For many people, the decision to become a home-owner is not an easy one. There are many reasons why people are hesitant to jump into home ownership but part of the reluctance can be the home-buying process itself. Uncertainty regarding down payments, interest rates, and surveys is common but the bigger question is often “where do I begin?” To assist those of you who are considering owning a home, here is a brief summary of the process.
Building Your Real Estate Team
One of the best ways to begin your home search is to surround yourself with real estate professionals who can help guide you through the process. A mortgage professional will be able to work with you to determine the amount of mortgage you could qualify for; a realtor will assist you in finding that perfect home and preparing an offer; a lawyer will advise you on the legal issues associated with your purchase and register the deed. More importantly, your real estate team will answer your questions to put you more at ease.
Finding Your New Home
After working with your realtor and mortgage professional to determine your budget and the type of property you are looking for, the next step is finding the home. For most first-time buyers, condominiums are an attractive option since they are generally less expensive than other types of properties. However, if you are considering a condominium, you should speak to your realtor and/or lawyer to ensure you understand how they work before making an offer.
Once you find a home you are interested in, you will submit an offer to the seller. The offer will consist of numerous items, such as the purchase price, the closing date, items included (e.g. stove, dishwasher, washer and dryer, etc…), and conditions. There are numerous conditions that can be included in the offer, but two of the most important are financing and inspection (if the property is a condominium, a status certificate condition is also vital). While it may seem like a financing condition is not necessary if you have already received a mortgage pre-approval, you should still consult with your mortgage professional (the potential lender could determine the property is worth less than what you are offering, which could result in them lending you less than what you were pre-approved for initially). Conducting an inspection is also crucial to ensure there are not any serious issues with the home (such as major leaks or foundation problems), which could result in extra costs in the future that will be your responsibility. Prior to making the offer, it is also important to get as much information as possible about the property so you can make an informed offer. For example, if the listing agreement mentioned that the basement has been finished, you may want to have a provision in the offer where the seller represents and warrants that they obtained the necessary permits and inspections for the work that was done.
After submitting the offer to the seller, the seller will accept, reject, or counter-offer. If you and the seller can agree on all the terms and sign the offer, you can then begin to satisfy your conditions. Assuming you have satisfied all your conditions and are ready to proceed, you will sign a document indicating as such and the deal will be firm.
I Bought A Home… Now What?
Once the deal is firm, there are still some items for you to work on prior to closing. Your lawyer will need information about you (e.g. date of birth, spousal status, how you are going to be registered on title, etc…), your mortgage, and the property (e.g. how old is it, what changes have been made to it, etc…) so they can begin to prepare the necessary documents. This information will also allow your lawyer to perform the necessary searches and advise you as to the cost for legal fees and disbursements. In addition to legal fees and disbursements, there may be additional costs on closing for pro-rated property taxes (i.e. the seller has already paid property taxes for the year but you are moving in before the end of the year) and land transfer tax. Luckily, as a first-time homebuyer, you will get a $2,000 credit toward the land transfer tax payable. During this time leading up to the closing date, you should also be finalizing the details of your mortgage with your lender and arranging for property insurance for your home.
Shortly before closing, you will meet with your lawyer to sign the closing documents and bring in the necessary funds. Once the transaction has been completed on the closing date, you will receive a phone call to let you know your keys are ready and that you are now the proud owner of a home!