If you have never purchased a home before you may not know where to start or how the whole process works. The following is a very basic outline to give you an idea of where to start. Not every buyer goes through these exact steps, and certainly not always in this order, but it will give you an idea of the things you should consider before you start your search for a home. If you would like to sit down and discuss the process in more detail or you have any questions please contact me. I work with buyers in the greater St. John’s area, including Conception Bay South, Paradise, Mount Pearl, St. John’s, Torbay, Pouch Cove, Flatrock, Portugal Cove-St. Phillip’s, Petty Harbour – Maddox Cove, and Logy Bay – Middle Cove – Outercove.
Step 1: Decide you want to buy a house. This is the easy part. Usually! Some things to consider:
- Are you prepared for the expense of owning a home? It’s important to consider all the hidden expenses.
- How long do you plan to stay in your home? This will help you decide whether purchasing is the right decision or not. Sometimes it may make better financial sense to rent.
- Is your income secure? If there is a strong possibility that you could lose your income, the flexibility of renting may be a better choice for you.
Step 2: Find a REALTOR®
- Many people start their search for a home before their search for a REALTOR®. They visit open houses, or call on ads, signs, or MLS listings that they have seen online. You should know that there is normally no cost to a buyer to use their own buyer’s agent. In most home purchases the buyer’s agents are paid a portion of the commission that the seller pays to their agent on completion of the sale, which means that the buyer pays nothing out of pocket for the services provided by their agent. It’s important to have your own REALTOR® who represents you, the buyer for several reasons.
- Your REALTOR® can answer all of your questions throughout the process, and refer you to mortgage brokers, lawyers, and home inspectors who will help you through the process as well.
- When a REALTOR® represents you through a Buyer’s Agency Relationship, by law their primary allegiance is to you. That means as your agent it is my duty to help you get the best deal possible on your home purchase and to protect your interests above the interests of the seller.
- As your agent I do the leg work for you. I handle the searching for you, making sure you are aware of newly listed properties. If there are properties you want to view I handle all the scheduling, and I am with you on all viewings. I am there to answer all of your questions throughout the process, offer advice and guidance, and to help you negotiate the best possible terms on your home purchase.
Step 3: Get pre-approved for a mortgage.
- Even if you are 100% certain you will be approved for a mortgage there are several benefits to be gained. A pre-approval allows you to:
- Lock in your rate. When you get pre-approved you lock in the current mortgage rate with the lender, usually for 60-120 days. That means if rates go up while you are house-hunting you get to keep the lower rate, and if they go down, you will get the new lower rate.
- Know the dollar amount for which you qualify by getting a pre-approval you’ll know how much you can borrow.
- Make stronger offers. Having a pre-approval letter offers some reassurance to sellers that the deal will not fall apart due to financing issues.
- Fix credit problems. If there are reasons why you cannot be pre-approved for a mortgage your banker or mortgage broker can discuss them with you and offer suggestions as to ways to improve your credit so that you may be approved in the future.
Step 4: Decide what you can afford.
- If all went well in Step 3 you are now pre-approved for a mortgage. The odds are good that you’re approved for a larger mortgage than your budget can comfortably accommodate each month. It’s important to figure out what you can comfortably spend on a mortgage payment each month. Based on that, you can calculate the maximum amount you are willing to spend on your home.
Step 5: Think about what you want in a home.
- You may not know precisely what you want at this point, but now is the time to think about what you want and need in a home. Decide what the “must-haves” are and which features you wish you could have but are not deal breakers.