So you’ve decided to purchase your first home or maybe you’re ready to upgrade to a new one. Here are a few things to keep in mind before you take that next step.
1. Get a Pre-Approval
Get in touch with your mortgage broker before you start shopping for your new home. Make sure your finances are in order to purchase the new property. Many things could have changed since your last purchase or pre-approval – maybe you purchased or leased a new vehicle, you took on additional debt, your credit score could have changed for better or worse. All these things will come into play when getting approved for a new mortgage.
2. Have Your Deposit Ready
You will need an upfront cash deposit when you make an offer on a property. This can range from a few thousand dollars to 5% of the purchase price. The deposit will be held in the listing brokerage trust account until the final closing and applied towards the purchase. You should try and have at least 20% saved as a down payment to avoid CMHC premiums.
3. Additional Closing Costs
You should have additional funds set aside for the various closing costs in addition to the down payment funds. These include the Land Transfer Tax, Legal Fees, Appraisal Fees, Inspections, and Moving Expenses. If your mortgage term is not up on your existing property, you should take into account any penalties involved to break the mortgage. Also, check to see if you’re able to port the existing mortgage to the new property.
4. Get In Touch With Your Lawyer
If you don’t know a lawyer that specializes in real estate, I suggest you ask your realtor to recommend a few and choose the one you’d like to use for the purchase. There are times when a lawyer may be required when reviewing the offer to make sure there are no surprises at the time of closing.
5. Find a Good Home Inspector
The home inspection should be a standard condition on an offer. I would highly recommend getting an inspection done, especially on the purchase of a house. You will usually have 5 days to waive this condition, so make sure you have a home inspector ready to go. The inspection can cost up to $500, but it can save you thousands of dollars if there is a MAJOR problem that is discovered during the inspection – at which point you can decide to not go ahead with the purchase or open the lines of communication to re-negotiate the offer.