How to Purchase Your First Home

Buying your first home is a stressful process in itself. Securing financing is a paramount part of purchasing real estate for most people. Use this checklist as a general guideline to have all your documentation in order.

Remember, when you are purchasing residential (especially for your primary residence), the lender often puts much emphasis on the actual property. The emphasis is on whether YOU as the BORROWER are CAPABLE of maintaining payments. The bank is protecting their asset (the loan) and YOU have to PROVE to them that you are an appropriate candidate for that loan.

Spring is the ideal time to start your home-buying journey, and being prepared is key to securing your dream home.

Let's dive into specific examples for potential first-time homebuyers in New York State and Calgary, addressing unique considerations for each location.

Example 1: Buying a Home in New York State

Scenario: You're a 28-year-old professional looking to purchase your first home in Albany, NY. Your budget is around $300,000.

1. Understand Your Financial Situation

   • Credit Score Check: Check your credit score through free services or your bank. Aim for a score of 700+ to qualify for better mortgage rates.

   • Budgeting: Calculate your monthly expenses and determine how much you can afford for a mortgage payment. Use online calculators to estimate monthly payments for a $300,000 home.

   • Emergency Fund: Ensure you have at least 3-6 months' worth of living expenses saved up.

2. Save for a Down Payment

   • Set a Goal: For a $300,000 home, aim for a 20% down payment ($60,000) to avoid private mortgage insurance (PMI).

   • Automate Savings: Set up an automatic transfer of $500 per month into a dedicated savings account.

   • Cut Expenses: Limit dining out and entertainment expenses to save an additional $200 monthly.

3. Get Pre-Approved for a Mortgage

   • Shop Around: Compare rates from local banks, credit unions, and online lenders.

   • Gather Documentation: Prepare your last two years of tax returns, recent pay stubs, and bank statements.

   • Understand Loan Options: Look into conventional loans, FHA loans (requiring a lower down payment), and state-specific programs like the SONYMA for first-time homebuyers.

4. Research Neighborhoods

   • Consider Your Lifestyle: Look for neighborhoods with good schools, parks, and amenities. Suburbs like Colonie and Bethlehem offer family-friendly environments.

   • Market Trends: Check recent sales data and trends in Albany's real estate market. Websites like Zillow and Realtor.com provide valuable insights.

5. Work with a Real Estate Agent

   • Find a Specialist: Choose an agent with experience in the Albany area and first-time homebuyers.

   • Leverage Their Network: Your agent can recommend trusted home inspectors and mortgage brokers.

   • Negotiation Skills: Rely on your agent to negotiate the best price and handle contingencies.

6. Attend Open Houses and Home Inspections

   • Open Houses: Visit homes in person to assess their condition and layout. Take notes and photos for comparison.

   • Home Inspections: Hire a professional inspector to evaluate the property's condition and identify potential issues.

7. Be Ready to Make an Offer

   • Stay Within Your Budget: Stick to your $300,000 limit to avoid financial strain.

   • Include Contingencies: Make your offer contingent on financing and a satisfactory home inspection.

8. Prepare for Closing

   • Review Documents Carefully: Ensure all documents are accurate and complete.

   • Closing Costs: Prepare for costs like appraisal fees, title insurance, and attorney fees, totaling around 2-5% of the purchase price.

Example 2: Buying a Home in Calgary

Scenario: You're a 32-year-old healthcare professional looking to purchase your first home in Calgary. Your budget is around CAD 400,000.

1. Understand Your Financial Situation

   • Credit Score Check: Obtain your credit report from Equifax or TransUnion. A score of 680+ is ideal for competitive rates.

   • Budgeting: Calculate your affordability using the CMHC's debt service ratio guidelines.

   • Emergency Fund: Maintain an emergency fund covering at least three months of expenses.

2. Save for a Down Payment

   • Set a Goal: Aim for a 20% down payment (CAD 80,000) to avoid CMHC insurance.

   • Automate Savings: Transfer CAD 600 monthly into a high-interest savings account.

   • Cut Expenses: Reduce discretionary spending to save an additional CAD 300 per month.

3. Get Pre-Approved for a Mortgage

   • Shop Around: Compare mortgage rates from major banks, credit unions, and mortgage brokers.

   • Gather Documentation: Have your T4 slips, Notice of Assessment, and recent pay stubs ready.

   • Understand Loan Options: Consider conventional mortgages and the First-Time Home Buyer Incentive for potential savings.

4. Research Neighborhoods

   • Consider Your Lifestyle: Focus on neighborhoods like Beltline for a vibrant city life or Tuscany for a family-friendly atmosphere.

   • Market Trends: Review Calgary's real estate market data on platforms like MLS and CREA.

5. Work with a Real Estate Agent

   • Find a Specialist: Choose an agent experienced in Calgary's real estate market and first-time buyers.

   • Leverage Their Network: Utilize their connections for legal and inspection services.

   • Negotiation Skills: Trust your agent to secure the best deal and navigate complex negotiations.

6. Attend Open Houses and Home Inspections

   • Open Houses: Visit properties to evaluate their condition and suitability. Take notes for later review.

   • Home Inspections: Hire a certified home inspector to uncover potential issues and estimate repair costs.

7. Be Ready to Make an Offer

   • Stay Within Your Budget: Adhere to your CAD 400,000 budget to maintain financial stability.

   • Include Contingencies: Ensure your offer includes financing and inspection contingencies.

8. Prepare for Closing

   • Review Documents Carefully: Double-check all paperwork for accuracy and completeness.

   • Closing Costs: Set aside funds for costs like legal fees, land transfer tax, and title insurance, typically around 1.5-4% of the purchase price.

If you're interested in learning more about getting your financial house in order and how to set up your financial life, please register for the live beginner course or the recorded beginner course.