August 26th 2021
6 Steps to Buying A House
By Jessica van Rooyen
Technology has streamlined our lives in countless ways. Activities like grocery shopping, making dinner, and even personal banking can now be done from the comfort of your living room. But when it comes to buying a house, most things can’t be done digitally — at least, not yet.
While real estate apps and online brokerages continue to crop up — and virtual viewings have become more popular during the pandemic — in-person interaction remains crucial during the homebuying process.
Speaking of the homebuying process: If you’re curious about how exactly it works, below we’re breaking down 6 key steps for successfully buying a house in Toronto (or other areas of Ontario).
6 steps to buying a house
One of the biggest benefits that technology affords you as a future homeowner is the ability to monitor multiple markets in real-time. You can comb through potential areas from Ottawa to Toronto to Thunder Bay and curate your own list of potential homes to buy. Once you’ve found a community or two that you’re interested in, you can connect with your real estate agent to receive the necessary guidance on next steps.
Of all the things a real estate professional can help you with, navigating the 6 steps to buying a home is by far the most important. Between assessing the feasibility of a potential home based on your financial situation and pairing you with top-end legal professionals, there are multiple steps you must complete on your journey to buying a house.
Step #1: Get an honest financial assessment
As is the case with any large-scale financial investment, purchasing a home needs to begin with an honest and objective assessment of your current financial situation. This means considering everything from your current salary and savings to your credit score, typical financial behaviour, and ability to cover closing costs.
Meeting with a financial advisor at your bank or looking over resources like the Canadian Mortgage and Homeowner Corporations guide to buying a home in Canada are great ways to make sure you’re considering all relevant dimensions of this large-scale purchase. The costs of homeownership can be split into three broad categories: initial costs, carrying costs, and large-scale repairs.
Step #2: Find homes for sale
There are plenty of ways to find the home that’s right for you. From driving around your ideal neighbourhood to searching on an online real estate platform or service to signing a representation agreement with an agent, your strategy for finding homes for sale can be custom-tailored to suit your preferences.
Some of the common factors people look at when determining their ideal home include:
- The size and age of the home
- Proximity to public transit or major transportation routes
- The overall safety of the neighbourhood
- How close the home is to essential services
With plenty of homes for sale across Ontario and the rest of Canada, there’s sure to be one that’s right for you!
Step #3: Secure your financing option
In most cases, people need to secure a mortgage pre-approval from a financial institution or lender to progress through the other steps of buying a home. Depending on your risk tolerance and current financial situation, there are different mortgage styles that you can choose from — these fall along multiple spectrums, from open and closed mortgages to conventional or high-ratio mortgages. Determining the size of your down payment and your home insurance policy can also impact the financing options available to you.
For first time home buyers and others who are just learning how to buy a house, there are also incentives offered at both the federal and provincial levels that provide assistance in the form of equity-sharing mortgages, tax refunds, and other financial benefits.
Step #4: Make an offer
Once you’ve navigated the first three steps, you can proceed to one of the most exciting stages of buying a home: putting in an offer!
Collaboration with your real estate agent will help you arrive at a number that maintains the balance of affordability and competitiveness. This is a good time for you to reaffirm your financial analysis and ensure that you’ve included current, future, and potential costs into your calculations. Before making an offer, you can also request information from previous owners (when applicable) like energy bills, taxes, and building updates. All of this relevant information can then be rolled into the final number that you and your agent settle on before sending it along to the selling agent.
Step #5: Have the home inspected
There are two major reasons the purchase of a new home is contingent on a professionally conducted home inspection:
- Financial institutions and lenders want to ensure their money is going toward a valuable asset, not a mixed bag of expensive renovations requiring further expenditure.
- Many of the functional components of the home (the things that are essential to quality of life) are not on full display during viewings and initial visits. Previous owners and builders can stage homes to hide slight imperfections, but experienced home inspectors generally pick up prominent structural and utility issues.
Step #6: Close or move on
When you find yourself at this stage of the home buying process, take a moment to appreciate all the great work you’ve done and the valuable experience you’ve picked up. Depending on the province, city, and even neighbourhood you’re looking to buy in, your offer may be accompanied by multiple competitors. In a tight race, the selling agent will contact the highest bidders to see who can increase their offer in a bidding war. At this point, you’ll either get the opportunity to close or you’ll have to go back to the drawing board.
If the seller selects your offer, there are a few additional items you need to take care of. Depending on your lender, you may need to have the house appraised to ensure that the list price is commensurate with the actual value. You’ll also need to hire a real estate lawyer so you can go over the proper legal documentation and begin the process of closing your purchase!