Buying your first home is no small achievement. From finding the perfect place to submitting a down payment, the road to first-time homeownership is an exciting journey.
As experienced real estate agents, we understand the concerns that come with navigating the housing market for the first time. Although it may seem overwhelming, the right preparation and expert support can make the process a breeze.
To help you get started on the right foot, here are our top 10 most frequently asked questions from first-time buyers.
Looking for information about selling your home? Check out our top 10 FAQs for sellers here.
1. Is Now a Good Time to Buy?
In recent years housing in the Greater Toronto Area has skyrocketed, with selling prices continuously breaking records. This trend has led many upsizers to wonder if now is a good time to buy a home, or if they’ll be better off waiting. Inventory shortages, rising prices, and competition can be overwhelming.
In reality, first-time buyers should not be discouraged by today’s market. Currently, the market is balancing, with more inventory becoming available, less competition, and more stable pricing.
Working with a great Toronto real estate agent is the best way to incorporate every possible advantage during the buying process. They can help you be strategic and find an amazing home within your price range.
One of the best ways to know if the timing is right is to stay up to date with the market. You can do that buy signing up for our newsletter right here.
2. How Much Do I Need For a Down Payment?
You may have heard that buying a home requires a down payment of 20%. In the current market, this would push homeownership out of the realm of possibility for many Torontonians.
Thankfully, 20% is no longer the standard for down payments. In reality, you can submit an offer on a home with less than 20%, as long as you have mortgage insurance. In Canada, you need 5% on the first $500,000 of the sale price and 10% on anything over that amount.
However, be aware that anything below a 20% down payment is subject to mortgage insurance. It’s best to do your research and speak with a professional to determine the specific down payment you should aim for.
3. When Will I Need to Apply For a Mortgage?
While obtaining a mortgage is a critical step in the home buying process, many first-time buyers are unsure of when the best time to apply for a mortgage is. Getting pre-approved for a mortgage at the start of your home buying process can help you be prepared and avoid delays when submitting an offer. That being said, pre-approvals typically expire after 90 days so you may need to re-apply if finding your dream home takes longer than expected.
Note – pre-qualification is not the same as a pre-approval. Pre-qualification is simply an estimate of how much you can borrow based on your finances. Pre-approval allows you to concretely prove your financial resources as a buyer.
Getting pre-approved has its benefits. You can get a better idea of how much you can afford to spend, which will help with your home search. Pre-approved is also a great way to show sellers that you are a serious buyer.
Are you ready to buy? Here are some other posts to guide you:
- What Buyers and Sellers Need to Know About Multiple Offers
- Top 5 Misconceptions When Buying Your First Home
- Our Process for Finding Your Perfect Home
4. Do I Need a Real Estate Agent?
While not a legal requirement, working with a real estate agent is hands-down the best way to navigate the home buying process. Not only can they help you find the perfect property, but their professional industry insights, negotiation skills, and housing expertise can give you endless advantages when it comes to buying.
Your very own buying agent is always looking out for your best interests.
5. What Does it Cost to Work With an Agent?
Buyer commissions are a common misconception among many first-timers. And, unfortunately, it can scare some buyers away from seeking agent support. In reality, buyers do not pay a commission to their agent. Sellers pay all commissions, which are then split between the selling and buying agents.
It literally costs nothing to work with a real estate agent to buy a home.
6. What is a Buyer Agreement?
After you’ve found a great agent to work with, they’ll likely ask you to sign a buyer agreement. This is a formal document that outlines the services provided by the real estate agent and the expectations and responsibilities of the buyer. Although it may seem intimidating, a buyer agreement is ultimately in the best interests of both parties.
7. What’s Included in a Home Purchase?
Along with the home itself, a purchase will also include some fixtures. These are usually large, difficult-to-move furnishings or appliances, such as an oven or refrigerator. Easily removed personal items are known as chattels and are generally unincluded from the home purchase. However, if you spot an item during a home showing that you have a particular interest in, ask your agent about it. They may be able to request it be included during the negotiation process.
8. How Long Does the Buying Process Take?
Just like properties, each home buyer is unique. Depending on your specific needs and timeline, along with market inventory, buying a home can range from a few days to a few months. At the beginning of your home buying journey, your real estate agent can suggest a reasonable timeline based on the circumstances.
Want to learn more about real estate in Toronto? Explore these informative blog posts about the city’s ever-evolving housing landscape.
- Inventory Challenges: Whitby Home Receives 13 Bids
- Downtown Condo Sells For 126K Over Asking Price
- What You Should Know About Buying and Selling on the Waterfront
9. Should I Expect a Bidding War?
Although the market has begun balancing out, bidding wars have been a common factor in Ontario real estate for a few years now. Regardless of market conditions, a great home will likely have more than one interested buyer. While not guaranteed, first-time buyers should anticipate competition during the offer process. This expectation can help you be prepared should you find yourself bidding against other buyers.
A good way to prepare for this is by sitting down with your financial planner or agent and determining what the absolute top end of your budget is. During the bidding process, your agent will help you strategically navigate offer submissions to increase your chances of landing your dream home.
10. What Happens On Closing Day?
Once you’ve submitted a successful offer and closing conditions are met, you’re almost a homeowner! The closing day marks the final step of the buying process. On closing day, the final payments on the home are received, and ownership is officially transferred to the buyer.
Although the buyer typically receives the keys to the property, the closing date is different from the possession date, which is when you’ll be able to move into your new home.
Are you ready to begin the exciting process of buying your first home? Our team can help! Reach out to learn more about our approach to buying.
