Is it your first time buying a house? Are you stumped on where to start? Don’t panic. We have the ultimate checklist so you can do a thorough rundown on what you need.
Buying a home for the first time doesn’t have to be complicated. Just make sure you have a plan and a budget in place. Let’s take a closer look!
Get That Mortgage
You will likely need to apply for a mortgage. A mortgage is a loan you take out from a bank or through a broker so that you can afford a home. In the years to come, you pay off your mortgage. Most aim for a 5-10 year term. And don’t worry, you can always renew it (but be aware that interest charges may change).
To afford a mortgage, you will need to have proof that you can afford it. The bank will likely want to take a look at your income, other debts, credit card rating, and living expenses. The best thing you can do as a first-time buyer is to pre-apply for your mortgage. This ensures you are eligible before you start browsing homes. We also suggest shopping around. Check out different rates. Don’t settle on the first one you find.
Be Aware of Extra Costs
When planning your budget, you will want to take into account all the costs involved in buying a home. Plan, while keeping the following in mind:
- Appraisal Fees: Most people don’t know about this one - until they are ready to buy. It typically ranges in price from $300-$500. But it helps determine the worth of your property. Plus, it pays a role in your mortgage approval.
- Property Taxes: These are typically included in your closing cost rate. But make sure you are aware of them so it doesn’t come as a surprise.
- Utility Fees: Get ready for those monthly bills. You may also have charges to pay from use of the previous owner - that is, if they transfer their account to you. Either way, make sure you contact your utility provider and have everything set up before your move-in date. Ask about any upfront fees or costs.
- Furniture Costs: New home? You likely need to buy at least a few items to fill it. Plan this into your budget!
- Home Inspection Fees: Any home you are thinking about buying is a good idea to get inspected. The last thing you want is to buy a home with hidden repairs or even, mold. A home inspection costs $300-$600 and can save you a huge peace of mind, plus money down the road.
Other costs and deductions that are worth researching include tax reductions. Buying your first home entitles you to a variety of credits. Plus, who doesn’t like tax breaks?
Make Sure You Have a Down Payment
While this may be obvious to some, it’s an important point to note. The down payment is the payment you put down on your home. You likely don’t have enough to cover the total cost - which is where a mortgage comes into play. But you will have to put a lump sum of money down to finalize the deal. In the United States, down payments for home purchases typically vary between 3.5% and 20% of the purchase price.
Get Home Insurance
Your home is probably the biggest purchase you will ever make. Insurance protects your investment. It protects you from robberies, fires, or any other structural damage. Make sure you shop around for insurance and read the fine print. Weigh the pros and cons of different options. Then, determine what is best for you.
Now, it’s time to get house hunting! Get ready for some possible bidding wars. And make sure when house hunting to keep things in mind, such as location and amenities. Happy hunting!
Kurtis Forster is a real estate agent for Team Forster in London, Ontario, Canada. He brings a wealth of knowledge and expertise about buying and selling real estate.
