Even if you’ve purchased a home in the past, the home buying process can feel quite overwhelming. There are a lot of steps, and everything needs to happen in the right order. Any unforeseen holdup could cost you both time and money, so it’s best to do everything possible to make sure you follow the process and have everything you need.
Let’s take a look at how the home buying process works so you know what to expect.
Figuring Out Your Down Payment And Closing Costs
Most first-time homebuyers don’t realize just how much money they’ll need upfront when buying a home. It’s important to have this knowledge so that you’re prepared.
Of course, the first thing people think about is the down payment. This needs to be at least 5 percent of the cost of the home, but it’s better if you can have 20 percent. We’ll talk about the affordability and the monthly cost of your mortgage payment in the next section, but as long as you have a general idea of the cost of your future home, you can start calculating how much you’ll need.
In addition to the down payment, though, you’ll also need money for the closing costs. These typically include paying property taxes and homeowners insurance for the year upfront, along with legal fees. It usually amounts to about 1.5 to 4 percent of the cost of the home. Many people also pay money for a home inspection, especially when buying a resale home.
And if you’re buying a resale home… make sure you have a bit of an emergency fund saved up even after you’ve paid all these other expenses. As soon as you take ownership of the home, any problems that come up are your responsibility.
While this isn’t as much of an issue when you’re building a brand-new home, you should still have some money saved for things like:
- furniture – especially if this is your first home!
- maintenance items – lawnmower, shovel, etc.
How Much Will Your Mortgage Be?
Your monthly mortgage payment will depend on the amount you’re borrowing and the interest rate you get. But you also have to remember that each month, you’ll be paying 1/12 of your property taxes and homeowners’ insurance – if you go with monthly payments; there are some options where you can pay the full amount for the year. If your down payment is less than 20 percent, you’ll also have to pay mortgage insurance. If you don’t factor these costs into your estimation, you may end up with a higher monthly payment than you can afford.
The best thing to do is to get pre-approved for your mortgage. In doing this, the bank will look at your finances and tell you how much they think you can pay each month. From there, you can determine the maximum amount you can borrow (the cost of the homes that are in your budget). Knowing your rate, you can also play around with mortgage calculators to find something you’re comfortable with.
Finding the Perfect Community
Ideally, you’ll be living in your new home for many years, so you want to make sure you’re purchasing a home in a location you love – both now and in the future.
For instance, you’ll want to think about what the commute is like for work and if you’re comfortable with that drive time.
Even if you don’t have kids now, if you’re planning to kids in the future, you’ll want to think about whether there are good schools and recreation areas nearby. It may become a factor for potential buyers if you choose to sell.
You’ll also want to look at the design of the community and what types of amenities are nearby. For instance, some people want a playground or walking trails right within the neighbourhood, but others don’t care that much as long as there’s a recreation centre nearby. Are your favourite grocery stores around? Do you have some preferred specialty stores? Are they nearby?
Remember, if you’re building in a brand-new community, some of these things may not be immediately available. But when it comes to a new neighbourhood, many commercial developments love these areas. It’s a guaranteed client base for them! You may find the community is still a good fit for you. As a bonus, those who build in communities that are just getting started usually see an increase in their home’s property value once the area is fully developed.
Building Your Dream Home
Once you’ve chosen the location, you’re ready to build! Now you take a look at floor plans and home models to find the perfect fit for your family.
When you build with Edison Homes, you’ll have several options when it comes to your new home:
- Edison Custom, which allows you to build your home completely from scratch.
- Edison Tailored, which allows you to choose from a selection of floor plans and designs, which you can modify to suit your style.
- Edison Urban Upgrade, which allows you to renovate or completely rebuild your existing property.
We also have a selection of move-in-ready homes if you’re looking for something with a shorter time frame or don’t want to build your home completely from scratch.
The Walkthrough and Inspection
When you buy a resale home, you usually have an opportunity before finalizing the purchase agreement to hire a home inspector. If they find any problems with the home, you can adjust your offer or ask that the seller make repairs.
If you’re buying a brand-new home, you’ll have a chance to walk through the home at various stages of the building process. The builder will have the home inspected at each stage, according to local regulations. And as you take possession of the home, you will walk through with the builder to be sure everything is to your liking.
Of course, you won’t be able to make changes at this point since construction is underway, but it’s a good point to ask questions you may have, such as how to clean or maintain your appliances. As a new build, your new home should also be covered under warranty so make sure to go over the details of that with your builder.
Once the home is built to your satisfaction and all of the closing costs and legal requirements are taken care of, you’ll get the keys and will be able to move into the home. To help this process go smoothly, a lot of people create a moving checklist. If you do this, you won’t forget the most important steps.
Now it’s time to set up your new home!
When you build with Edison Homes, you’ll be getting the benefit of our 20+ years of combined home building experience to help ensure that everything goes smoothly. However, you can also help to avoid any unexpected surprises by learning about the home buying process for yourself. If you’re still unsure about anything, give us a call and one of our experts can talk you through any part of the process you need help with.