Loading ...Stephanie Billes
As a first time home buyer, entering the real estate market can be a little overwhelming.
With soaring real estate prices and fears of a market bubble trickling up from the United States, many first time home buyers are reasonably anxious.
Despite these fears, the Toronto housing market has remained strong. While sales are down from last year’s incredibly fast paced turnover, June 2008 proved that the market is still active and healthy, with the fifth best June on record. Sales for the month of July 2008 were up compared to sales for July of 2006.
The past ten years or so have been phenomenal for sellers, with the number of buyers exceeding the supply of homes on the market. With all the competition for houses, purchase prices were driven up and often offers were drafted without any conditions for financing or inspections.
We are slowly experiencing a shift in the real estate market this summer as it becomes more balanced. In a balanced market as we’re currently experiencing, buyers have the leisure of taking the time to make decisions without the pressure of multiple offers and price wars. The number of homes on the market is more or less equal to the number of buyers looking to purchase. September would be a great time to begin you search for your first home whether it is a condo or a house.
* Statistics taken from the Toronto Real Estate Board
Five ways to Reduce Real Estate Stress for First Time Home Buyers
1. Write down what is important to you. This will help you and your agent narrow down the area and style of home that will suit your needs.
Do you need to be close to public transit? Would you prefer to walk to stores and restaurants? Think about the future; five years down the road where and how do you see yourself living? Will you be raising your children in this house? What schools and parks are in the area? How safe is the neighbourhood? These are all just as important as the house itself. Remember you’re not just buying a home; you’re buying a location. The right home in the wrong location will always be in the wrong location. You can always update and modify the house to your needs and taste.
2. Determine what you can afford. A mortgage specialist can help you understand the costs associated with purchasing your first home and how much you can afford to spend. Some costs are ongoing like a mortgage, while others are one-time costs.
3. The largest one-time cost when purchasing a home is the down payment. Traditionally, a down payment represents twenty to twenty five percent of the purchase price of the home. The benefit to this type of conventional mortgage is that there is no insurance required by the government. The minimum down payment for a mortgage is five percent of the purchase price. This type of mortgage is a high-ratio mortgage and requires insurance to protect the lender should the buyer default on payments. This is an extra cost added onto the mortgage.
4. Every real estate purchase in Ontario incurs a land transfer tax imposed by the Provincial Government. The GTA has a second land transfer tax in effect imposed by the Municipal Government. The good news is that there is a rebate for first time home buyers who have never been on title to a property.
5. Find a real estate agent who can pinpoint homes that meet your needs and dismiss those that don’t. A good agent can advise you of your financial and legal options and recommend appraisal, home inspection and contracting services.
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