Being a first time home buyer is exciting and stressful all at the same time. On one hand you are embarking on an exciting journey where at the end you will become a first time home owner. Having never owned a home before you can't wait to move and make your home your own. At the same time it is terrifying for those same reasons. Maybe you've never had all the utilities to pay, you've never had to pay property taxes, when your toilet breaks down now it will be your responsibility to fix it. All of these things add stress.
On top of the above issues, there is another whole pile of stress that you are going to have... When you are out looking at houses as a first time home buyer you will most likely look at dozens of houses and each one will be different in its own way. It's going to seem like it is taking forever. Once you find the house you like and are ready to put in an offer, everything is going to seem like it speeds up to a mile a minute. Sit back and enjoy the ride. Here are the steps that you will take as a first time home buyer ready to buy a house:
Submit an offer to purchase
It's funny. When buying a home for the first time, second time or third time (or really any number) we want the lowest possible price on the house. When we sell our home we want the highest possible price. This is really important to remember when buying a home. First time home buyers especially have a false sense of reality of "how much of a deal" they can get when buying their home. In many cases it takes two or three attempts for a first time home buyer to gain the experience necessary for an offer to be accepted. I say this because many first time home buyers believe they're going to go in there and make an offer 10's of thousands of dollars under the asking price and get it. Remember... The seller wants to get the highest price possible and if the house was that far over priced, your Realtor probably wouldn't take you there to see it in the first place.
Everyone wants a deal and that's okay. Just make sure that when your putting in your offer, ask yourself the question "if you were selling the house, would you take the deal". That is likely what is going through the vedor's mind (seller's mind). Does this mean not to put in an offer that is below the asking price, absolutely not! Find a great house and get a good deal. Just make sure it is within reason or you could find yourself looking at dozens of houses again.
Make your offer conditional
Any Realtor worth their salt will not allow you to submit an offer without placing conditions in the offer. This is important especially as a first time home buyer. Putting a condition in the offer protects you from being force to buy a lemon of a house. It also protects you from having to buy the house if the bank says they won't lend you the money for some reason. Here are the conditions that you want to make sure that you put in an offer:
Financing: After getting pre-approved for a mortgage it's not over, you still need to get a formal approval. The bank (or CMHC / Genworth) might not like the property or area that you are buying in and might still come back and say no. Therefore you need to have a condition in the offer that protects you from this. This condition typically gives a first time home buyer 7 days from the date of acceptance to find mortgage financing. That's where I come in. You contact me and I'll go ahead and find the financing for you. If for some reason the banks don't want to do it, you simply let the offer expire and you get your deposit back.
Home Inspection: This condition is typically for 7 to 10 days from the date of acceptance as well. It allows you time to hire a professional home inspector to look at the property you are buying and make sure that you really know what condition it is in. The home inspector with go through the whole house, including the roof (weather permitting) and the attic, looking at windows, the basement overall structure, etc. They will go through and find out as much as they can about the condition of the house. This usually costs about $450, and yes, the cost is your responsibility. A lot of first time home buyers don't want to pay the money for that because they don't understand the importance. PAY IT! It is so important to protect yourself. Hopefully it is money wasted, but in the even that the inspector finds something big, you will be thanking yourself for spending the money. FYI... A family member that is in construction is not a trained inspector. Inspectors know exactly what to look for.
Insurance: This is an important one that is very common. Having a cluse/condition of insurance in your offer guarantees that you won't have to buy the house if you can't get reasonable insurance. For example, some old houses still have knob and tube wiring in them. Insurance companies don't like knob and tube wiring as it can be a fire hazard especially as it gets older. Most first time home buyers don't realize the ramifications that things have on your insurance rates so you should make sure this condition is there. In this example, it is likely that the insurance company would require that the home owner replace the knob and tube wiring within a certain length of time. This can be very expensive and if not done the insurance company will cancel your coverage (which is very bad).
Get your financing finalized
Once you have submitted your offer with the proper conditions in place it is very important that you send my office your offer to purchase as soon as you can. A condition of financing for 7 days does not give us a lot of time to get things finalized. In many cases I can get it finalized for you within a couple of days, however some times things "pop up". First time home buyers often don't understand the urgency involved in getting everything done on time. The sooner I get the information (offer and MLS listing) the sooner I can get things finalized for you and the sooner the stress will be lifted. The financing part is probably the most stressful part because it's out of your control now. Get the documents to me, send me your Realtor's information and I'll get started on working with him/her right away.
Order your home inspection
You can order your home inspection right away after submitting an offer. However, it is advisable not to have the actual inspection until the 6th or 7th day (after the financing has been finalized). This is because you don't want to shell out $450 dollars on a home inspection if the financing might still fall through.
Get your insurance
Start on this right away as the financing is being finalized. Make sure you talk to your insurance broker and get a quote. It might be a good idea to get quotes from multiple places. HINT: Get a quote with your automobile insurance too from each provider. The reason is that most insurance carriers will give a discount to you if you have multiple products with them (eg. automobile & home coverage).
So far through this process you are likely having a roller coaster of emotions. Now you can relax. Once the financing has been finalized, the home inspection complete and you have found home insurance the stress will disappear. At this point it's going to feel like a ton of bricks has been lifted and you can breath again. As a first time buyer it's important not to fight the emotional roller coaster. Go with it and enjoy the ride the best you can.
Uh-oh the stress is back!
About two weeks before closing you are going to find that the stress comes back. You've spent the last month or two in limbo and now your day is approaching. You're going to be first time home owners. YAY! However, now you have to hook up your hydro, gas and telephone. You have to arrange for movers whether hiring someone or getting friends, you've got to find a moving truck if you are doing it yourself. You've got to go to the back to get your lawyer the money for the down payment and it seems that it's back. Don't freak out, make a list and just do one thing at a time, you'll get it all done.
Sit back, put your feet up and enjoy your pizza
I don't know what it is but everytimg I've moved it seems like pizza is the meal of choice that day. It's so relaxing to sit back on your couch in your new home with your feet up on the boxes and just enjoy your pizza. So go for it! Start unpacking tonight, tomorrow, whatever suits your fancy. You're first time home owners, congratulations, you survived the process.
If you are a first time home buyer give me a call toll free at 1-866-257-0158. I work with dozens of first time home buyers every year. I'll take the stress out of getting a mortgage for you!