Home buying advice for first timers
How to make sure your first home buying experience doesn’t leave you penniless.
The biggest do-it-yourself project for a growing number of Canadian homeowners has become the house purchase itself. The 2011 TD Canada Trust First Time Homebuyers Report found that many Canadians are doing it completely on their own, with 45 per cent saying they will be buying their first home independently (rather than with a co-purchaser).But its always advisable to hire services of relevent professionals in real estate to make your dream come true.
Home prices are up across Canada. The Canadian Real Estate Association reports the national average price for homes sold in May 2011 was at a record $376,817, up 8.6 per cent from the same month last year. The increase was largely due to historically high sales activity in selected pricey Vancouver neighbourhoods, and broadly based price gains in Toronto, where supply remains tight relative to demand. If Vancouver sales are excluded from the calculation, the year-over-year change in the national average price amounts to 5.6 per cent; excluding Toronto and Vancouver, prices are up 3.7 per cent.
Rising home prices and tighter mortgage rules are making it harder for first time buyers, and while going it alone is possible, it takes careful planning and advice. You’ll want to ensure, for example, that the mortgage you take on allows room in your budget to set some money aside for the future, because should your financial situation change, you are the only person legally responsible for the mortgage.
Here’s some advice for first-time homebuyers going it alone:
- Buy the house that fits your budget. Better to have a smaller house within your means than a pricey house that forces you to give up your lifestyle. Canada Mortgage and Housing Corporation’s guidelines on affordability say housing costs should not exceed 32 per cent of your gross monthly household income. Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this should also include half of your monthly condo fees. Your total monthly debt load should not be more than 40 per cent of your gross monthly income.
- Build your team. Have your real estate agent, lawyer, home inspector and mortgage lender lined up well in advance. This will save you time and enable you to make an offer if you see a property that you like.
- List your needs and wants and then provide it to your agent. This will help you focus on the property you want and will save you time when viewing homes. Decide which areas you might be willing to compromise on.