Calgary Realty Team First Time Buyer page!
First Time Buyer
It is common knowledge that for most people purchasing a piece of real estate is the most substantial financial endeavor you will ever be involved in. Knowledge about real estate varies from person to person, especially in regard to first time buyers. That is why we have developed this page to include
Enjoy your purchase!
- Some suggestions for the process
- Tips for first time buyers
- Costs involved when purchasing
1. Some Suggestions
Before You Begin Searching For a Property
- Get Pre-Approved, this is a crucial first step as it defines exactly how much you can finance and lays out your financial map for the purchase process. It also gives confidence to the seller when making an offer as it shows financing wont bog up the transaction.
- When getting Pre-Approved, highly consider using a mortgage broker as opposed to a bank. They have access to many different lenders and can usually find better terms than through the limited options a bank has. Best of all in almost all situations you pay nothing to get pre-approved.
- Budget for your expected mortgage payment, utilities, HOA fees (if they apply in the community you wish to live), property taxes etc. ensure you make a smooth transition financially)
- Research all the potential communities that you want to live. Crime stats, access to transportation and amenities, vicinity to shopping and schools etc. Click here for community information
- Be specific; think hard about what it is you are really looking for. At times there may be a lot of inventory on the market so understand what you "must have" in your future home and what you "want to have". Separating these two ideals will help make the final decision easier on you.
- Be Realistic, Know what is within your means and understand that everything you desire in your first home you may not get. Compromise is not a bad word when it comes to purchasing real estate. (Your pre-approval will assist in helping you set realistic expectations)
- Consider this purchase an investment, think about re-sale and seek a property that has good present and future value. (This can be determined in relation to condition of the property, location, ability to improve (renovations or building additions)
- Find a Realtor that you feel comfortable communicating with, there are a lot of considerations to be taken into account and a good Realtor can make the process much more enjoyable. (Best of all is since commissions come from the property you pay nothing to use the services of a Realtor!) Why choose a Realtor® Click here
When You Are Ready To Start Looking
- Provide you’re chosen Realtor with all the necessary information pertaining to your purchase. Your Realtor should ask you for all the details you outlined for yourself before contacting them.
- Create a number system for your own tracking such as a 5 number system where you would rate an ideal property a 5. All other properties would be rated somewhere below 5, keep track of the homes you view that are a 4 or 5. This is helpful in have great comparables to help you decide when you find the home you want to place an offer on.
- Be vocal about your likes and dislikes when it comes to viewing homes. You may feel as though you will come off sounding negative, but it is fundamental in finding the right home to let your Realtor know what you like and dislike.
- Spend some time in the houses that you view. Even if you walk in a house and know it’s not for you, walk around and constructively analyze what exactly you don’t like, this is beneficial as it helps solidify in your mind what exactly you are looking for.
When You Find the Property You Want to Purchase
Once you know you want to make a purchase your Realtor will work closely with you to ensure you make an informed purchase. Part of your Realtors job is to ensure due diligence in the sale to protect your best interests.
- Don’t buy on emotion. Ensure you are not putting an offer on the house simply because you want to own a home, make sure the benefits outweigh the costs of the purchase
- Have strong exit clauses in your offer, this will ensure easy withdrawal without penalty if you want to back out, or because you have found an issue with the home. I.e. Home inspection, "subject to viewing" etc. Consult your Realtor® for a strong and secure offer.
- Don’t bring your emotions to the offer process. It is quite easy to become irritated or even angry during the offer/counter offer process, keep in mind you and your Realtor are working together to ensure you get the best value possible. You want to be clear and fair in negotiation, the sellers’ interests must be taken into account as well, and you will get much better results by considering the sellers’ position and interests as well as your own.
- All agreements are negotiated by a combination of price and terms, if you want a low price consider what potentially you could offer the seller in the terms of the agreement. I.e. instead of justifying wanting a low price because the carpet is in poor condition, justify your price in terms of the cost of replacing the carpet. (Your proficient Realtor will be invaluable in these negotiations)
Once the Offer Has Been Accepted
- Once you and your Realtor have successfully negotiated your offer and it has been accepted, make sure you are aware of all the important dates in the near future. I.e. if they apply; home inspection, possession date, appraisal etc.
- IMPORTANT BEFORE YOUR DEAL CLOSES**Make sure that you do not make any purchases that would involve your credit at all! even a small purchase that you finance (living room set from the brick) can affect your ability to purchase the home and can sometimes cause deals to collapse.**
Once the Deal Is Closed, Making a Smooth Transition
- First and foremost, celebrate! Congratulate yourself and your spouse (if applicable) on completing your first real estate purchase.
- On or before closing day, your lawyer and the seller's lawyer will arrange to transfer title of the property from the seller to you. The mortgage money will be transferred to your lawyer's trust account, and then to the seller, and your lawyer will bill you all additional expenses such as land transfer taxes or outstanding legal fees.
- Contact all of your vendors and notify them of your new billing address (credit cards, cell phone bill, Cable etc.). Also make arrangements to have your providers come in a day or two after possession to install cable and home telephone.
- Plan your move, if you have close friends this is the time to put them to use! Let them know ahead of time what your move day is so they can schedule it if they are able to assist. Pre- pack before possession day to expedite the move, and pre book a moving service if friends are unavailable. (For most first time buyers this is an un-necessary cost, as you will have far less to move than in a re-sale situation)
Welcome home!
- Breathe a sigh of relief and content, you made it!
- Don’t forget to put the garbage out on garbage day
- You may want to set your thermostat to reduce heat when your not home (save $$$)
- Don’t forget to lock the doors, close the windows, and shut off the lights when you leave
- Enjoy living more independently!
2. Tips for first time buyers
- If you are currently renting, try to practice mortgage budgeting i.e. if your rent is $1200, calculate the estimated mortgage payment that you plan on paying given the price of the home in your sights. If the payment is more, lets say $1500 (include what you would normally pay for utilities) try putting the extra $300 dollars in a separate savings account when you pay your rent. This will make the transition easier when you take on a higher monthly payment with a mortgage. (Depending on the purchase price you may not have to go above what you currently pay for rent).
- Take advantage of first-time homebuyers' tax credit, this credit is small but will allow you to receive up to $750.00 in credit on your income tax. For more information on the HBTC click here.
- If you have poor credit and find that you cannot qualify for a mortgage, consider other alternatives to traditional financing. One popular option is a "rent to own" or "lease option", in these situations you are able to pay a deposit on a particular property, then (as stipulated in the agreement) you will have a timeframe to get your credit and other financing considerations in check so you can qualify for the mortgage down the road. I.e. 4 years from now. This option is becoming more popular, one of the reasons is there is an immediate feeling of ownership, and you have the first right of refusal to purchase that property after the set timeframe allowing you "rent" a home knowing you can purchase it if you so choose to (also knowing what your purchase price will be as it is fixed in the option agreement. ** for any questions regarding Lease Options, send us an email, we can assist in these situations**
3. Costs involved when purchasing
It is important to budget for all the costs incurred with the purchase of real estate, these costs will include some or all of these costs:
One time costs
- Appraisal fees
- Mortgage broker fees
- Home inspection
- High ratio mortgage insurance premium
- Interest adjustment, Mortgages are normally calculated from the first of each month, if your closing date is the same as the beginning of your mortgage, there will be no adjustment. However, if your closing date is September and you move in on august 15, those last 15 days are the interest adjustment period. Your lender will expect you to cover the cost of the interest during that time.
You'll also have to reimburse the seller for the unused portion of any prepaid property taxes or utility bills.
Monthly costs
- Mortgage payment
- Utilities
- Maintenance
- Insurance
- Property taxes
It is important to budget for both one time, and monthly costs. The one-time expenses will take the largest amount from your pocket book.
If you would like some assistance finding your first home, remember you DO NOT pay for real estate fees so we can assist for no out of pocket expense to you. Our entire team working for you worry free, hassle free, and with your interests in mind.
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