Some real estate basics

Today, I thought I would share a few basics for the first-time buyer. If you are thinking about purchasing in the near future, here are a few tips that may help you out:

1. Get pre-approved for a mortgage - From an agents perspective, this is one of the first things that you should do. Agents want to know what you can afford. This will serve as a useful background in helping you narrow down your search. I usually like to sit with my clients after they've been to a bank to ensure that they can afford what the bank is offering. There are some lifestyles that may have to change because what the bank says you can afford and what you can afford based on your lifestyle can be two different things.

2. Understand the costs - I think the biggest surprise to people is the CMHC insurance. What is CMHC insurance? It's a premium levied on buyer's to help protect lenders when a down payment is less than 20%. Basically, it means that you may purchase houses at lower interest rates with smaller down payments than would otherwise be available for a loan that had a larger downpayment. The premium is based on the size of the down payment and amortization period of the loan. Therefore, you may wish to think twice about having a 30 or 35 year amortization period.

3. Learn about the market - This is where I think I try to help out my clients the most when I show houses. I think once they have an understanding of the areas in which they want to live, they can make an educated decision about what to buy and not an emotional one. Home buying is a big decision, so it can become very emotional very quickly. The more you know, the more rational your decisions are and the more likely that you've made a great decision.

Other topics
- Learn about different mortgage options. You may not want the best 5 year fixed rate.
- Home inspections - How you can use them to save you money
- Buying new vs. buying used - who are the good builders out there. Do you need an agent?
- The costs of an agent - each agent has a cost. What is the true cost to you?

If you know someone that is thinking of buying, please send them my way. I can go over many of these topics with them to ensure they make a sound business decision.