If you’re a first-time home buyer, you’re embarking on a journey that is both exciting and scary.
We asked Dan Plowman, of Dan Plowman Team Realty, a few questions about buying your first home.
How can first-time homebuyers set a manageable, and realistic, budget for the home?
A great place to start is by speaking with a mortgage broker. Figuring out what size mortgage you are comfortable with and how much money you would have left after paying your bills is very important. Separate your wants and needs. Ask your realtor for his advice on what a home might be worth if it has everything on your wish list. Look at some homes that are currently for sale, so you can get your own idea of how much house you can afford.
Could you offer some tips on saving for a down payment for a first home?
- While you may be able to afford a monthly mortgage payment and the associated costs, that first down payment can be a bit of a hurdle. However, you can overcome this by changing a few simple habits and taking advantage of saving options.
- Any savings you already have (not set aside for emergencies) should go toward your down payment. This includes work bonuses, income tax refunds and maturing bonds.
- The Canada Revenue Agency Home Buyers’ Plan allows you to borrow from your RRSP for a down payment for a home. For an individual, this is $25,000, and $50,000 for qualifying couples. This does have to be paid back over a period of 15 years split into equal payments.
- A tax-free savings account (TFSA) lets you invest up to $5,500 a year and earn on your investment. These earnings are not taxed, nor are any withdrawals you make from the TFSA account.
- Having more money is often about spending less. Eat at home more, cut down on luxury purchases and bring your own lunch to work. You will be amazed how small things add up quickly.
Do you have any tips on choosing a real estate agent?
A full-time realtor is critical in my opinion. The market conditions charge quickly and buying a home is probably the largest single investment you will make. It’s most important to choose a realtor that you are comfortable with. Make sure he is knowledgeable, experienced (especially with negotiations), honest, and is going to tell you reasons to buy or sell, or even the reasons not to.
What about other professionals such as home inspectors, lawyers etc.?
Your realtor can provide you with a few different options for all of the professionals you might need in your home buying experience. Make sure you understand all of the costs involved.
How should they deal with things like multiple offers?
There is never any harm in entering into a multiple offer. Your realtor should have the experience and know-how to help you buy the home of your dreams, or to advise you when to walk away.
How can first-time homebuyers know if a home is right for them?
When you have found the right home for you, it will feel right. You will start to place your furniture in the home and picture yourself living there. A full-time realtor will bring you up to speed on the house and the area, and an educated buyer is a comfortable, relaxed buyer. Experience and education go hand in hand. An experienced full-time realtor can make all the difference.