day to celebrate, the day the keys are handed over to you. Congratulations on your new home!