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Home Buying

A Step-by-Step Guide to Buying Your First Home

June 04, 2006

For many of us, buying our first home is a major life planning goal.Many 1st time home-buyers’ find the prospect of buying their first home to be a daunting task. Outlined below is a step-by-step guide to buying your first home.

Step 1: Pre-qualifying

Contacting your financial institution to pre-qualify for a mortgage allows the opportunity to shop with confidence and limit your house search to homes within your price range. Pre-qualifying also locks in your rate for up to 120 days which protect you if rates go up.

Step 2: Finding the right home and making an offer

Using a professional realtor is recommended and their services are free to home buyers. Realtors have access to Multiple Listing Service which allows them to shop the entire market for the right home. The more specific you are, the easier it is for the realtor to find the right home. Realtors also help with the Real Estate Purchase Contract by negotiating purchase price, conditions and other items.

Step 3: Property inspections

Buying a home is the largest investment most of us make - so spending $300+ on a home inspection “to check what’s under the hood” is recommended. A home inspector provides a written report on everything from foundations to electrical to cosmetic repairs. Most home inspections detail repairs that should be done in the short, medium and long term allowing the buyer to plan for future expenses.

Step 4: Confirming financing

Finding the down payment is usually the biggest challenge for most 1st time home buyers. The financial institution will want to verify the source of the down payment which could include Registered Retirement Savings Plans (RRSP), savings, inheritances, gifts and loans. It’s recommended to have at least 1.50% of the purchase price available for closing costs to cover appraisal, inspection and legal fees as well as moving expenses. Financial institutions will also want to verify employment, usually via an employment letter and check out your credit record. Additional documentation will be requested if self employed, and for condominium, acreage and construction purchasers.

Step 5: Legal

The next step is a trip to your lawyer who usually represents you and the financial institution. Your lawyer reviews and prepares documentation, advises you of your rights and responsibilities and ensures the mortgage is properly registered for the financial institution.

Step 6: Organizing your move

There’s an old adage - the second worst thing that can happen to you is moving. Besides packing, storing and moving, it’s important to arrange and notify utilities and provide change of addresses. It is also recommended that you arrange to change the locks of your ‘new’ home as the previous owner could have distributed keys to a variety of neighbors, friends and relatives.

Step 7: Repaying your mortgage

Most financial institutions offer effective ways to pay off your mortgage faster including weekly, bi-weekly, semi-monthly and lump sum payments. The lender will insist on fire insurance to protect you and the FI’s interest in the event of a fire. The financial institution will also discuss payment protection in the case of an unexpected death or illness.

Buying your first home is an exciting event in most people lives. I encourage you to contact our staff at the Christian Credit Union to help you with the process.

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