Determining Your Budget
The first step in the home buying process is determining your budget. Simple enough; you can only buy what you can afford. What’s in your savings account will determine what kind of down payment you can afford, and your anticipated income (how much money you will make in the future) will determine how much you can afford to pay for the monthly payments.
Principal and Interest
Keep in mind mortgage payments include principal and interest. Essentially, when you make a payment, part of that is spent on interest, and the rest goes toward reducing the principal. As you pay off the principal, you’ll have to pay less interest. Interest adds up, so the bigger the monthly payment, the more you’ll save on interest in the long run although obviously this leaves you with less money in the short term, so it’s important to consider the amount of time you’d like to spend paying off your mortgage.
Fixed and Variable Mortgages
When the interest rate will remain the same throughout the course of your mortgage, this is called a fixed interest rate. With a variable mortgage, your interest rate will change with trends in the market.
Check here for more information on understanding Ottawa mortgage rates.
Finding Your Broker
Once you’ve determined your budget and what kind of mortgage you’d like, the next step is finding a mortgage specialist or broker. A mortgage broker is essentially a middleman between you and the lending institution (a bank or credit union usually), and can negotiate with them to get the best possible financing deal for you, as well as work with you to find out which payment plan would be best for you.
Once you’ve mapped out the financing for your new home, you’ll need to consider where you’d like your home to be.
It’s important to consider transportation time between your new home and your workplace. If you don’t drive to work, you’ll need to find out about the transit systems going to your job and back. Keep in mind the time of day you’ll be commuting; rush hour conditions can vary depending on the route you’ll be taking. You may sour on that inexpensive, nice new house you bought if living there involves a 2-hour drive to work in bumper-to-bumper traffic every day. Also, if you plan on living in a rural area, find out what road conditions are like (especially in the winter) before you buy.
If you’re looking in an area and don’t understand why prices are cheaper than they should be, you should do some research and find out the reasons. Sometimes, seemingly amazing areas to live in are cheaper because of problems with water contamination, landfills, traffic problems, pollution, or crime rate.
Also, do you mind living on a busy street? Properties on busy streets are usually cheaper, but have higher pollution, are noisier, and are less safe for children. Statistically, people who live within 50 meters of very busy intersections for most of their lives will have a life span 2 years lower than people who live away from heavy traffic. Make sure to research the pros and cons of living in the area you’re considering moving to.
Build or Buy?
After choosing an area to live in, you’ll need to decide if you want to build a house or buy one that’s already been built, if you have the option. If you want to build a new house, you’ll have to start looking at designs and site locations. Building your house has the advantage of having your house customized to what you want, but you won’t be able to live there until construction is completed, whereas you can move into an existing house much faster.
Do It Yourself, or Use An Agent
Buying and selling a home privately will save you some money, but will require more work on your part. If you buy a home through a real estate agent, you’ll pay a fee based on the home’s value. The agent’s fee is included in the price of the home, rather than appearing as its own charge.
See our guide on “Why you need a Real Estate Agent in Ottawa”
Finding the Right Agent:
If you choose to use an agent, the next step is to find the best one for you. A good place to start is to ask friends and family for recommendations. If a real estate agent did a good job with them, it’s likely that you’ll have a similarly positive experience. Next, do a Google search for local real estate agents.
Once you’ve spoken to friends and family, and looked up agents online, it’s time to visit their websites. Checking the quality of agents’ websites is a great way to screen real estate agents to figure out the ones you really want to speak with. Check if their website has unique, relevant information on real estate in Ottawa, and see how professional it looks.
See our guide on “How to select your real estate agent”
Contacting an Agent
Once you’ve narrowed your search of real estate agents down to a few that you’re interested in, it’s time to give them a call. Have a list of questions you’d like to ask handy, so you don’t forget anything important. When you’re on the phone with them, get to know their personality and see if you feel like they’re someone you could work with. After speaking to prospective agents, pick the one you’re most comfortable with.
Now that you have an agent, it’s time to start looking at houses. Your real estate agent should be sure to show you houses that fit the criteria you’re looking for, and should show you listings of other agents as well as their own. Be aware that agents make double commission off sales of their own listings, and agents who only show you their own listings may not be showing you houses that could be a better fit; therefore, take praise of their listings with a grain of salt.
Don’t be limited by your agent. If you see an advertised house that you like, and your agent hasn’t shown you, check it out anyway. Make sure to check out MLS work listings in the area you’re interested in, since MLS is the authority on real estate listings in Canada.
When you’ve picked the listings you’re interested in, it’s time to check the houses out. Give the listings you’ve picked to your agent, and they’ll take you to each of the homes for viewings.
When you look at houses, keep an open mind and don’t allow your agent to pressure you into buying something you’re not totally comfortable with or not sure of.
Inspecting Potential Homes
When inspecting a home, watch for deal killers; traits a house may have that would exclude it from being a potential home for you. This may include such problems as rodents, insects, mold, water damage, asbestos, a leaky roof, or damage to the foundation. Find out how the house is heated and cooled, and how much it costs.
Consider parts of the house that may need to be repaired or replaced in the future. There are two kinds of repairs and renovations; the kind you need, and the kind you want. A leaky roof or a broken water heater will take priority over problems such as unattractive carpeting or peeling wallpaper. Repairs and renovations should be factored into your budget, since these costs will need to be covered after you buy the home.
What to Look For
Check the windows, keeping in mind that if they’re wood, they’ll likely need to be changed at some point. Also see what kind of flooring the house has; hardwood flooring, or marble or granite flooring can add a lot of value to the home. Old, outdated carpet or linoleum flooring may or may not be a deal killer for you, as it is replaceable. If you or a family member has allergies, keep in mind that carpeting contributes dust and allergens to your home’s air.
Take a look at the cabinets, countertops and doors in the house, and see if they will need replacing. Check when the roof was last done. Also find out if the house uses a septic system or city sewage.
When viewing the basement, check for water damage, mold, and high humidity. Pay attention to smells such as mildew or anything strange, and watch for cracks in the foundation. If there is a sump pump in the basement, check to see if it has a battery back up; a sump pump is the safest way to protect your basement from water damage. Check out the toilets and faucets to make sure they work, as well as light switches and other electrical components around the house.
Other things to consider when you’re viewing the listing are the availability of rooms and whether or not they’re big enough for your needs. Depending on the size of your family, you’ll need a certain amount of bedrooms and bathrooms.
You’ll want to find out if there is there enough space in the house for your belongings. Imagine the house empty with your family and possessions in it, don’t be distracted by what the current owner has in the house.
Don’t forget to thoroughly check out the exterior of the house before you finish the viewing. If it helps you remember details, bring a camera or a notebook.
Make sure to look at a good selection of homes, even if you seem to have found one that’s ‘perfect’.
See our guide on “The dangers of Radon in your new home”
When you’ve found a house you’re interested in, find out its history, and ask your agent how many owners it’s had, and why the current owners are selling it. If you don’t get a straight answer on this, it’s not a good sign.
Make sure to check out the prices of neighbouring houses and compare their prices to your target home. Factors that could influence the price are the house’s state of repair, and whether or not appliances and furniture are included.
When you and the seller come to an agreement on price, you’ll need a notary or lawyer to help you with the legal documents involved in the property transfer.
You’ll have to determine a closing date also, which can be easy or complicated depending on the current living situations of you and the seller.
Preparing for the Move
After sealing the deal on the house, you’ll need to pick a moving date. Try to avoid a winter move, since moving in snowy and icy conditions can be awkward.
If you have able-bodied friends who are willing to help you move, make sure they will all be available on moving day. Keep in mind that if you use your friends as movers and rent your own truck, the liability for any damage to your property during the move is on your shoulders.
If you use a moving company, keep in mind that the more reputable ones will be more expensive, but they will insure your belongings and your move will be less risky. Find out about the different moving companies available and make your decision, factoring in cost, insurance of your property during the move, and the reputation of the movers.
When you’ve chosen who will help you move, whether a moving company or friends, you’ll need to prepare for moving day. Make sure to do a thorough job of packing your possessions, since good packing will reduce your chances of your items being damaged. Make sure your fragile items will be well protected, and label every box with what its contents are, and what room of your new house it will be going to.
When moving day comes, you’ll need to put your trust in the movers. If you’ve hired a moving company, keep in mind they are experienced and will know what they’re doing, and you should basically stay out of their way and let them do their job. If your movers are your friends, they’ll be less experienced and you’ll likely have to take the lead and give them directions.
Either way, take care of the people moving your furniture. Keep morale high by providing snacks and being positive. Even if something gets damaged, don’t stress out about it until after the move is complete.