Buying a home may be one of the most important (and expensive) purchases you will ever make. It can also be overwhelming to navigate on your own. This step-by-step resource will familiarize you with the home-buying process and provide useful information along the way. Whether you are a first-time buyer or looking to purchase your next home, our comprehensive Kingston Home Buyer Guide can help you prepare and feel confident in your decisions.
9 Steps to Buying a Home
- Talk to a Realtor
- Get Pre-Approved, Know Your Budget
- Start Your Home Search
- Make an Offer
- Do Your Due Diligence
- Prepare for Closing
- Close the Deal
- Take Possession of Your New Home
Step 1: Self-Assessment
This is the time to be honest with yourself and become critical. It is a big decision! Are you ready to buy a home? Are you prepared to take on the commitment? Do you have a stable job and a steady income? Are you ready to deal with any maintenance and repairs that come with homeownership?
Familiarize yourself with the ongoing costs of homeownership and determine if you can afford them. Consider your income, spending, debt, and loans. You will need money for the upfront costs, such as down payment and closings costs. Ongoing expenses to keep in mind include mortgage payments, property taxes, utility bills, mortgage insurance, and ongoing maintenance. It’s also good to save for major repairs and unexpected emergencies. Once you understand the short-term and long-term costs of buying a home, you will be able to make an informed decision.
If you decided that you are now ready, your journey is just getting started. Enjoy the ride!
Step 2: Talk to a Realtor
After your self-assessment is complete and you have decided you are ready to start your home-buying journey, the first thing you should do is reach out to a Realtor. They will be able to point you in the right direction on what your next steps should be. The Realtor will assist you in assembling a trusted team of home-buying professionals (mortgage professional, lawyer, home inspector, etc.) that you will need when buying your home.
Tips For Choosing a Realtor
Research. Research real estate agents online, read their reviews and explore recommendations from family and friends.
Trust. This one is huge. You want to make sure your Realtor is on your side. But how? Choose a realtor that makes you feel comfortable, respects your views, and listens to your concerns.
Experience. An experienced, full-time realtor will have been through the different market types and know how to best navigate current buying conditions.
Attention. You want someone who will be there for you 24/7, especially in a hot market. Someone who responds quickly and who will be able to swiftly show you a listing you are interested in. A red flag is a realtor who takes days (or even hours!) to respond; they may be the reason you miss out on your dream home.
Step 3: Get Pre-Approved, Know Your Budget
Before viewing what homes are on the market, you will want to know your budget. Just like when choosing a Realtor, you will want to select a trustworthy, experienced, knowledgeable, and highly rated mortgage professional. If you need help finding one, your Realtor will be happy to give recommendations on mortgage professionals they work closely with and trust. A trusted mortgage professional is a great asset to have on your home-buying team. They will check your financial standing and determine how much you qualify for based on your current financial situation. They will explore different mortgage options and help you decide which one is best suited for your situation.
Applying for a mortgage can be a daunting process, so knowing what is involved can help you be prepared. The mortgage professional will check your credit score, employment history, and assets/debts. Be prepared to show proof of employment, tax records, bank statements, and loan information. Lenders will want to know your debt-to-income ratio to see if you will be able to make the loan payments on your mortgage. If you cannot get prequalified for the mortgage you had hoped for, the mortgage representative will be able to point you in the right direction for the steps you need to take to strengthen your financial foundation.
Once you are pre-approved for a satisfactory mortgage sum, you can lock in the interest rate for 60 to 120 days, depending on the lender. Keep in mind that a preapproval is a maximum you may get for a mortgage, it is not the amount you need to spend. However, it is still a good idea to get pre-approved before starting your home search. If you are pre-approved for a certain amount and then refused after you have submitted an offer, there are still options you can take. Your mortgage professional will discuss these options with you, don’t give up hope just yet!
Step 4: Start Your Home Search
What are you looking for in your new home? It’s a good idea to make a list of things you absolutely can’t live without and things you would like to have. In a perfect world, you would get all of these bundled up in your dream home while staying within your budget. But in today’s market, that may not be an option. What kind of things are you willing to sacrifice?
You can expect to see various home styles and designs, from single-level homes to condos and traditional to modern. Having a good idea of what you’re looking for is essential. Things to consider are your budget, desired location, the number of bedrooms and bathrooms, square footage, school districts, transportation, amenities that are must-haves versus like-to-haves, and lot size and outdoor space. Once you have determined what your must-haves are, your Realtor can set you up with listings that meet your criteria via different search engines. We will also actively check for off-market properties in our vast client base. Once you find a property that interests you, your agent can coordinate an in-person showing.
When viewing a potential property in person or online, take time to make some considerations. Where are the windows located, and what is the natural lighting like? What will your furniture look like in the space? Take note of potential upgrades and renovations that you may want to do to match your style. Paint is an easy, inexpensive way to change the ambiance, but complex renovations can get pricey. Consider the outdoor space: what maintenance will be required? Is the lot large enough for your requirements? Once you have found a property that feels like home, you are ready to prepare an offer.
Step 5: Make An Offer
You found the perfect spot! Great. Now what? When you’re ready to make an offer, your trusted Realtor will prepare the required paperwork, including the offered purchase price and terms/conditions. They will then present the offer to the sellers on your behalf. Things your offer should include:
- Your legal name, the name of the seller, and the address of the property (Note: be your agent will ask for a copy of a government-issued ID)
- The purchase price you are offering
- The deposit amount (held in trust by the listing brokerage and then is put towards what you owe at closing)
- Any extra items you would like included in the purchase (e.g., appliances or window coverings)
- The closing date (the date you take possession of the home, usually within 30-90 days)
- Any other conditions that must be met (e.g., a satisfactory home inspection or approval of financing from your lender).
- The date/time the offer expires
What can you do to strengthen your offer?
Know the market. Is it a seller’s market or a buyer’s market? Just because the property is listed at a certain price does not mean it will sell for that price. With low inventory, houses are likely to go over the asking price (depending on several factors, such as location and style). So how will you know how much you should offer? Your Realtor will assist you in creating a solid offer using their expertise and knowledge of the current market.
Reduce or eliminate conditions. If it’s a competitive situation, you may not have the freedom to submit conditions. In most cases, the offer with the least amount of conditions or the offer with the shortest timeframe for conditions usually wins. Submitting an offer with no conditions will strengthen your offer, so you will need to decide if this is something you are able and willing to do. It is best to talk to your mortgage professional before moving forward with reducing or eliminating conditions. It will all come down to risk tolerance, experience, and capital.
Present a larger deposit. We’ve all heard the saying, money talks. A larger deposit in your offer will make the seller more confident in your ability to close the deal.
Get familiar with the seller. What is their reason for selling? It is best to tailor your offer to meet the seller’s needs. Your Realtor will help you with this.
Be flexible with your closing date. If your seller is looking for a quick close and you can’t take possession for a few months, this can hinder your offer. Flexibility with the closing date can allow the seller to decide when you take possession, which may be important to them.
For more details on what you can do to strengthen your offer, check out our Four Easy Tips to Make Your Offer More Competitive.
Step 6: Do Your Due Diligence
Wait, there’s more? There are a few more things you will need to do after you have submitted an offer (and it’s a good idea to think about these things beforehand, too!).
Confirm financing. If you have been pre-approved for a certain amount, it’s time to head back to your mortgage lender and confirm your financing.
Insurance. If you have a mortgage, you will need to purchase homeowner’s insurance. Be sure that it is enough to cover your home and your belongings. This gives you an opportunity to get a quote from your mortgage agent and allows you to understand how much it will cost you per month to budget appropriately, especially if your property has features such as a wood-burning stove/fireplace or oil heating.
Home inspection. If the market allows for it, a home inspection can bring to light any issues or concerns with the home. Your Purchase Agreement can be conditional on the outcome of the inspection, so if you find more than what you bargained for, you can withdraw your offer and keep looking.
Now is a good time to also get familiar with the neighbourhood. If your showing was in the evening, take the time to check out the area during the day, and vice versa. Go for a walk around the neighbourhood, and check out different parks and amenities close by. Immerse yourself in your surroundings. Can you see yourself living there? It is also not a bad idea to google the address to find any history that may be pertinent for you to know (e.g., deaths that happened in the home, any stigmas of the neighbourhood, potential known hazards, etc.)
Once you are satisfied and conditions have been met, you will proceed with submitting a Notice of Fulfillment. If conditions were not met, but you would still like to proceed with the purchase, you may have the opportunity to waive the conditions.
Traditionally, these steps would be taken after the offer is accepted; however, with low inventory, you may not have the time and privilege to get these things done beforehand. Being prepared before submitting an offer will put you ahead of other potential buyers. It will also relieve some pressure and make you feel more comfortable with your offer.
Your real estate agent is a great resource. Don’t hesitate to ask them for recommendations for mortgage professionals, lawyers, inspectors, moving companies, insurance providers, contractors, etc.
Step 7: Prepare for Closing
Now is the chance to get your utilities and services set up and coordinate a moving company if you are using one. Things you will need to either have set up or transferred to your new home include utilities and mail forwarding. Check out our Kingston Moving Checklist for a complete list of services and utilities. Now is also a good time to coordinate dates you’re your moving truck. Usually, you get your keys later in the day on closing day. It is best to plan for later in the day or the day after when setting up these services.
Meet with your lawyer. They likely have already searched title on your behalf. While with your lawyer, you will sign off on all the documents associated with your purchase (e.g., deed transfer, registering the mortgage on title, and title insurance).
You will want to inspect the property before closing (known as the final walkthrough) to ensure that everything is as it should be. This will help identify any issues that need to be fixed prior to closing day.
Step 8: Close the Deal
On closing day, final payments are made. Your lender will provide your lawyer with the mortgage for your home. You will then give your lawyer the down payment (minus the deposit), along with the closing costs. From there, your lawyer will pay the seller and register the home in your name. You will receive your keys from your lawyer later that day.
Step 9: Take Possession of Your New Home
Congratulations! You made it to the end, and you now have the keys to your new home.
The possession day is typically the day of closing or the next day to ensure all transactions are complete.