Saving money to buy your first home will likely be one of the most significant purchases you’ll make in your life. But with all the details and parties involved, it’s easy to get confused or blindsided by hidden costs and fees. Here are some tips to ensure you get the most for your money.
1. Resolve credit issues before applying for a mortgage
Your mortgage rate is partially determined by your consumer credit score, so fix what you can before you apply. Even little things like late payments or errors on your record (it happens!) can increase your mortgage payments.
2. Budget wisely and save for a down payment…even if it means waiting a little longer to buy
It’s hard to be patient, but a decent down payment means more reasonable payments, saving you thousands of dollars over the duration of the mortgage.
3. Shop around for mortgage rates
Don’t assume the offer made to you by your bank is the best rate you have access to. It will vary from client-to-client, which makes it important and extremely beneficial for you to get a second opinion.
4. Don’t take listing prices at face value
Found something you like? Research house values in the neighbourhood to be sure you’re dealing with a fair price. Your real estate agent can help, but you can also search for nearby listings online or attend open houses in the area.
5. Use your RRSPs
In Canada, first-time homebuyers can take advantage of a federal government program called the Home Buyers Plan (HBP) which allows you to take up to $25,000 from your RRSPs, tax-free.
6. Don’t be scared to low-ball your offer
New buyers can be timid when it’s time to buy, but unless you know you’re headed for a bidding war, low offers can be countered. So you may as well give it a shot!
7. Make your offer contingent on closing dates
It’s easy to overlook small details like closing dates in the rush of making an offer. But don’t risk the cost of paying for temporary accommodation and putting items in storage if you run into last minute changes.
8. Get a list of fixtures and fittings included in the sale
Check the details to avoid opening the door to your new home and finding it stripped of light fittings, cables and appliances. Also, pay attention to what you’re paying for: the seller may list the price they paid for an appliance, but from how long ago? Would it be more cost-effective for you to exclude it from the offer and buy a new one?
9. Review your closing statement carefully
With all the details that go into buying a home, it’s not unusual to find mistakes in the fine print. Be sure you check the math prior to closing, so you don’t overpay based on a simple clerical error.
10. Opt for bi-weekly mortgage payments
Paying monthly means that you make 12 payments per year. But if you pay half that amount every two weeks, you’ll make 26 payments, which means you’re paying down your mortgage faster.
If you are looking to buy a home and would like more information about the process, please don’t hesitate to give me a call for a free consultation.
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