The housing market in Canada has seen some fluctuations recently due to the COVID-19 pandemic. With record low interest rates, more people, including many of the younger generations, are taking advantage of this opportunity to purchase their first home.
But how do you buy a house? If you are new to buying real estate — specifically in Calgary and Kelowna — you may not know where to start. We’ve pulled together a step by step guide for buying a home so you can close with confidence.
Step 1: Get Prepared and Organized
Pay down your debts
Existing debts can have an impact on your home buying journey. Lowering your debt levels can have positive impacts on your credit score, your debt service ratios, and how much your lender will lend you.
Check your credit score
Checking your credit rating allows you to see where you may fall on the scale before submitting a mortgage application.
During the process there will be documents requested that you will need to provide including:
- Government-issued photo identification
- Proof of employment and income
- Proof of a down payment and where it will come from
- Other sources of income like investments or business income
- Savings and investment statements for the past 90 days
- If you are planning to use the Home Buyer’s Plan, proof of withdrawal from your RRSP
- If you are using a financial gift from a family member, you’ll need a letter stating the gift is not a loan
- A voided cheque
- An inventory of all other debts and assets like cars and car loans
Step 2: Get a Real Estate Lawyer
A real estate lawyer provides legal counsel along the process of buying a home. They can help you at all stages of the process including:
- Helping you to apply for a mortgage
- Answering questions you may have during the process
- Reviewing documents, such as the purchase agreement and certificate of title
- Protecting you legally
- Finding resolutions for unexpected delays or added expenses
- Ensuring that the transaction is handled in a timely manner
You may be asking yourself, do I really need a real estate lawyer? Yes, yes you do.
In fact, in Calgary, and in all of Alberta, you are required to consult with a lawyer when buying a home. A lawyer will ensure that everything is legally binding when transferring property. And with the competitive market in Kelowna, it’s highly recommended to work with a real estate lawyer to gain a competitive edge.
Step 3: Get Pre-Approved
This step is not mandatory, but it’s strongly recommended to understand exactly how much you can afford. This process is free (aside from your time) and it also provides you with:
- The opportunity to explore all the rates and lenders available
- Knowing the maximum amount of a mortgage you could qualify for
- Your estimated mortgage payments
- A locked-in interest rate for 60 to 120 days, depending on the lender
Note: Mortgage pre-approval does not guarantee financing when you submit an offer.
Step 4: Get house-hunting! (the fun part)
At this stage, it’s highly recommended to find and work with a realtor. They are the experts and a great resource to help with finding a home, making recommendations based on your needs, and booking showings (in fact, some sellers may not schedule bookings without an agent!)
When searching for a house, there are several things to consider:
- Location: where and what type of community do you want to live in? Do they have good schools? Close to transportation? What are the demographics? Crime rate?
- Type: What type of house are you looking for? Single Family? Row or Townhouse? Condo
- Size: How much space do you need? How many bedrooms do you need?
- Features: What are your must-haves in a home? What are nice-to-haves?
- Expenses: What would your monthly expenses be? Strata fees?
- Future: What will you need for the future? More bedrooms? A nanny suite?
Take your time to do your research and don’t allow yourself to feel rushed or pressured into any quick decisions. However, in this competitive environment, you also have to be prepared to move quickly.
Step 5: Get in your offer, and seal the deal!
You found your dream home and now it’s time to make it yours! Working with your realtor and real estate lawyer, submit an offer to purchase. This will include the price you are willing to pay, any subjects (such as financing and inspection), as well as your closing date (when you get the keys). This stage you may go back and forth on revising your offer or it may get accepted. Once your offer is accepted, you will send the seller your deposit and arrange to finalize your financing and set up a home inspection.
This step usually takes 30 days or more, based on the closing date in your offer. Once everything is completed, your real estate agent will hand you your keys and you are officially a home-owner!
Book a free consultation today to discuss your home purchase and how we can help you buy the home of your dreams!