Ottawa First-Time Home Buyers Guide

Being a first-time home buyer in Ottawa can be a daunting and overwhelming experience. You’ll have a lot of information thrown your way and often need to make decisions quickly or risk losing out on your dream home.

But houses flying off the market in weeks doesn’t mean you should act on impulse. Instead, you should do your homework and get informed so you can make a smart decision that fits without your budget. This way you can still get a home you love without compromising your future money goals.

With that in mind, here are five things every first-time home buyer in Ottawa should know before you start throwing offers around.

1. Figure Out Your Budget

How much house can you afford? That’s your biggest question upfront.

You need to check your monthly budget to determine what you can afford before you get attached to a beautiful house beyond your limits. You’ll need room in your budget for other housing costs like taxes, insurance, HOA fees, as well as a cushy emergency fund for when things inevitably break or go wrong.

As a rule of thumb, your housing costs should be no more than 25 percent of your monthly take-home pay. Property taxes and homeowner’s insurance will affect your monthly home payment, so you need to factor in those numbers when you settle on a maximum home price. You can check with your real estate agent and insurance company to help narrow down your target number.

2. Save, Save, Save

Of course, you should have been saving for years before now, but either way, it’s time to up your efforts. Paying cash for the total price of a home is mostly an unrealistic goal, but you will want to have at least 20 percent saved for a down payment. This way you won’t have to pay for private mortgage insurance (PMI), which protects your mortgage company if you are unable to make your payments and end up in foreclosure. This additional PMI costs 1 percent of your total loan value and is added to your monthly payment.

You should also avoid first-time homebuyer programs that offer single-digit down payments. These options will end up costing you more in the long run. Watch out for Adjustable-Rate Mortgages (ARMs), FHA loans and even VA loans so you don’t get stuck paying more. The length of your mortgage is another important factor, so try to avoid a longer mortgage.

3. Get Preapproved for a Loan

Once you have your savings lined up for a 20 percent down payment and closing costs, you’ll be in a better position for the other 80 percent that will go to your mortgage lender. At least now you can begin the conversation.

You can save time later by getting pre-qualified for a loan and even get a preapproval letter before you begin your home search. This shows sellers that you are a serious buyer — an excellent way for first-time homebuyers to get a step ahead in a competitive market.

Your lender will need to verify your financial information, such as proof of income, taxes, and more, to preapprove you for a loan.

4. Research The Neighborhood As Well As The Home

When you’ve found some homes you like that are within your price range, make sure you also do your homework on the neighborhood as well. You want to find a home that fits your lifestyle, is in a safe area, and has good schools.

You can ask your real estate agent for information on crime rates and school quality in the neighborhoods you are looking in. You’ll likely find that you’re willing to compromise on the size and condition of the home if it is in an ideal location.

Visit the neighborhood at several different times and days to get a better feel for what it’s really like to live there. Consider the traffic and your commute times, the noise level, public spaces and if people are often outdoors. Only choose a home in a neighborhood that gives you a good feeling.

5. Attend Open Houses

You don’t have to be ready to buy to attend open houses. But going to see homes in your target neighborhoods is a great way to learn more about the area and to solidify your list of wants and needs. You might find that the list changes as you go to see more homes, and you’ll also learn more about what your price range gets you.

When it comes to buying, a good tactic to use is to find the most affordable house in the best neighborhood. This gives you a better opportunity to build home value over time as you make upgrades to the home.

Summary

Obviously, there are numerous other steps to take to prepare yourself for the home-buying process here in Ottawa, but these five will give you a good start. There are bound to be roadblocks and snags along the way, but being as prepared as you can be will give you the best chance of having an enjoyable experience.

Perhaps the best thing you can do for yourself is to hire a reputable real estate agent to take some of the weight off your shoulders. They’ll help you find the perfect home, negotiate a deal on your behalf, and be there with you to see the process through until closing.

If you need help finding a local Ottawa expert you can trust, turn to the professionals at the REID Real Estate Group Ottawa. Get in touch with us today!