Seven Steps To Buying A Home
At Raj Gera - Dominion Lending Centres, we understand that turning your dream of homeownership into reality can be quite a challenge. Navigating the process of homebuying can be viewed as a stressful or difficult task, but with a little preparation, you can purchase a home easily.
As an expert in the mortgage industry, I’ve created a handy checklist to help you complete the process of homebuying with as little stress as possible. Follow our seven steps to buying a home to make sure that you get the best mortgage and real estate experience possible.
Step 1: Down payment
The hardest part of buying a home is saving for the down payment, a gift from your parents’ bank account also works.
- For purchases under $500,000, the minimum down payment is 5%.
- If you’re buying a home that costs between $501-999,000, you need 5% on the first $500,000, plus a 10% down payment for anything over $500,000.
- If your home costs over $1 million, you need a 20% down payment.
- For any home purchases with less than 20% down payment, you are also required to purchase Mortgage Default Insurance.
Step 2: Strategize and get pre-qualified
Unless you can afford to buy a home with cash in hand, you are going to need a mortgage. You need to get pre-qualified, which should not be confused with the term pre-approved. The big difference is that no approval is ever given by a lender until they have an opportunity to examine the property that you wish to purchase. The bank may love you, but they also must love the property you want to buy. Pre-qualifying will focus on gathering documentation to prove the information on your mortgage application including credit, debt load, income/employment, down payment, etc.
Mortgage brokers will make sure you get a great mortgage rate. Just as important as rates are the terms of your mortgage which should include:
- prepayment options (10-20%)
They will also discuss what type of mortgage fits your current situation
- fixed vs. variable
- life of the mortgage (amortization) 25 or 30 years etc.
- payments – monthly, semi-monthly, accelerated bi-weekly
Step 3: Set your budget
Keep in mind that just because you’re pre-qualified for a certain amount of mortgage, doesn’t mean you can actually afford that amount. Prepare your own monthly budget to be sure. Typically, your total home payments (including mortgage, property taxes, strata fees and heat) should not exceed 32-39% of your gross (pre-tax) income.
Step 4: Find the right property by engaging with a realtor
Once you have been pre-qualified for a mortgage, based on your budget, you need to find a realtor.
Selecting the right real estate agent is a crucial step in the home buying process. When you work with an agent, you can expect them to help you with many things, including:
- Finding a home
- Scheduling tours of homes
- Researching the market, neighborhood, and home itself
- Making and negotiating your offer to purchase, and counter-offers
- Providing expert advice on home buying
- Handling the offer, gathering documentation and closing paperwork
I recommend interviewing at least three realtors. You will quickly get to know who has your best interests at heart and choose one that suits your needs. Do you want to deal directly with a realtor who’s going to work with directly when you go home hunting, or do you want to deal with a BIG name realtor, who has buyers and sellers realtors working under them? There are advantages to each – you need to decide what is the best fit for your situation. Get referrals for realtors from friends and family, or ask me, I have a group of realtors that I know and trust.
Step 5: Mortgage approval
Once you have found the property you would like to call home, your mortgage broker will send your mortgage application and property information to a lender that best fits your situation, based on your input. If the lender likes your financial situation and the property, they will issue a “commitment” letter outlining the terms of the mortgage. The lender will send you a list of documents, so they can verify and validate all the information you told them on the mortgage application.
Step 6: Time for the solicitor (lawyer or notary)
Once the lender has reviewed and approved all your mortgage documentation and the property documentation, your file will be sent to your solicitor (in BC, you can use a lawyer or notary). They will process all the necessary title changes and set up a time for you to meet, review mortgage documents, and sign.
Step 7: Get the keys
On the closing day, the documentation for your home purchase will be filed at the land titles office by your solicitor. Typically, the possession date is one or two days later, giving time for the money (down payment and mortgage) to get to the home seller. On possession day, you set up a time to meet with your realtor to get the keys.
Congratulations! You now own your home!
If you have any concerns about buying a home and applying for a mortgage, or you’re looking for a mortgage specialist to help simplify the homebuying process, reach out to Raj Gera at Dominion Lending Centres.
I understand that mortgages are complicated, but they don’t have to be. With access to more than two hundred lenders, I can sieve through several mortgage products to match you with the right one. I can also provide you with expert advice and guidance right from the pre-approval stage to the closing of the deal. I offer mortgage purchase, mortgage renewal, home equity line of credit, mortgage for self-employed, and several other mortgage services to Oakville, Hamilton, Burlington, Toronto, Grimsby, Stoney Creek, St. Catharines, Brantford, Niagara Falls, Kitchener, Waterloo, Milton, Mississauga, and the Greater Toronto Area.