There’s nothing like the feeling of getting the keys and entering your home for the FIRST time. While this guide cannot guarantee that you will be able to purchase (or afford) your dream home, it will definitely get you started on your homeownership journey!
This includes multiple FREE worksheets to help you end-to-end, review and complete EACH one. Let me know how much easier these made your homeownership journey once you’re in your new home!
STEP 1: Figure out your finances – Complete Tab 1
- Even if you THINK you’ve got your finances sorted out, have a quick look at this spreadsheet. Do you have your finances figured out to know EXACTLY how much you spend on the things list? You know EXACTLY to the dime how much you make and how much goes out every month? If yes…AWESOME! Move on to the next step. If you had to even think for a second, fill out this spreadsheet, I promise you’ll be in a better position and be much happier when you can actually pay bills without pulling your hair out.
- Browse https://www.realtor.ca/ to actually see how much homes are selling for in the areas you’re interested in purchasing. You’ll start to notice roughly how much a condo vs. townhouse vs. semi-detached vs. detached home costs and can determine what works best for you in the current market
- Get your mortgage pre-approved
- This should take a few days if you have all your paperwork on hand
- Be prepared to provide lots of documentation:
- Your personal information & identification: Photo ID & Social Insurance Number
- Proof of income: pay stubs, T4 slip or Notice of Assessment
- Employment Vertification: Letter of employment stating your current position, salary, type of employment (temporary or permanent) and length of employment. If self-employed you may be required to provide additional documents including financial statements
- Proof of down payment: Recent bank and investment account statement
- Debts and Liabilities: Including credit card balances, lines of credit, student loans, car payments, personal loans, liens, spousal or child sport or rent obligation
- The bank or lender will run a hard credit check with your consent. If you are buying a home with a spouse or partner, they will also be required to provide all above documentation
- When obtaining a mortgage pre-approval, you should also be clarifying what the conditions of the mortgage are: rate, term, prepayment options and penalties, mortgage portability, appraisal fees, broker fees (if applicable), other fees, etc.
- If you are unable to find a house you like or close on a deal within the rate-lock period (90-120 days) contained within your pre-approval certificate, you may be able to reset the pre-approval to extend the rate for a few more months, depending on the lender and market conditions.
- Mortgage Life Insurance is a declining benefit and is very expense. Instead choose a life insurance coverage that stays unchanged, cheapers and offers better protection
STEP 2: Craft a Wish-List & Must-Haves List – Complete Tab 2
STEP 3: Build your Dream Team – Complete Tab 3
Purchasing a home can be a fun and rewarding experience if you have all your “ducks in a row” from the start. Here’s the dream team that you need (Reach out to me if you need recommendations, I luckily ended up an amazing team!):
- Realtor: Helps in writing up the offer and any counteroffers, negotiate on your behalf with the seller or seller’s agent; and coordinate closing. Depending on the realtor and your particular circumstances, realtors may also assist with other things. Bidding wars happen often a good agent can help you strategically create offers, avoid impulsive bids, and get the most bang for your buck.
- Lawyer: Conducts a title search to ensure there are no title defects or liens against the property and prepares legal paperwork and closing documents. They also help coordinate payment for land transfer tax, PST/HST on CMHC insurance, the remainder of your down payment, and transfer of funds from your lender to the seller on closing. Legal fees will vary depending on the complexity of the transaction and additional services provided by your lawyer. To avoid surprises, ask your lawyer to give you an all-inclusive quote before you get started.
- Mortgage Broker: A mortgage broker is an intermediary between you and the lender. They are not always required. If you go directly to your bank (e.g. RBC, CIBC, TD), they have mortgage advisors or loan officers who will set up your loan. However, big banks rarely post the best mortgage rates available and bankers only sell their own products. They will rarely tell you if a better deal exists at another bank.
- Lender: They make funds (mortgage loan) available to you to complete your real estate transaction. A lender could be any financial institution including banks, credit unions, trust companies, mortgage finance companies, insurance companies, etc.
- Home Inspector: Will carry out a visual inspection of the property and tell you if there are any problems or repairs that need to be carried out. They may be able to give you an estimate of costs of repair and also note how soon repairs or replacements are required.
STEP 4: Let the hunt begin! – Complete Tab 4
Now that you are pre-qualified for a mortgage, narrowed down your search and pulled together your team to work with, it’s time to start looking at listings.
- While realtor.ca is a good place to start searching for homes, your real estate agent will send you custom listings that match your criteria
- House hunting will involve screening listings electronically, previewing properties online, and then finally going out to look at homes. This is your opportunity to get a feel for the different neighbourhoods, refine your wishlist, and ask questions.
STEP 5: Making an Offer, Closing & Moving in – Complete Tab 5
Congrats! Your house hunting efforts have paid off, and you’ve found the right home for you: it satisfies your wants/needs, it’s in your price range, and it feels right.
The offer process is both exciting and nerve-wracking. In Ontario, your offer must be in writing and will form the Agreement of Purchase and Sale (APS). The APS is a legally binding document which contains:
- The price you are prepared to pay
- The amount of your deposit (usually 5% of the purchase price, due within 24 hours after the offer is accepted)
- Closing date (the date you take possession)
- Inclusions you want (washer/dryer, big screen TV)
- Conditions that need to be met for the deal to go through such as financing condition, home inspection, status certificate review condition, sale of property condition
Once your agent has submitted your offer, the Seller can accept it, reject it or sign back a counter offer. During these back-and-forth negotiations, you may need to compromise on small things, but a great realtor will work hard to get you what you want.
You’re almost a homeowner! Do a final walk-through the house just before closing day to ensure everything is as they should be i.e. agreed-upon repairs were done, no obvious damage has occurred since the home inspection was conducted, appliances are still working, etc.
Closing is the point at which the ownership and possession of the property are transferred from the Seller to you. It takes place once all the legal and financial obligations have been met. Closing the purchase will be a team effort: in addition to yourself, your lawyer and your lender will all be involved in helping close the deal.
Line up utilities and other services like phone, cable and internet. If you rent, you must give your landlord notice. Also, forward your mail to your new address and hire a moving company. Preparing these things well in advance will help you make a smooth transition to your new home. Checkout the last tab here to make sure you don’t miss anything.