Home buying tips and tricks for first-time buyers

Determine how much you can afford

Before you start your home buying process and looking for your dream home, you need to know what’s actually within your price range. Use a home affordability calculator to determine how much you can safely afford to spend. Be honest and realistic with yourself, do not cut your expenses down to the bone to afford the home. In the long run it will only make things harder.

Check your credit

When you’re taking out a loan, your credit will be one of the key factors in whether you’re approved, it will help determine your interest rate and possibly the loan terms. So check your credit before you begin the home buying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts.

You can get a copy of your credit report once a year from TransUnion.

Set aside more money for after move-in

Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any other touches you’ll want to have when you move in.

Start saving for a down payment early

It’s common to put 10% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 5% down. But putting down less than 10% may mean higher costs and even a small down payment can still be hefty. Play around with a down payment calculator to help you land on a goal amount. Some tips for saving for a down payment include setting aside additional funds for things like rates and taxes accounts that can add up and slap you with a hefty bill after a few months. Setting up an automatic savings plan and using an app to track your progress. That way you can track your progress because the money is kept separate from your spending accounts.

Consider what type of property to buy

You may assume you’ll buy a single-family home, and that could be ideal if you want a large lot or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhome could be a better fit.

Get a pre-approval letter

You can get pre-qualified, which simply gives you an estimate of how much a lender may be willing to lend based on your income and debts. But as you get closer to buying a home, it’s smart to get a pre-approval, where the lender thoroughly examines your finances and confirms in writing how much it’s willing to lend you and at what terms. Having a pre-approval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.

Stay under your pre-approval limit

As your agent shows you homes, look for properties that cost a little less than the amount you were approved for. While you can technically afford that amount, it’s the ceiling — and it doesn’t account for a broken washer or dryer or any other expenses that arise during home ownership, especially right after you buy. Rather than maxing out that amount, set a lower purchase budget to leave yourself wiggle room for unexpected costs.

Pick the right neighbourhood

Finding the right neighbourhood is just as important as locating the right house. Research the schools, even if you don’t have kids since that affects a home’s value. How close are the nearest hospital, pharmacy, grocery store and other amenities?

 Buy a home for tomorrow

It’s easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home you can grow into. Consider your future needs and wants and whether this home will suit them.

Be prepared to compromise

It’s rare to find a house that’s perfect in every way, so think carefully about what you’re willing to compromise on and what you’re not. Perhaps no walk-in closet in the master bedroom is a deal breaker, but an outdated guest bathroom will be tolerable until you can renovate it.