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The ultimate guide for first-time homebuyers

The ultimate guide for first-time homebuyers

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The ultimate guide for first-time homebuyers

Buying your first home is a huge step in every adult’s life, but the process isn’t always easy. The excitement of finally being able to make such an important purchase can cloud your thinking and result in you making some decisions that are not 100 per cent based on logical thinking. To avoid making the common mistakes first-timers make, such as buying more than you can afford or miscalculating renovation costs, here are some things you should keep in mind.

Make sure you are debt-free first

Owning a home implies many other costs besides the initial buying price and renovation costs. You may be happy to see that the monthly mortgage payment is lower than your rent was, but keep in mind that when you own, you are responsible for all maintenance costs. This is why you should make sure you start this new chapter in your life debt-free.

Pay off all debt you have and, if possible, try to build an emergency fund. You will feel much more at ease when you have to deal with unplanned expenses if you don’t have other payments to worry about and have a generous emergency fund that you can dig in. Make peace with the fact that you may have to decorate one room at a time and sleep on a mattress for the first few weeks. This will make up for some good stories in the future.

Know your limits

Before even starting to look for a home, set up your budget. Many first-time buyers can’t afford to make the purchase without a mortgage, so you need to determine how much you can pay for it monthly. To keep it safe, your house payment should not account for more than 25 per cent of your monthly income. If you want to take out a bigger loan, you should consider making a bigger down payment.

“Typically, it is advised to make a 20 per cent down payment, to avoid having to pay for private mortgage insurance,” say real-estate experts at Chestnut Park Realtors. “If you can afford it, make a bigger down payment. This will help you in the future, as you will have to pay less each month.”

At the same time, try to go for a 15-year mortgage, instead of a 30-year one. Even though you will end up with a higher monthly payment, you will be in debt for only 15 years and you will be paying far less interest.

Narrow your search

There is no point in scouting the whole city for a house, only to end up living on the other side of town and spending more time and money every month commuting to work. Try to narrow down your search to two or three neighborhoods that provide the most benefits. Because, even though the house seems to be the right one, the neighborhood may end up being the worst.

Nearby schools are among the first things you should be looking for, even if you don’t already have kids, as they can affect home value. Then, make sure the neighborhood has all the amenities you might be needing, such as grocery stores, a pharmacy and maybe even a hospital, at a close range.

Once you’ve narrowed your search down to a few neighborhoods, you can start scouting for houses that better suit your budget and needs. One piece of advice that many realtors give is to purchase the most affordable house in the best neighborhood you can. This way, you can add value to your home in time and end up selling it for more in the future.

Buy a home that fits your lifestyle

When buying your first home, keep in mind that you will be living there for at least 10 years, so think long term. Even though your needs may be pretty basic now, in 10 years a lot can change. You may end up having a family and kids, if you don’t already, so make sure you have enough room in the house for those changes.

How many bedrooms will you be needing? Will you have kids? Will you have people coming to visit and spend the night? Do you want a pool? Do you need room for a home office? These are all questions that you need to answer yourself before deciding on the house.

Attend open houses and think about renovations that you can do to increase the value of the house, but at the same time make sure it fits the needs of your family and gives you enough space to grow. The best way to do so is to make a list of absolute must-haves, such as bedroom and bathroom number, outdoor space and number of floors.

Do a home inspection

Congratulations, you have found your dream home! Now, before signing on the dotted line, make sure to do a home inspection. This will tell you if the house has any issues that may not be obvious to the untrained eye.

An inspector will check everything from pipes to walls, basement, insect or rodent issues, and many others. This way, when you negotiate the contract, you can present the seller with the issues you have found and maybe even get a price reduction in case they really bring down the house value.

Be careful when you sign the contract, especially when it comes to contingencies. You need to be able to back out of the sale after inspection, if there are issues that can’t be fixed, or in case something happens with financing.

After inspection, be realistic about the issues that are worth fixing or not. If, for example, you encounter mold issues or a degraded foundation, it may end up costing you more than it is actually worth paying, so if you don’t get a generous discount to cover repairs, don’t even bother thinking about it.


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Look for the condo market’s hidden gems this spring

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Look for the condo market’s hidden gems this spring

We can almost see the end of winter, and with spring tantalizingly around the corner, perhaps this is the year to buy your new home.

The market is changing daily; our city continues to grow and the shortage of new homes and new condos continues; demand still far outweighs supply. New detached housing took it on the chin a little, although there is little available, and little on the horizon. Average pricing across the GTA still exceeded $1 million.

With my three kids still to buy their first new home, I guess retirement isn’t on the horizon for me and many others as soon as I expected. They’ll need help getting into the market. Rents are forecasted to increase about 11 per cent citywide, so owning will still look like a better option if you can get in. I predict a return to a strong detached new home market in the not so distant future. Builders are feeling the pain of the buyers’ inability to get in; new mortgage rules are good in a general sense, but not making it any easier for would-be buyers. Still, we need more housing and it will bounce back and get absorbed faster from the buying public.

The condo market remains robust, although pricing has crept up significantly in recent years. Pricing is still well below the average freehold home that’s out there for the taking. Look for continued interest on all of the condo apartment projects that get launched or reintroduced to the market. While the builders have to protect themselves for the future by building in anticipated increases in costs of all kind, the market remains competitive and perhaps more of a buyers market than we’ve seen in some time. Lots of great choices are expected; make sure you do your homework and see what’s out there before you buy.

Winlock townhomes
Winlock townhomes

Look for some hidden gems out there as well. The urban townhome, or stacked townhome continues to grow in popularity. For those who want more space than a typical highrise condo, yet less than, a typical detached house, these fall nicely in the middle. There are lower maintenance fees and a larger space spread out over two or three floors, separating the living areas from the sleeping areas, all the bells and whistles you’ll find in our highly competitve marketplace and, perhaps most importantly to many, certainty as to timing. Builders can start them earlier as the presale requirements are smaller; the buildings or clusters of buildings have far fewer units than a typical highrise. And the construction process is simpler and much shorter. This provides more certainty as to when they will start and, more importantly, when they will be completed.

Some of these new townhome opportunities are presenting themselves in prime locations, places you never thought had any room for more development. One prime example will rise soon in the prestigious Bayview and Finch neighbourhood. Crown Communities, a company with deep roots, is introducing Winlock Towns, a collection of 30 new homes, 20 urban towns and 10 more traditional. An opportunity to live in a neighbourhood that commands very high resale values, with older product in the one, $2 million to $3 million range. Winlock offers a good selection of two- and three-bedroom plus urban and traditional townhomes starting at less than $800,000, ranging to slightly more than $1.2 million. The builder has thrown in all those bells and whistles, with over height ceilings, the best in finishes, appliances, free parking and, unlike many of the townhomes on the market old and new, concrete construction. All this, right in the heart of an established neighbourhood, minutes from Bayview Village, Fairview Mall, North York Centre and public transit, GO, the 400 highways and everything you need. Look for this and other hidden gems this Spring. It will be an exciting one for sure.

Mark Cohen is a founding partner of The Condo Store Marketing Systems, a firm specializing in the design, marketing and sales of condo and new home communities in and outside of the GTA. condostorecanada.com mark@condostorecanada.com

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