Step 3: What Are The Options For Your First Home?

Buying Your First Home - Dream HouseNow that you’ve decided to purchase your first home and have checked out your finances with a mortgage professional, it’s time to start looking.  But at what?  You really want to have a good idea of what type of home you are looking for before you start out.  Otherwise, you can end up looking at so many homes, condos and apartments only to come out confused or overwhelmed.  So how do you start to narrow down the search?  You need to have an idea of what type of homes are available.

Small Single-family home

Single Family Homes

These provide the most privacy in terms of housing. This is a stand alone home on its own yard.  You are responsible for all home and yard maintenance.  A lot of people looking to purchase their first home automatically think that it should be a single family home.  That might not always be the best option though.  When starting out, remember that your finances might mean you are looking at a single family home that will need a lot of repairs or updating.  Make sure you plan for the costs that may incur.  It often ends up costing MUCH more than one expects when repairing and renovating, so make sure that you will have enough in your monthly budget.

Single Family Attached Homes

These homes have a shared wall between 2 or more homes.  It is usually less expensive than the single detached home but still may maintain some of the benefits such as the yard and possibly a basement and garage.  Usually you own both the home and some yard and as such, you are responsible for the maintenance of both.  These can include duplex, triplex, fourplex, townhouses and rowhouses.

Condominium Homes

Buying Your First Home - Apartment Condo

You purchase the individual unit you live in (wall board to wall board), which is part of a multi-unit property.   You have shared ownership of the land and common areas such as hallways, parking facilities and heating system.  The owners form a condo board which runs the building . Condos come in many forms, such as bungalows, townhouses, carriage homes, stacked townhouses and apartments.  One of the great advantages in owning a condo is that you don’t need to worry about yard maintenance and exterior home repairs such as roofs.  Some condo developments have restrictions in place such as minimum age of residents and whether pets are allowed or not.  A monthly condo fee usually exists which may vary in amount and may cover things such as some or all utilities, recreation fees, landscaping, snow removal and property management.

Buying Your First Home - Modular HomesModular Homes (Mobile Homes)

Single family home built in a factory and moved to where it will be lived in.  On the surface, it can look like an attractive and more affordable option.  The land on which it is though, is not owned by the home owner and there is usually a HIGH monthly lot fee to pay.  In addition, it can sometimes be harder to get financing especially on an older home.  Resale can also be more difficult.

Your realtor will be able to help you filter through the options and figure out what type of home would best suit you to start out in.  Remember, when you’re purchasing your first home, it won’t necessarily be your ultimate dream home, but rather a huge step towards that goal.

Buying Your First Home

Helpful Links: 

CMHC:  Which Home Is Right For You?

RE/MAX Western Canada:  Condo Buyers Guide

Step 4:  What Do Your Want In Your Home?

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Step 2: Financing Your Home Purchase

Financing Your Home

The first step before looking at homes is getting mortgage pre-approval from a bank mortgage broker or an independent mortgage broker.  This will either tell you how much they will lend you and at what interest rate, or what you need to do before you can borrow and get pre-approved.  They typically look at things like your income, the amount available for a down payment and your credit history.

Financing Your Home

Having pre-approval gives you a better idea of which homes you should look at and can afford and it lets your realtor know that you are a serious buyer.

There is nothing worse than finding out after an offer is made that you can not get the financing and your dream home purchase crashes!

Here are some great sites to use to help get a better idea about mortgages and pre-approval:

CMHC (Canada Mortgage and Housing Corporation)

RBC Mortgages For First Time Home Buyers

TD Mortgages – The Home-Buying Decision

TMG Mortgage 101 Basics

Financing Your Home

Step 3:  Housing Options

Step 1: Are You Ready To Buy Your First Home?

Buying Your First Home

Tired of renting? Living in a basement?  Need more space?  The process of buying your first home can be overwhelming.  Here are some steps to consider to turn your dream into reality.

– Review your budget (yes, you need one!)  Do you make enough monthly income to qualify for a mortgage and pay for the mortgage payment, taxes, condo fees (if there are any), utilities and regular maintenance?  You can count on needing at least $1500 a month. Check this website out for great budgeting ideas:

http://www.gailvazoxlade.com/resources/guide_to_building_budget.html

Your First Home
– Start saving for your down payment.  For a $200,000 condo, you can expect to need a minimum of $10,000 down.

– Then save some more!   Establish your priorities.  That might mean putting off things like the new car or expensive vacation for a while.

– Establish good credit.  Pay off debts like your credit card regularly.

– Talk to your bank or a mortgage broker. They can help you find out what you qualify for.  If you don’t qualify yet, they can help you make a plan.

Not Your First Home

– Go online and check what’s available and for what price. Be realistic about your expectations.  House, duplex or condo?  New or old?  Remember, it’s a process, you probably won’t be starting out in your dream house!

With a bit of planning, your first home doesn’t need to look like this!

Not Your First Home

Coming Next

STEP 2:  Borrowing Money