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INVESTING10 simple steps to buying a home in Canada.

10 simple steps to buying a home in Canada.

Okay, so you finally decided that this is the year you’re going to jump into the real estate market. You’re finally going to buy that home, but you want to make sure you don’t make any mistakes along the way. 10 step buying process.

1.Have a down payment saved.

Just because you’re ready to buy a home, just because you think you have the down payment saved, doesn’t necessarily mean that you’re ready to actually jump into it.

You want to make sure that in addition to having enough money for the down payment and the income to actually be able to make your mortgage payments that you’ve got some money saved for an emergency fund. Because when you own a home in Canada, there are things that are going to come up down the road that are going to cost you money, and you want to make sure you have at least some funds set aside for that, and also for the unlikely event that you may lose your job and have to dip into some savings in order to keep your home in Canada. The last thing you want is not to be able to make your mortgage payment, so it is imperative that you not only have a down payment saved, but you have three to six months’ worth of living expenses saved as well before you jump into the market.

Now, not any of my real estate and mortgage brokers will tell you this, but the reality here is that this isn’t about them selling a home or selling a mortgage. The reality here is that you want to make sure that you don’t lose the home that you end up buying. So evaluating your financial readiness is more than just about creating a budget and having a down payment. It’s about looking at the worst case scenario that could possibly come up for you and making sure that you’re also prepared for that in the unlikely event that it happens. Prepare for the worst, hope for the best, but always make sure that you have a plan B. 2

2.Save a down payment.

 Now, there’s a whole bunch of ways you can do this and things you can take advantage of, but I highly recommend taking advantage of RRSPs, where you get a tax rebate and have the ability to pull the money out in the future in order to buy a home in Canada, or even better, take advantage of the brand new First Time Homebuyers account which gives you the benefits of both the RRSP with the tax refunds if you make a contribution, as well as the ability to pull the funds out tax free, meaning that you don’t have to pay them back like you would if you were to borrow from your RRSP. Use the First Time Homebuyers Savings account combined with an RRSP and any employer matching that you’re getting from your employer. If you’re looking to put money into your RRSP is the fastest way to save your down payment because you will be getting those tax returns and those tax rebates that will help you increase the speed at which you can save your down payment.

One other thing you can do is use RRSP loans in order to borrow the money, make the contributions, get a tax refund, and ultimately end up saving that down payment even faster. But be careful when you’re getting an RRSP loan because keep in mind that it will limit the amount of money that you qualify for when it comes to getting a mortgage. So make sure that you talk to a mortgage broker before you implement that kind of strategy.

3.Get pre-approved for a mortgage.

Now many people think that this is something that you should do in the 60 to 90 days before you purchase a home in Canada. That is probably not accurate. This is because the sooner that you get a pre-approval, the more information and the better information that you will have in order to ultimately make your buying decision. So if you think that you may be purchasing a house two or three years down the road, it does make sense to get a pre-approval right now because then you will have a complete picture of how much you qualify for and if there’s anything on your credit or anything with your income that needs to be sorted out, a mortgage broker will be able to help you determine what those things are well before you’re actually in the process of buying a home. Please use a mortgage broker. let’s be honest, it’s not 1999 anymore. I think at this point it’s safe to say that banks are there to make money for shareholders and don’t necessarily have your best interests at heart, but a really good mortgage broker will be able to make sure you not only get the right mortgage, but that you get it with the right lender. And especially in an environment where interest rates are going down, this is incredibly important. I cannot emphasize how important this is because things that you may not be aware of like high payout penalties at big banks could come back to haunt you if there’s an opportunity down the road to get a lower interest rate. 

4.Budget for additional costs.

Things like property taxes, things like property insurance, things that you may not necessarily realize are there but are hugely important for you to consider because there are a lot of people that end up buying a first home that don’t realize that there are other expenses involved. So you want to make sure that those are factored into your budget and that you’re not just assuming there’s going to be a mortgage payment, heating, and that’s going to be all the costs associated with owning the home.

5.Hire a real estate agent.

 I cannot emphasize how important this is. You need to make sure you have somebody who represents you and is looking out for your best interest in the home buying process.

A great agent that is there to look out for your interests will not only save you a whole bunch of money, but they will also make sure you don’t make any silly mistakes, like buying a home that is on the right away for a future highway that is going to be impossible to sell once that highway is built, or any other number of potential issues.

6.Begin your home search.

You’ve got your real estate agent, you’ve told them what you want, they’ve set you up on a search and they’re sending you listings that meet your criteria, and then what you want to do is you want to have a really great filtering process. The trick here is to only view those homes that are highly likely to meet your criteria.

7.Make an offer to the house you want.

This is again where a great real estate agent will be worth their weight in gold. Maybe not completely worth their weight in gold, but they will definitely save you a ton of money by being good negotiators and knowing how to get the best deal possible for you. Now here’s the thing, the difference between a good realtor and a great realtor is their negotiating skills. 

Conclusion.

Your efforts in getting a good home in Canada will always count if you hold on the above guidelines. Many people opt to do it their way relaying on online agents and end up counting endless losses. 

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