How to Start Looking for a House
1. Preparing to Buy
Preparing to buy a home can be intimidating, especially if it's your first time. I often find home buyers who try to go at it alone think they are ahead of the game and outsmarting us all... only to quickly become overwhelmed with everything that's involved in buying a home, not to mention being left alone if something goes wrong because they don't actually have any representation on their side (HINT: There is more to a buyer agent than just finding and showing houses). Here is a compiled list of stages on how to start looking for a house. I've put this together to help you buyers out there in the beginning stages of looking for a home, however, aren't quite ready to reach out to a professional for guidance just yet.
Make Sure You’re Ready
Buying a home is not something to take lightly. After all, this may very well be one of the largest financial transactions of your life. Being prepared mentally, emotionally, and financially are a must before you dive right in.
There are only a few other things that can match the pride of home ownership. But remember there are responsibilities and sacrifices that must be made. The very obvious long-term financial commitment and the required care and maintenance throughout the time spent living in your home. You'll want to make sure these are things you're willing and able to take care of in one way or another.
Status of Your Bank Account
As I mentioned, buying a home is likely to be one of the largest financial transactions of your life. These steps are what we cover with each and every buyer we meet. By reading this guide, you'll have a headstart when it's time to reach out and hire a professional.
Everyone has an idea in their head for their dream home, so it's important to save up some money and manage any debt before making that dream come true. In a few seconds, you can have an idea of what you can afford by using this simple Affordability Calculator. First and foremost, your top priority will be getting a mortgage pre-approval. Contact me for a list of our trusted mortgage brokers used by our clients to get started on your pre-approval.
Is Right Now a Good Time to Buy?
Markets are always going up and down, and no one can predict the future. What we do know at this moment of writing are that prices continue to rise here in the GTA and interest rates continue to go up. That may change tomorrow, but we work with the data we have today and from the past, and not what we might have tomorrow. If you’re buying a home as a long-term investment (and for long-term enjoyment, growing a family and building memories), you should be protected from those short-term changes in the market you see constantly in the headlines. Instead, focus on picking a home that meets you and your family’s needs and buy when you have the ability to. The best time to buy is when you can.
Decide What You Want
Where Do You Want to Live?
It doesn't matter if you're new to the area or lived in one place your whole life, we can help you navigate homes in the areas that best suit your needs and lifestyle. Are you looking to be downtown, close to the action, work, public transit? Or are you okay with a commute from the 'burbs or from the outskirts of town? Whichever type of neighbourhood you're after, we are here to help and share our expertise and local community knowledge.
What Type of Home do You Want?
Whether you’re building a new house or moving into a previously enjoyed home, we can help narrow down the type of property to meet your needs.
The most common types of homes in the GTA are:
It's important to note that not all homes are created equally. Each neighbourhood features different styles, quality, and price points all depending on age, location, builder, upkeep by the current owner, etc. For example, thinking of a condo apartment? Don't buy solely based on a single unit you see. It may be perfect. but the management, neighbours, owners vs. tenants ratio, concierge/security, and many more factors could make or break your condo ownership experience. While most are fine, there are some we would not feel comfortable putting our clients in.
Know the Current Market
As you may already know, the real estate market is an ever-changing environment. Below are some common terms you'll hear and what they mean.
Lots of buyers looking for homes but too few for sale to meet demand. (0-3 Months of Inventory. Pretty much all of the GTA right now except for a few areas).
An equal amount of buyers to sellers, this is what a normal stabilized market looks like. (4-6 Months of Inventory).
More homes for sale than there are buyers. (6+ Months of Inventory).
Historically speaking, the winter months tend to be slower in most markets while in the spring sales ramp up. Although there are fewer options in winter, typically only motivated sellers are listing. Mix that with fewer buyers and you get lower prices. When spring hits there will be more inventory but on the flip side more competition amongst buyers which drives prices up.
2. Plan Your Finances
What Can You Afford?
Knowing what you can afford and being prepared also means understanding that expenses go beyond the purchase price.
Cost of Buying a Home =
|One Time Costs||Monthly Costs|
-> Down Payment
-> Legal Fees
-> Title Insurance
-> Inspection Fees
-> Land Transfer Tax
-> Moving Costs
-> Property Taxes
Unless you're paying cash (lucky you) then you'll need to secure a mortgage. Getting a pre-approval is an absolute must before you seriously start house hunting. Use this handy affordability calculator to help estimate your mortgage payments.
What do Lenders Look For?
Gross Debt Service Ratio (GDSR)
Monthly housing costs should be under 32% of your gross monthly income (before tax).
Total Debt Service Ratio (TDSR)
Your TDSR should not exceed 40% of your gross monthly income (these are your monthly financial obligations such as car payments, loan payment, etc.).
After using the affordability calculator to get an estimate of what you can afford, plug the number into this mortgage calculator run it through different scenarios to get an idea for a monthly payment.
How to Arrange a Mortgage
Talk to everyone
There are many banks, credit unions and other lenders out there who will gladly provide you with a mortgage. Talk to everyone you can and gather as much advice and information as possible. We have several highly recommended mortgage brokers our clients have used in the past. Contact me today for their details.
A great option if the seller is willing to have you take over a low-interest mortgage. There are several factors involved so be sure to speak with your mortgage agent on what's best for your situation.
Be sure to have your downpayment ready to go. The larger the down payment the smaller mortgage.
If you’re a first-time homebuyer with money in an RRSP the Home Buyers' Plan allows you to withdraw up to $25,000 without paying income tax. Provided you agree to pay it all back within 15 years.
Documents Needed For Mortgage
- Letter of employment
- List of your assets (your car, stocks, bonds, GICs, etc.)
- List of your liabilities (car payments, student loans, credit card debt, etc.)
- Social Insurance Number
- Your chequing account number
- Your lawyer’s contact information
- Information about the house you want to buy
3. View Properties
Meet the Getting You Home Team
We sit down with you to discuss your wants and needs, determine your price range, and answer any questions you may have about the area(s) you’re interested in. This is a casual, no pressure get together with open discussion. We can also provide access to exclusive listing information, preview properties on your behalf and much more to ensure we save you time, money, and keep things as stress-free as possible.
See What’s Out There
The internet will be your main resource for home searching, however, when you trust the Getting You Home Team to be by your side, we exhaust all of our resources to find your new home. That includes talking to private sellers, access to exclusive listings, contacting our large network of homeowners and agents to get the heads-up on listings before they hit the market, door-knock, and more.
As a REALTOR® we have direct access to MLS® Systems operated by local real estate boards and associations. REALTOR.ca is the publicly posted information for listings from MLS®. The only downside is there is a 1-2 day delay from the MLS® System to REALTOR.ca, so many homes (those good deals buyers are after) are sold before they even reach the public eye.
We can set you up with daily or even hourly alerts through our systems for homes that match your criteria so you'll know first of any home hitting MLS®.