Five Things All First Time Buyers Should Know

We all dream of one day buying our first house and no longer answering to a landlord. Though daunting, purchasing a home is a significant milestone that can be achieved with the proper knowledge and preparation.

Not everyone knows where to begin and how to get the best home for their personal and financial circumstances, but with the proper guidance, you can confidently navigate this process.

One reason to buy a home is the cost. Purchasing a property is often many times your income, and as such, it will most likely be the biggest purchase of your life.

When deciding when to become a homeowner, there is a buying process to avoid potential pitfalls. When understood and followed, this process can make the experience enjoyable. Did you know buying or selling a home is one of the most stressful events we experience?

Financial pressure makes buying a house stressful. For example, the loan is tens of thousands of dollars, and, in most situations, hundreds of thousands of dollars. Securing the mortgage requires the correct criteria, and even people with excellent credit ratings can fail to get a loan approved.

Then there’s the chunk of money you must put in to get the mortgage. The down payment or deposit is hard to save for most wage earners with everyday expenses.

The liability is the home loan; however, when you buy your home, it becomes an investment, which is the growth in equity as the property increases in value.

Finally, there is the stress of owning a home, which is a responsibility. In saying all this, when you ensure your lifestyle can accommodate owning the asset, you’ve made the best decision. First, homebuyers need a comprehensive plan that covers the key requirements of purchasing a home to ensure it is doable. When carefully crafted and followed, this plan can provide a sense of security and control over one’s financial future.

The Plan

The plan must cover how to reduce the financial pressure that builds up as you aim to grow a down payment, keep a good credit rating, and finally get approved for a mortgage.

What down payment do I need?

This is the first, most important question, and it is usually where most discussions about buying a house end.

Chances are, if you’re struggling to pay your bills while you’re renting, you won’t be able to afford mortgage repayments, home maintenance, and living costs like utilities bills, food, and other items.

However, you can plan to buy a house in the future. Saving the down payment is the starting point. Work with a financial advisor or accountant to figure out how you can budget and save simultaneously.

What kind of mortgage can I get?

When you’ve calculated a budget for buying a house, you should seek out a reputable mortgage lender. The more money you have for a down payment, the better deal you can get.

The Federal Housing Administration (FHA) generally uses the 43% debt-to-income ratio rule as a guideline for approving mortgages.

Although it can often change depending on market conditions, this ratio is the best way to determine if the borrower can repay the mortgage.

You should make your calculations based on what you can afford. It won’t do you any favours if you factor in any future income; you might not get the job promotion or raise you were promised, and then you’re trapped in a repayment plan you can’t afford.

Where am I going to buy a home?

Change can cause emotional uncertainty. Once you have a down payment saved up and pre-approval for a mortgage, you know how much you can spend on a property. This should be the fun part—looking at houses for sale.

When planning to buy a house, adopting a long-term perspective is crucial. Consider the potential for growth in the property’s value and the stability of the location.

Look for a house where you can reasonably assume you’ll stay for at least five to seven years. For example, if Ottawa is where you want to live, explore tips for buying a house in Ottawa either by searching online or using ChatGPT. You will become more confident and forward-thinking in homebuying decision-making when you acquire relevant knowledge of the local area.

Shoud I get a fixer-upper?

Some homeowners tell you, “I’d like to sell my house fast,” but you shouldn’t let them pressure you into rushing the process so you miss that the house needs work. Of course, fixing up a house can increase your home’s value, but that’s only if you can afford to do it in the first place. All homebuyers should get an inspection of the house before signing any documents.

How much will you have afterwards?

Just because a house is in perfect condition when you buy it, doesn’t mean it will always be that way.

Now that you’re a homeowner, you’re in charge of your home’s upkeep—see experts to do the repairs. Your role is to inspect your home regularly and ensure you’ll have some funds for any accidents or emergency repairs, like an electrical fault or burst pipe. For less specialized maintenance like painting, consider the DIY approach.

With home purchases and ownership, always expect and plan for the unexpected.