Are you ready to buy a home?
The idea of buying a home is appealing and exciting. However, it is a huge investment and one that should not be rushed into if you’re not ready.
The first few steps of this guide are going to help you determine what you need in order to buy a house. We recommend that, if you are not ready to meet those requirements, you take the time to properly prepare yourself for the purchase of a new home.
Otherwise, when you’re ready, buying a home in Edmonton is a fairly straightforward endeavour! Keep reading to find out what the home buying process in Edmonton looks like:
Step 1: Your Dream Home – Wants Versus Needs
Everybody dreams of buying the perfect home but buying one is a huge financial decision. While there are certainly “must-haves” on your dream home list, purchasing a home that works with your finances may mean sacrificing some of the bells and whistles.
Take some time to really think about what your home must have and what you would like it to have. For example, you may need extra bedrooms to accommodate your family but would like to have a two-car garage to store your vehicles.
It may work out that your budget isn’t suitable for a home with a two-car garage but you can afford a multi-bedroom home.
Doing this helps to put things in perspective when you start looking at homes that are for sale.
Step 2: Determine Your Price Range
Now is the time to start browsing real estate listings or get in touch with a real estate agent. You’ll be able to see what the market is like in your area and compare the prices to your wants and needs list.
At this point, you should start using a mortgage calculator to get a better idea of how the list prices will translate into a monthly payment. It will also help you determine any closing fees and land transfer taxes.
Step 3: Save for a Down Payment
Using a mortgage calculator will also help you determine what your down payment should be. While it is possible to put down as little as 5%, it is recommended that you aim for at least 20% of the mortgage cost.
For more information, check out our post on the benefits and risks of a 5% down payment.
Saving for a down payment isn’t always easy. Here are some tips to get your started:
- Start a budget and prioritize your spending. Try to cut down on buying things you don’t need and putting that money in a savings account.
- Earn some extra income by starting a side hustle or taking a casual job. Put the money you earn from this into your savings.
- Pay off your credit cards and debt first to free up some extra money you can put aside.
You can also look into Canada’s Home Buyer’s Plan (HBP) that helps first-time homebuyers withdraw up to $35,000 from their RRSP (tax-free) to put towards a down payment.
Step 4: Get a Mortgage Preapproval
Not only will getting preapproval for a mortgage through a broker help you determine how much you are qualified to borrow, but it also gives you an opportunity to explore and understand the different types of mortgages, rates, and other important mortgage terms.
The first step in getting a mortgage preapproval is to get a mortgage pre-qualification. This simply helps your mortgage provider determine approximately how much you can borrow as well as what you’ll need for a down payment and closing costs.
This doesn’t involve running a credit check or verifying your financial information – it is merely an estimate to get you started.
Once you reach the mortgage pre-approval stage, where credit checks are done and financial information is verified, remember that this is not a 100% guarantee that you will get the mortgage – but it’s as close to a guarantee as you will get.
We recommend that you get pre-approved before you start to seriously shop for a home. This will give you a solid idea of what you can afford as well as lock you into an interest rate if you’re fully approved within 90 days.
Step 5: Make an Offer
If you’re ready to put an offer on a home, there are two ways you can do this: a conditional offer and an unconditional offer.
A conditional offer usually depends on a home inspection and the final approval of your mortgage. There are other conditions you can apply but these are the most common ones.
This means that you are offering to buy the house but say, for example, the home doesn’t pass an inspection, you can pull your offer and move on and get your deposit back.
On the other hand, an unconditional offer is rare and risky. This means that if anything compromises the deal before closing, you lose your deposit. and unconditional offer is never recomended, unless you have carefully weighed out the pros and cons, and have a back-up plan.
Step 6: Close the Deal and Take Possession
Once your offer is accepted, it’s time to move on to the closing phase. You’ll need a lawyer at this point to legally process the paperwork and buy title insurance.
Otherwise, you simply have your lender transfer the rest of the purchase cost to the seller and take possession. This is when the house is officially yours!
The Home Buying Process in Edmonton
This start to finish guide will get you on track to purchasing your dream home in Edmonton! It’s a straightforward process but the details can seem complicated.
That’s why the Mortgage Force Team is here and dedicated to helping you sort out the details of getting a mortgage. Our mortgage professionals are experts in their field and are ranked among the best nationally.
So whether you are looking to purchase your first home or upgrade to something more suitable, Dominion Lending Centres have a variety of products to meet your unique needs.