What You Need When Buying a House

Buying a house can be an exciting but stressful journey. In today's economy it can be very intimidating and difficult, especially if you’re a first time home buyer. I am here to explain how to buy a new build home or pre-construction home.

Here is what you need to buy a new build home:

• Money in your bank account that’s easily accessible. So it can’t be locked in stocks, home equity, or other investments. You want to be cash happy. You want to be able to access your money at a moments notice without having to sell stocks or use your home equity, which is essentially getting a line of credit loan.

• Multiple mortgage brokers. You want the best deal for yourself. Don’t limit yourself to one broker because you might end up feeling your interests aren’t being taken into account. A mortgage broker is supposed to shop around and get you the best possible deal. I had a mortgage broker who only liked to deal with Scotiabank. It defeated the purpose of using a mortgage broker instead of a bank when my broker only looked at one option and refused to shop around. Don’t be afraid to ask for second opinions because this is a huge investment in your life and you deserve to get the best possible deal.

• A good lawyer. Someone on your side that can talk to the builder and get you to request specific things from them. Experience is key, when your lawyer is going through the purchase and sales agreement your home builder provided, you want someone that knows all the tricks the builder tries to pull, and someone who can advise you on the next steps to take.

• Cheques. You don’t realize how under appreciated cheques are until you buy a house and everyone from your lawyer, to your home builder, to your mortgage broker keep asking you for cheques. When I bought my first home from Mattamy Homes they asked for 6 post dated cheques for the next 6 months, $5000 each.

• A good income. My first mortgage broker put my income at $74,000 per year. He got this number by taking an average of my last 2 T4’s. He refused to take into account my current income because my T4 for the year hadn’t been posted yet. My second mortgage broker took into account my money this year and what I was pacing to end the year at, and put my income at $85,000 per year. The difference between an income of $74,000 and $85,000 is huge when you’re trying to get pre-approved for a mortgage.

• Documentation. Get your paperwork in order. Organize it in a file on your phone and a folder at home. You’d be surprised how many emails I’ve had to send with so many different documents and amendments. I’ve given the following: drivers licence, passport, phone number, job title, last 2 years of T4, last 2 pay stubs, my last 3 bank statements, the builders purchase and sale agreement, mortgage agreement to my lawyer, letter of employment, copy of cheques deposited to the builder. Because I already own and rent another home I also had to provide my property tax bill, my tenancy agreement paperwork and my most recent mortgage statement.

• Experience. This one isn’t fair to first time home buyers but when you go through the process the first time, the builder remembers you, and is more inclined to work with you if you were a good costumer. They bring you up the waiting list, they pull some strings for you like extending the occupancy date. There’s just a different level of respect you’re given.

• Knowledge. Know what you want and don’t let anyone convince you otherwise. If your downpayment is going to be 120k don’t let anyone convince you to put more or less. Just put what you’re comfortable giving. If your budget is $500,000 then keep it at that. Don’t do more because you’ll feel like you’re drowning in bills. Having a good support system of family and friends who have your best interests in mind is very important. Know your home builders. Mattamy Homes is not as strict as Minto Homes. They trust you more and give you the house as soon as you provide the cheques for the deposit they ask for. Minto wont give you the home without you first giving them a pre approval letter, your lawyers information, and post dated cheques. Mattamy Homes asks for additional information later on in the process.

• Sometimes a home may not be attainable without a co-signer. If you end up needing a co-signer you will need to let your home builder know so they can send the purchase and sales agreement to you and your co-signer. You need to let your mortgage broker know so they can collect documentation from you and your co-signer, and you need to let your lawyer know. If you purchased your home thinking you don’t need a co-signer, and along the way realized you can’t get approved for a mortgage without a co-signer then you’ll need to reach out to your builder and ask for an amendment to include your co-signer on the purchase and sales agreement. It’s a time sensitive matter and needs to be done asap.

• Hidden costs. Your real estate lawyer will provide you with a document to sign that states how much the legal fees will be, the ownership, and the land transfer fee. These are the hidden costs people mention when purchasing a home. The hidden costs can end up ballooning to over $10,000 so it’s very important when you put your down payment you leave an extra $10,000 for the closing costs (lawyer fee, land transfer, title on house, ect).

Being prepared, doing research, and having a good and experienced team on your side is what this boils down to. Buying a house, whether you do it alone or with a partner is certainly not easy. Hopefully this post can help someone.