Home Buying – Checklist
Home buying is a major life decision for all of us. It involves a lot of steps and I wanted to simplify the process and provide you with a detailed checklist of the steps involved. Without any further ado, let’s get into it.
It is important to visualize and write down your expectations of an ideal home. Are you picturing a detached / semi-detached house with a spacious backyard for your kids and pets to play or a high-rise condo in the downtown area overlooking the beautiful skyline of your city?
2. Finding the right Real Estate Agent
The number of registered realtors with the Toronto Real Estate Board is close to 54000 right now. As a buyer, you will run into a lot of realtors in your day to day activities. It is important to choose a realtor who can patiently listen and answer all your questions and also someone whom you can trust.
If there are ten things to be done in the journey of buying a home, hiring a trustworthy and capable realtor should be the top thing on the list and he/she will take care of the rest. This will make your home buying experience stress-free and rewarding.
3. Zero down on Mortgage Lender
There are many types of mortgage lenders. When it comes to mortgages, you can definitely think beyond your bank. You can also ask your real estate agent to refer a lender. As real estate agents work with a lot of home buyers, they have a strong understanding of the lending market.
Get a free credit report from TransUnion or Equifax Canada.
4. Planning your Finances
Based on your savings from traditional accounts as well as RRSPs, determine a down payment amount and set it aside. Lenders will track your accounts and any large deposits from unknown sources can raise some red flags. Keep the money in your account for at least two to three months.
Get a pre-approval letter from your lender. This will give you a clear picture of the predetermined maximum price for which you can buy your home.
5. Finding your Dream Home
You have a good real estate agent. You are prequalified to buy a home. Now comes the most interesting part – finding your dream home.
Based on your affordability, your real estate agent will suggest suitable neighborhoods in the city. Once the neighborhood is zeroed down, it becomes easier to go through the properties that meet your price range and your preferences.
Your real estate agent will keep tabs on the market and will send you suitable listings every other day. Given the advancements in MLS websites, it is hard to resist surfing through the listings yourself to find your ideal home.
Pro Tip: Take a lot of notes. Record details of each home you visit so that you can review them to decide quickly. Feel free to take a lot of pictures and add notes. Always view your top choices once again to notice elements that you might have overlooked the first time.
6. Focusing on Value
When you are buying a home, it is essential to understand the features that add value to the property for future buyers. I get it, it is too early to think about selling a property that you haven’t bought yet. Since home buying is a major financial decision, it is important to think about the future too.
Although personal preferences differ from person to person, there are some elements to a property that will seem lucrative for every buyer.
For example: Hardwood floors, granite countertops, good landscaping, located in a top-rated school district, proximity to public transit etc.
Your real estate agent will have a solid understanding of the features that add value and the ones that are more of a personal preference.
7. Making an Offer
You and your real estate agent can be a great combo. In the same way, there are thousands of great combos in town eyeing the same properties as you.
When you find a perfect home that ticks all the boxes as covered in the previous section, it is important to make a purchase offer immediately. You will be surprised to find the number of buyers looking at the same property at a single time.
Check with your real estate agent for prices of comparable homes in the same neighborhoods and come up with an offer based on that.
By working closely with your real estate agent, you can make your offer stand out from the rest. The seller is going to sell his property to a lucky buyer, and it could very well be you.
8. Closing Procedures
While the down payment is usually expressed in the form of a percentage of the purchase price, the closing costs cannot be determined easily. It may run up to 3% of your loan amount.
To avoid paying private mortgage insurance, you need to pay 20% of your purchase price as down payment. This is apart from the closing costs.
Most of the first-time home buyers may find it difficult to put up the 20% down payment. Hence, they go with the minimum requirement of 5% down payment or 10% depending on their finances.
Once your purchase offer is accepted, closing phase starts. It is one of the crucial parts in the home buying process and involves a lot of due diligence from the buyer’s side.
Your real estate agent will help you with a tailored inspection checklist depending on the type of the property and can also refer reliable home inspectors.
Get a detailed list of closing costs from your lender. Go over it and feel free to negotiate with the lenders to remove certain charges.
Pro Tip: After the inspection, you will have a list of problems that requires the fixes. Get a detailed quote from the service providers for fixing all the problems. You can negotiate with the seller to deduct those costs from the sale price and you can get started with the work after the purchase is finalized.
- Turn on and verify every faucet
- Make sure all the electrical appliances are working perfectly
- Check smoke detectors and carbon monoxide detectors
- Test the heat and air conditioning
- Plug something into every outlet of the house and check if it’s working
As a full service realtor, I will help you navigate the home buying process with ease and will make sure you take well informed decisions at each stage of the process.
Are you a first-time home buyer? Here’s everything you need to know about the First Time Home Buyer Incentive.