12 Steps to Buying a House

Buying a Home - Step by Step Guide

We have compiled 12 easy steps to buying a house, fully detailed with insider tips to help you avoid the common mistakes homeowners make.

Table of Contents - 12 Steps to Buying a House

Step 1: Discover where you want to buy your house

When considering buying a house the location is one of the most important things. Is there a school that you want to live by so your children can go there? Do you want to live close to work? Is city transit nearby? Is city transit important to you?

Always determine your location requirements, then take a drive through all the neighbourhoods that match your criteria. Does the neighbourhood feel safe? Are people outside enjoying themselves, or fighting and arguing? Once you find an area that you fall in love with, you should visit it at different times of the day to ensure you feel the same way about the property. If you can’t get enough of the neighbourhood and it appeals to you at different times of the day, then we think you found your dream house location.

Step 2: Set up a budget buying a house

Once you have discovered your dream house location, you must set a family budget and make sure you afford to live in the area. We recommend writing down every expense you have monthly.

Next, analyze each expense and determine if you need that expense or could you tweak the expense to save.

Here are some example of expenses that can be reduced or possibly eliminated;

  • Cell Phone – Are you on a family plan? Does the plan include features that can be cancelled for additional monthly savings? Are you paying month by month or are you on a contract. Often, a contract can save you money.
  • Cable TV - Do you still watch Cable TV. If so, do you need the package you are currently subscribed to? Do you bundle your tv with your cell phone and internet provider for bundles discounts?
  • Internet – Do you need the speed you have subscribed to? Are you paying for internet overages? If so, you can save by switching to an unlimited plan. Are you bundling your telecom services for maximum savings?
  • Vehicle loan – Do you have a vehicle loan? Can you pay it off? If you cant pay it off, did you check with your bank to see if they can offer a lower interest rate? Lower rates = lower payments.
  • Credit cards – Do you carry a balance? If so could it be paid in full, or converted to a low-interest loan? Could you change your credit card type to a low-interest card? The lower the interest rate the lower your monthly payment.
  • Digital Subscriptions – Do you need all the digital subscriptions you are subscribed to? Is there an alternative plan that could be cheaper? If you use Amazons Subscribe and Save – can you extend the time between deliveries?
  • Major department store financing – Often store financing has the highest interest rate cost if you don’t pay the card off in full when the financing term ends. Can you pay this high-interest debt off with a lower interest debt? Do you have the cash to pay in full?
  • Existing mortgage payments – Do you currently own a home with a mortgage? Do you need to keep the home but still move into a new house? If so, are your payment bi-weekly? Changing to monthly can help lower your payments. Also, if you have pre-paid any part of your mortgage, you may be able to lower your payments, instead of reducing the amortization.
  • Student loans – When student loans start, they generally have an amazing interest rate. After the introduction period, these loans can shoot up in interest. If this has happened see about converting this to a regular loan for interest and monthly payment savings.

After you determine what payments can be lowered, if any, you need to determine how much you can afford the payment of a mortgage. Please keep in mind that the payment you may be able to afford may be higher or lower than what a lender will approve you for. However, we cover how to get past that in the next step. The benefit of discovering what you feel you can comfortably pay is that you can determine right away if the neighbourhood you want to move is affordable to you.

Step 3: Get pre-approved for a mortgage

If you have completed the first two steps, and you're satisfied then we suggest you proceed with a mortgage preapproval.

LendCity Mortgages can do your pre-approval quickly and online. Click the blue link to apply for your mortgage online.

The benefit of getting a pre-approval with a broker like LendCity Mortgages is that we can shop around to secure you the lowest rates. The lower the rate, the lower your monthly mortgage payments which are easier on your budget.

When doing a pre-approval for a mortgage there are two types of pre-approvals you should know of.

  • Rate Hold – A rate hold is what it sounds like. It just locks in your rate. Be very careful about this type of pre-approval. We have seen hundreds of clients over the years think they are approved for a mortgage and then discover they are not. Most lenders do Rate Hold pre-approvals. Do not put in a firm or cash offer with these types of pre-approval. The benefit of a Rate Hold pre-approval is that often they can be done the same day.
  • Full Approval – This is the type of approval we prefer and do for the bulk of our clients. This approval is fully underwritten so when you get your approval you know you passed the lenders stress test and you have a mortgage. The downside to this type of pre-approval is that it can take a few business days for a response from a lender.

Step 4: Find a Real Estate Agent to help you search for your home

The next step to buying a house would be to speak to and find a Real Estate Agent to work with. Speak to your friends and family for some good referrals. Also, you can ask your lender for referrals.

When finding a real estate agent it’s incredibly important that you get along and connect almost like friends. Buying a home is one of the largest financial decisions you will make and no one wants to do this with someone they don’t trust or get along with.

Speak to your potential agent, get to know them and if you don’t think they are a good fit… fire them!

Once you have found your real estate agent sit down with them and tell them about the neighbourhood you found that you love. Also, inform them about the mortgage pre-approval and how much you can qualify for. The real estate agent will input your criteria into their system and you will receive property listings by email, often a few days before the houses officially hit the market.

Step 5: Make an offer on a home

As soon as you find a home that fits your budget, you should put an offer on it as soon as possible. To put in an offer on a house all you have to do is give your real estate agent a call. If you delay putting in an offer on a home you may miss your opportunity as some real estate markets are very fast-moving.

However, this is precisely why we also recommend you get a mortgage pre-approval is one of the first steps to buying a house because it allows you to put in a firm offer on your home – As long as you have completed a full pre-approval. Sellers prefer working with buyers that submit offers that have no conditions. Often a seller will take a lower-priced offer if it has no conditions.

Step 6: Get a home inspection

In our previous step, we spoke about putting in an offer with no conditions. However, we do believe you should do a home inspection, even if you went in with a firm offer to help you determine if there are any issues with the property. If the seller is hiding issues that are not being disclosed, there can be recourse if you have completed a home inspection.

However, a home inspection will allow you to create a budget for property repairs and maintenance as soon as the house is yours.

Step 7: Follow up with your Mortgage Broker

Once you have an offer that has been fully accepted by the seller, please contact your mortgage lender. Your mortgage lender must submit the offer to purchase to the lender. This allows the lender to determine the exact mortgage amount and start the process of creating the legal paperwork.

Step 8: Find a Lawyer to Assist with your House Purchase

After the lender has fully finalized your mortgage application, you now need to find a Lawyer who will consult you about the legal documents you need to sign, as well as complete the required legal property registrations.

If you’re not sure where to find a Lawyer your lender or real estate agent can make some suggestions for you.

You do not need to meet your Lawyer at this time, but the purpose of finding a Lawyer is so

Step 9: Shop around for home insurance

Now that you have finalized your mortgage and your house closing is approaching, you must shop around for home insurance. Its recommended to use the same company that provides you with auto insurance. By bundling your home and auto insurance you can save additional money. However, it pays to shop around and get a few quotes to ensure you have the proper protection at great rates.

Step 10: Book a moving company or DIY

As your closing date is getting closer, you must either book a moving company or a DIY option. Many moving companies require a few week's notice, so it’s best to book your mover sooner than later.

Moving can save money but will take much longer.

Please keep in mind that on the day of closing, you won’t get the keys until 4-5 pm. If your planning on moving on the closing day please book the start time to coincide with the time to get your keys so there is no idle time.

Step 11: Meet with your lawyer to sign the legal paperwork

Usually, your lawyer will email before your signing appointment informing you what you need to bring to your meeting.

Generally, the lawyer will ask you to bring the following;

  • A bank draft made out to the lawyer in the amount they inform you of in the email. This amount will include your legal fees, down payment and disbursements.
  • ID – Your lawyer does an anti-money laundering and fraud check for your protection
  • Documents – Your lender may have given the lawyer condition, such as debt payouts, or proof of anything you have stated on the application. Your lawyer will send you the request ahead of time for the exact documents you need to bring.

Step 12: Move into your new house

Congratulations! You just finalized all the steps to purchasing a house!

It may take a few weeks, but the city is going to send you your very first tax bill. If you're paying taxes with your mortgage you need to get this letter to your lender. They specifically need this letter because it gives them your tax roll number and tax account number, both of which are needed to pay your taxes.

As the years go by, if you think you need a smaller or larger house, be sure to speak to your lender to determine if you can port your mortgage.

Also, if major expenses arise, you may have the option to refinance your mortgage and add the renovations, expenses or debt to your mortgage.

Give LendCity Mortgages a Call today, or Email us for any questions you may have.

Ready to Apply? Apply for your mortgage online here.