So you’re ready to buy a property

Step 1 | Determine how much you can afford

Only buy a house you can afford to buy today. You might think that next year you’ll get a promotion, or get married, and have a second income, but you can’t base your decisions off of what might happen. A good rule of thumb is to keep your housing expenses around 30% of your gross monthly income. Any more than that and you run the risk of being house poor.

For example, if you gross $600 a week, that’s a gross income of around $2,400 a month. Your ideal housing expense budget would be around $720 a month.

Step 2 | Examine your finances

Have you checked your credit lately? Your credit rating is extremely important when you go to get a mortgage. It tells the bank how good you are at paying your debts. If you’re young, or have a low credit score, have you considered finding a co-buyer to take the mortgage with you? This could be a spouse or parent, someone with good credit who can take up your payments if you can’t make them.

Do you have savings? You’ll need cash for your downpayment and related expenses. These are usually between 3-20% of the purchase price of your property. These costs can’t be absorbed by a mortgage.

Step 3 | Shop for a mortgage

Shop around! Different institutions offer different rates, time frames, and promotions. You’ll be paying for this for years so you want to get the best deal available. Getting pre-approved for a mortgage let’s you know what your house budget is before you start looking. The worst feeling is falling in love with a house you can’t afford, or losing one you can because securing financing took too long.

Step 4 | Contact a real estate agent

Real estate agents work closely with other agents in the are and have a tight grasp on what’s available or coming up. The agent will show you any properties that may be of interest to you and then handle all of the legal aspects and negotiate on your behalf. They work for you to ensure you’re getting treated fairly. A good real estate agent will save you both time and money.

So you’ve found the perfect property

Step 1 | Contact a real estate agent

Your real estate agent will be by your side throughout the entire process. Once you’ve decided on the perfect property, they’ll help you with the rest.

Step 2 | Negotiate your offer

Your real estate agent will write up an offer for you with your price and conditions. Would you like the owners to leave their couch behind? Ask for it now. If your offer is accepted, great! If not, the owners might come back with a counter offer. You can accept that, or counter back, until you’re both satisfied.

Step 3 | Negotiate your mortgage

Your offer has been accepted, awesome! You’ve already been pre-approved for a mortgage and shopping around for the best option, so now it’s time to finalize that deal and get your financing in place.

Step 4 | Secure an insurance policy

All mortgage lenders will need you to have an insurance policy in place on the property if there is a structure on it. This policy protects them and ensures that they will get their money back if anything happens to your property. Home insurance is always a good investment. It protects everything you own and so much more.

Step 5 | Get a home inspection done

Getting a home inspection done on your new property is very important. It’s hard for us to tell what’s going on inside the walls, ceiling, or foundation of a house. A home inspector examines the roof, foundation, walls, windows, doors, insulation, basement, crawlspace, and attic. They’re also looking at your plumbing, electrical, and heating systems. The report provided at the end of this will tell you everything you may not be aware of. It’s not uncommon for these reports to come back with 50 or more issues; they could be minor things, but these are things you should be aware of before buying the house. If you bought a home in the summer without an inspection, you may not find out until winter that the heating system was broken.

Step 6 | Get a lawyer

A lawyer will handle all of the legal aspects of the sale. They will handle the title transfer and payments for you. Take all of your paperwork to your lawyer’s office and get them started on your purchase.

Step 7 | The little stuff

If there was anything the homeowner needed to do for the sale, this is the time to have it done. If a condition of the sale was that they repaved the driveway, it would need to be done. This is the time to give notice to your current landlord that you’ll be leaving and hiring movers, if you need too. You should make arrangements for utilities to be set up on the closing date. These are things like power, water, cable, etc. If you’re buying a rural property, a water test will need to be performed.

Step 8 | Closing day

The day is finally here and it’s time for your final walkthrough. You and your realtor will do a final walkthrough of the property to make sure that everything is as stated in the contract. If it is, you can go to your lawyer’s office and sign the final paperwork. Once that’s done, they’ll hand you the keys.