You have purchased your first property – Congratulations! As you approach the closing date don’t forget these four important steps that are often overlooked by first-time home buyers.
Understand the expenses you will incur as a new homeowner
Owning property comes with a few more bills than a rental. Once you have determined your mortgage payments you will also have to factor in annual property taxes and home insurance. If you are moving from an apartment to a detached home, semi-detached home, townhome or condo you will most likely incur additional utility costs and possibly a maintenance fee. All of these expenses will have to be factored into a monthly budget, which could mean a dip in your disposable income, but it is well worth it! You are now an official homeowner, and each month you when you are making a payment you are building equity in your property.
There are two unavoidable expenses at the closing
In order to close a property, you will have to pay land transfer tax and legal fees. The amount of these expenses will vary from property to property and may be affected by the location where your property resides. Make sure you work with your lawyer, and the Shirriff Wells team, to understand the amounts you will need to set aside to avoid any unwelcome surprises. On a brighter note, first-time home buyers benefit from programs like the Home Buyers Plan and various rebate programs to make your first home more affordable. More information on these programs is available here http://trebhome.com/buying/gov_programs/index.htm please be sure to ask us for additional ways to save money and make home ownership more affordable.
Do not switch jobs or make any significant changes to your financial situation
The bank will be issuing a mortgage based on pre-approval, but they will still revisit your financial standing for your mortgage eligibility prior to the time of your closing. A major change in your financial situation – such as buying a vehicle, loss of a job, or running up lines of credit – may prevent the lender from extending your financing. As long as you keep your finances status quo during the closing period you should not experience any problems.
Know the comparable property prices in your new area
You want to make sure you are aware of the comps in your new area as the bank will only issue a mortgage for the market value of the home. If the purchase price is higher than the market value you will be responsible for paying the additional funds before the property closes. For example, if you paid $500K for a property valued at $450K you will have to pay $50K out of pocket, on the closing date, as the bank will only mortgage $450K. This will be evaluated on a case-by-case basis however, keep in mind that any variance between the purchase price and market value, can significantly change the number of funds needed on the closing date.
Purchasing your first property is exciting! There are a lot of closing steps that the team at Shirriff Wells will be happy to help you navigate. Please give us a call and we will walk you through the process so you feel confident, and comfortable moving forward with your purchase.