Home Buying Guide

From pre-qualification to closing day, this 8-step guide breaks down the home buying process into simple, practical steps so you know exactly what to expect.

8 Steps Home Buying Guide

Have you ever been to IKEA? I love how the entire store is laid out systematically. You just have to follow the white arrows. Buying a home is a lot like shopping at Ikea. If you follow the arrows—the eight steps outlined in this guide — you will be far less likely to make a costly error or omission, and the complete process will be less stressful.

Of course, a few rebels always like to walk in the wrong direction at Ikea. If you are one of those people, hopefully, I can convince you to follow the steps—just this once. While walking the wrong way at Ikea might mean you miss out on buying some cleverly designed shelving (that you probably don’t need), not following the correct steps when purchasing a home can lead to disastrous results.

Our team has extensive mortgage industry experience, and we also have also seen worst-case scenarios unfold. This checklist will help you avoid that. If you havepurchased a home before, think of this as a refresher.

1. Get Prequalified

First, you must get pre-qualified (resist the urge to walk in the wrong direction). Before you go house hunting, you must go through the pre-qualification process. Here’s what we cover in your first consultation:

APPLICATION REVIEW - How will the mortgage lender look at your application?
BUDGET - How much can you afford? What are the hidden costs of buying?
MORTGAGES - How do you select a mortgage, given the uncertainty with long-term interest rates?
PRE-QUALIFICATION LETTER - How do you get one, and how do they help?
RATE HOLDS - How do they work? Is it necessary in your situation? This step lays the ground work for the rest of the home-buying process.

2. Hire A Realtor

How much do you think a realtor will cost you? The answer is–absolutely nothing! Their invaluable services are free for buyers because the seller pays for both agents. You would be crazy not to hire your own. Please let me know if you want any recommendations for a great one. I have worked with many real estate agents across Canada and have an extensive database. Only move on to the next step once when you have a realtor.

3. View Properties

This is where the fun begins. With your budget from Step 1 firmly in hand and your realtor by your side, you will start to look at properties that fit your criteria. It is a good idea to make a list of “must-haves” and “would-like-to haves” to help you focus. It is also essential to think about the location. You are not just buying a property but choosing to live in that community.

*Pro Tip: Always use a local realtor as they will have insider knowledge of the neighbourhood and the different areas of the city.

4. Make An Offer

For most people, this is where it gets stressful. Typically, your first offer is not accepted, and your realtor will be invaluable at this point. They will help you negotiate with the sellers to get the best price and terms. Your offer will have conditions, often called “subject-to’s.” Your realtor will typically add several “subject-to’s,” but there are two that are critical to your mortgage application.

A. SUBJECT TO FINANCING

When you borrow money to buy a property, the mortgage lenders consider you and the property a package deal. Having this clause ensures that the mortgage lender has a chance to review the property. I highly caution against going into a purchase subject free; even though you are approved for financing doesn’t mean the property is.

B. SUBJECT TO INSPECTION

An inspection is critical. An inspector is professionally trained to find things you or your contractor friend will not see.

C. SUBJECT TO INSURABILITY

It is also important to ensure adequate home insurance can be obtained for the property you are purchasing. We have an amazing contact that can help in this area as well.

5. Get Approved

Once we receive your accepted offer, we will confirm the last details before submitting your application for approval. Then, based on our earlier consultation, we will get a mortgage that fits your needs. Until we receive approval on your application, we will be in constant contact with your realtor. Once approved, we will review and sign the paperwork and answer questions. We will also review your closing costs so you know the amount of money you will require for Step 7.

6. Pay Your Deposit

Once your conditions are met, you will write a non-refundable, certified cheque that will be held in trust until closing. This deposit forms part of your down payment and is given as an early commitment that you are going to purchase the property. Usually, the cheque is not written directly to the seller but is held in trust by a third party, such as your lawyer/notary or realtor. In most cases, this is the point of no return. Breaking the contract at this point can result in losing your deposit and possibly being sued. You legally have to purchase the home, but on the flip side, the sellers legally have to sell it to you.

*In some markets, this cheque is required earlier, sometimes upon offer acceptance.

** If you are purchasing in BC, ask your realtor about the Home Buyer Rescission Period now in place for residential real estate transactions

7. Hire A Lawyer Or Notary

Usually, about five to ten days before closing (your closing date was negotiated with your initial offer), your lawyer or notary will meet with you to sign the final documents. They will also let you know the exact closing costs at this time. Here is the minimum documentation your lawyer/notary will ask for:

Two pieces of ID
A certified cheque or bank draft for the down payment and closing costs

8. Welcome Home

Congratulations! Once your lawyer/notary has registered everything correctly, your realtor will give you the keys to your new home. Whether this is your first home or your tenth, we are so excited for you! We love helping people finance homes. Remember, our service doesn’t stop when your mortgage is complete. We will contact you annually throughout your mortgage term and advise you whenever we can optimize your mortgage further.