Understanding the home buying process
While starting your journey as a first-time home buyer is exciting, the buying process can be intimidating. In fact, a recent Canada Mortgage and Housing Corporation (CMHC) survey found that 50% of the mortgage consumers it polled “felt uncertainty during the home buying process.”
In this light, it’s important to understand what you might expect on your home buying journey. You will first need to establish that you are ready for the financial responsibility of buying a home before going through your financing options with a mortgage broker and preparing the documents you will need for a mortgage application.
When you have your financing sorted, you can then start house-hunting with the help of a skilled real estate agent. And after finding the right home, your real estate agent will draft an offer (which also serves as your purchase contract).
If the offer is accepted, the next steps involve working with a lawyer or notary to finalize your transaction before the property is transferred to you.
Below, we outline the buying process to help you experience a stress-free home buying journey.
Determine if you are ready for home ownership.
Purchasing a house is a big financial decision, so it’s important to determine if you have enough savings for a down payment and whether you can comfortably manage the necessary monthly expenses of home ownership.
In this blog, we help you understand what goes into determining mortgage affordability
Speak to a mortgage broker about your financing options and pre-approval.
When you feel you are ready, the next step is to get a clear understanding of the requirements you need to apply for financing. An experienced mortgage broker can help with this by outlining your financing options and the mortgage pre-approval process, connecting you with lenders and explaining the documents you will need to prepare.
Prepare and submit your documents.
At this point, you will need to start gathering all the documents needed to complete your mortgage application. A mortgage broker can help you submit your documents and explain what else your lender might need.
Speak to a real estate agent.
A real estate agent is a licenced professional who helps home buyers and sellers come together in real estate transactions. They often have expertise in certain geographical areas and neighbourhoods and can coordinate and schedule viewings of properties you may be interested in.
Learn more about the value of a real estate agent in the home buying process in this blog.
Make an offer and negotiate the agreement of purchase and sale.
When you have found the right home, your real estate agent will negotiate and prepare an offer to purchase that acts as the contract to buy the home.
According to CMHC, your offer must include your legal name; the name of the seller and the address of the property; the amount you’re offering to pay (the purchase price) and the amount of your deposit; any extra items you want to include in the purchase; the date you want to take possession (or your “closing day”); a request for a current land survey; the date the offer expires; and any other conditions that must be met before the contract is finalized, such as a satisfactory home inspection.
And if your mortgage lender requires it, your agreement could also include a requirement to have an independent real estate appraiser assess the value of your home.
Work with your real estate lawyer or notary to finalize your transaction.
If your offer is accepted, an experienced real estate lawyer or notary can help you finalize your purchase by ensuring that all parties satisfy the purchase agreement; conducting a search on the title of the home to check for any liens registered against the property; checking if property tax payments are current; obtaining title insurance on your home; and signing any additional paperwork and documentation.
In this blog, we examine the value that real estate lawyers and notaries bring to the home buying process.
Prepare for closing day.
Before closing day, your lawyer or notary will prepare a statement that summarizes what has been paid and what is still owed. They will then arrange to transfer these costs – including the down payment and other closing costs – to the appropriate parties. Then on closing day, your lawyer will give you the keys and the house will be transferred to you.
With careful preparation, your home buying journey does not have to be stressful. And when you’re ready to buy your home, Home Trust has a range of financing options available. Learn more by visiting hometrust.ca/mortgages.
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