Purchasing a home is still something many hard-working Canadians look forward to. As the millennial generation matures, more and more are looking to sign on the dotted line and get a mortgage. While this can be an exciting time, it can also be a very stressful process — one that should be carefully thought through, evaluated and discussed with advisers, lenders and family.
There are a few things I’ve learned that are worth keeping in mind before you start the home search process:
1: You can’t put a price on being prepared.
Start by creating or finding a good home buyer’s checklist. Review it and add to it as part of your research. Also, ensure you have set aside time to do your proper due diligence.
We all want to believe we know the game. We might have an understanding of what to look for and what questions to ask, but being fully prepared, understanding your needs vs. desires and knowing your financial position and mortgage qualifications will help eliminate stress and allow you to easily move forward once you have purchased. This applies to both a new home purchase and a resale one.
With more and more properties being listed privately, including listings for new homes, you need to understand the little details that can end up costing thousands of dollars if you’re unprepared. While a Realtor can be of great value on a new or resale home, builder sales centre consultants can also provide you with valuable insights and information on the buying process.
There are lots of Realtors and new home builders out there, so you’ll want to do your homework. Start by interviewing realtors and/or get referrals, as a good representative can answer many questions and even save you money.
There are many others who are part of the purchasing process and can help you along the way, such as home inspectors, lawyers, and lenders or mortgage brokers. Identify them early and engage them during your house hunting journey.
2: Know your financial limits.
You already have a solid job with time in, you have established a good credit rating, you have been saving for a down payment and you have a bank you deal with. Get in to see your lender early and get your pre-approval amount from the bank (or banks — it’s good to shop around) to understand what you will qualify for in purchase price and mortgage payments.
If your pre-approval exceeds what you thought, it doesn’t mean you need to go out and purchase a more expensive property. You certainly don’t want to be stuck with a mortgage that, ultimately, you can’t afford.
3: On a new home purchase, make sure you have a warranty. On a resale home, make sure to get an an inspection.
Most new home builders in Ontario are registered with Tarion, the Ontario New Home Warranty Corporation. Tarion backstops your builder if a warranty matter is not corrected. A word of caution: some smaller builders are not registered. You should check Tarion’s website for registered builders.
On a resale home, have an inspector do a thorough review of the home and advise you of any potential risks or concerns. Any excess work can then be negotiated in the offer. Also, speak with your insurance company to determine the level required and limitations on coverage.
4: In a hot market (like Ottawa), be prepared to move fast.
It’s amazing how quickly listings come and go. Some houses have a sold sign up even before you knew it was listed (the advantage of working with a Realtor). New home sales have people camping out one or two days in advance of a release to get the house and lot of their choice.
Sometimes you are outbid on a property. But be patient; having done your homework, you will be prepared and should be in a better position to react to something you want and can afford.
5: Go with your gut.
You know how the saying goes: Our gut is often our best defence during times that require critical decisions. If something doesn’t feel right, ask questions. Learn to speak up and ask lots of questions when going through the home-buying process. Don’t be embarrassed to point things out or bring things up that don’t make sense to you. Ask for clarification on items you need more information about.
Once you sign an agreement and close on the property, unidentified problems are now yours. In many cases, a seller will fix identified items or negotiate on the price, allowing you to address such concerns after closing.
6: Never be afraid to walk away from an opportunity.
A mentor taught me a business lesson very early in my career: “Never be afraid to walk away from a deal if it doesn’t feel right. You haven’t lost anything at that point.”
Buying a home is going to be your largest investment and an investment you may have for many years. There will be many options available to you and while some may be amazing, they could be out of your price range.
Having the strength to say no to what you can’t afford or to something that is missing that one thing is a difficult practice but one that could protect your long-term investment. Sometimes, walking away could help with future negotiations.
7: You are going to get lots of opinions, so…
One of the hardest things to do is to sit and listen to all the insights and wisdom of those around you. Most of the time, family, friends and associates have kind intentions, but once you sign on the dotted line it’s all your responsibility.
Far too often, opinions can be conflicting and confusing. You start second-guessing yourself. That is why you need to be prepared. While asking for feedback can be helpful, remember to trust your own gut and follow through on the homework you have undertaken for yourself.
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