Your First Home, Made Simple

Whether you’re buying your first home, or your fifth, the process of buying a home is a detailed, time-consuming venture here in the Halifax Region. At the same time, it’s an emotional period laden with important decisions. You want to ensure that the home you purchase meets your family’s needs now, and in the future.

Each of these decisions often involves money and you want to ensure that you don’t pay too much. I can help you become a savvy buyer, by pointing out some of the pitfalls inherent in the home-buying process. Basics include knowing what you want before you begin shopping, taking your time to shop, choosing the right realtor, and remaining objective while viewing potential homes.

First, develop a “needs versus wants” list. Your ideal home includes features you not only need, but have long desired. Yet, when it comes time to buying a home, “wants” cost more. Things like a beautifully landscaped backyard, a solarium, and built-in appliances, are usually considered luxury items, which can add considerably to the price of your home.

That’s why it’s a good idea to develop a “needs and wants” list. With this list, begin with items you really need like adequate space, a garage and the number of bedrooms. For most people, basic needs should be considered first. After that, you can consider additional desires, if you can manage these additional benefits financially.

With such a list in your hands, you’re less likely to be caught up in the excitement of the pursuit. You’ll have a good idea of what you want, whether it’s within your price range, and if you can afford additional items.

It is really important to visit your financial or lending institution prior to home buying or even shopping around. Quickly, you’ll know the amount of mortgage you’ll receive. Be sure to get a mortgage commitment in writing. This matters and is important because it tells sellers that you are a serious prospect. Depending upon market conditions, a seller may lean towards an unconditional offer. You want to be in the mortgage-approved camp! You’ll have less negotiating power if you have to wait for mortgage approval.

Banks and financial institutions have developed many programs for home buyers, whether for first-time buyers or those with equity in their homes. When you review your needs and objectives with a lending officer, you’ll be one step closer to purchasing your home.

If you purchase a home, and then get a job transfer or decide to move after only a short time, you may end up paying more money to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors having to do with the area and the property itself.

Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area where you buy your home experiences an economic up-turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

Whether the house meets your immediate needs or whether it will stand the test of time is a tricky and individual decision. Depending on how long you plan to stay in your home, you’ll need to ensure that the home has the amenities that you’ll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need in the future will help you find a home that will satisfy you for years to come.

Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing the amount you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a “home affordability” calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36” rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation. The “28/36” rule means that your monthly housing costs can’t exceed 28 percent of your income and your total debt load can’t exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we’re not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

Typically homebuyers will need money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk to a lender.

These days, a 5% down payment is expected and closing costs amount to between 3-5% depending on the property or type of property.

Maintenance, improvements, taxes and insurance are all costs added to a monthly house payment. If you buy a condominium, townhouse or other specific properties, monthly fees might be required.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

There are at least six mistakes that buyers can avoid. Read on:

• Bidding without sufficient information: What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Without up-to-date research about the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A professional realtor, can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home, and the neighbourhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.
• Buying a mismatched home: What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes home buyers buy a home that is too large or too small. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.
• Unclear title: Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.
• Outdated survey: Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbour’s new fence which is extending a boundary line, etc.).
• Unexpected repairs: For a fee of $300 – $500, a professional inspector will conduct a thorough inspection of the home. This way, you’ll have an idea of the cost of future repairs. Make the final contract subject to a favourable report.
• Shopping without pre-approved financing: It only takes a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.

I’m proud to have helped many home buyers relocate to the Halifax area from all over Canada. If you’re thinking about moving (relocating) to anywhere in the Halifax Regional Municipality, I’ll send you a Free Relocation Package full of maps, travel & tourism information, new home guides, magazines, school information, wine & golf guides, and tons of other “stuff”.

Go to my Contact page, fill out the confidential form and I’ll get that information package to you ASAP. If you have a specific interest (e.g. handicapped, special needs etc.) please add it to the bottom of the form. I’ll do what I can to find information and include it in the package.

I’ve lived here all my life and know the place like the back of my hand. I can answer any and all of your questions. Just ask!

Having been on the “The Brookfield IRP Preferred Vendor List” for many years and currently active on the suppliers list, I will ensure your transition is efficient and smooth. Over the past 10+ years, I have moved many members of the R.C.M.P and the Canadian Armed Forces. And, having served in the Canadian Armed Forces myself, I understand the unique needs of military members.

Just go to my Contact page and let’s get started finding your perfect home.

It doesn’t cost a dime. Our free Relocation Package includes:

• Land registration information
• Buying a home brochure
• Typical closing costs
• Tourism CD
• Airport Information
• Area Map
• Agent Brochure
• Frequently called numbers
• Useful websites
• CMHC/Bank Brochure
• Sample Contracts and Forms
• Agent Contact Information