Thinking About Buying a Home? Here's What to Do First

Buying a Home? What to Do Before You Start House Hunting

Buying a home is exciting, but it can also feel overwhelming, especially if you are a first-time buyer. There are a lot of moving pieces, and it is easy to jump straight into looking at homes before taking care of some of the important groundwork. Whether you are buying your first home or simply need a refresher on the process, taking a little time to prepare before you start your house hunt can make a big difference. Being prepared allows you to shop with confidence and puts you in the strongest possible position when you find the right property.

Here are a few steps we recommend taking before you start looking at homes.

1. Get Your Finances and Tax Returns in Order

One of the first things to do is make sure your financial paperwork is up to date. If you are planning to get a mortgage, the lender will need to review your financial situation. Your tax returns and Notices of Assessment (NOAs) are important pieces of that process. Lenders will ask for your Notices of Assessment from the past two years, so it is a good idea to make sure your taxes have been filed and your paperwork is readily available.

It is much easier to deal with this ahead of time rather than discovering you are missing documents after you have found the home you want to buy.

2. Talk to a Mortgage Broker and Get Pre-Approved

Once your financial paperwork is in order, we strongly recommend speaking with a mortgage professional and getting pre-approved. We often recommend working with a mortgage broker rather than approaching just one bank.

Why use a mortgage broker?

A mortgage broker can shop your mortgage needs among multiple lenders rather than being limited to the products offered by one financial institution. Depending on your circumstances, this can give you access to a broader range of mortgage options and rates.

A mortgage broker can also:

• Compare mortgage options from multiple lenders

• Help explain the differences between mortgage products

• Work with you to determine what you may qualify for

• Help identify financing options that fit your particular situation

• Guide you through the mortgage approval process

• Often save you the time of approaching several banks yourself

There is generally no direct cost to the buyer for using a mortgage broker. The broker is typically compensated by the lender when the mortgage is placed.

We work with a few amazing mortgage brokers whom we know and trust and are happy to share their contact information with our clients.

3. Understand How Much You Can Actually Spend

Getting pre-approved isn't just about finding out whether a bank will lend you money. It gives you a much clearer picture of your realistic price range. Knowing your maximum mortgage amount allows you to determine what homes you should be looking at and, just as importantly, what price point feels comfortable for you. It is important to remember that the purchase price of a home isn't the only expense. You will also need to consider things such as your down payment, property transfer tax, legal or notary fees, inspection costs, potential appraisal cost, moving expenses, property taxes, insurance and ongoing homeownership costs.

Your mortgage broker can help you understand the financing side, while your Realtor can help you understand the costs associated with the purchase and the homes you are considering.

4. Find a Realtor You Feel Comfortable Working With

Once you have a good understanding of your financing, it is time to find a Realtor you trust. Buying a home is more than simply finding properties online and booking showings. Your Realtor should help you understand the market, identify properties that fit your needs and budget, provide information about the homes you are considering, and guide you through the offer and negotiation process. For first-time buyers especially, having someone who will explain why things are happening, not just what you need to sign, is incredibly valuable. 

We believe our job is to make the process as understandable and straightforward as possible and to help our buyers make informed decisions along the way.

5. Think About What You Really Want in a Home

Once you have your financing in place, know your budget and have a Realtor working with you, then it is time to start looking at homes.This preparation can make the house hunting process much more enjoyable. Instead of wondering whether you can afford a particular property or scrambling to arrange financing after finding a home you love, you can focus on finding the right property.

Being Prepared Can Make a Difference When You Find the Right Home

One of the biggest reasons we encourage buyers to complete these steps before house hunting is what happens when you finally find the one. In a competitive situation, being financially prepared can put you in a much stronger position. If you have already gone through the mortgage pre-approval process, your Realtor can let the listing agent know that you have spoken with the bank and have your financing in place.

That doesn't guarantee that your offer will be accepted (there are many factors that go into a seller's decision) but it can give the seller greater confidence in you and your ability to purchase their home. It also allows us, as your Realtors, to write the strongest offer we can based on your circumstances, rather than trying to figure everything out at the last minute. Once you are ready to make an offer, our job is to walk you through that process, explaining the terms, conditions, timelines and considerations so that you understand what you are offering and why.

The Bottom Line: Prepare First, Shop Second

Buying a home is a big decision, and taking the time to prepare before you start looking can make the entire experience smoother. Get your taxes and financial documents in order. Talk to a mortgage broker. Get pre-approved. Understand your budget. Find a Realtor you trust. Then start your search.

The more prepared you are, the better positioned you will be when the right home comes along.

We have found that when our buyers take these steps ahead of time, we are able to do our job better too. We can focus on finding the right property and, when the time comes, helping our buyers put forward the strongest offer possible.

If you are thinking about buying a home and aren't sure where to start, Kevin & Layla would be happy to have a conversation and help you understand the steps involved, even if you are still in the early stages of thinking about a purchase.