5 Tips for First-Time Home Buyers in Kelowna
#1 -- GET PRE-APPROVED
Mortgage Pre-Approval is an absolute must when you are purchasing your first home. Why? Because you need to know exactly what you can afford and what you can't. Not only that, but once you are pre-approved for a mortgage you are considered a serious buyer and this will allow you to jump on any good opportunities without having to apply after the fact! One of the biggest questions I get asked as a Realtor®: Is whether to go to the Bank or recruit a Mortgage Broker? It's a great question. Traditionally, Banks have always represented a larger portion of the market; however, that trend is changing very quickly. One of the biggest benefits to using a Mortgage Broker is that they have access to, and knowledge of, the entire mortgage market. Mortgage Brokers can advise on which lenders will consider your case and which will not based on individual circumstances. In addition to this, they can usually secure exclusive deals, rates and fees that aren't open to the public market. My personal recommendation is a Mortgage Broker and if you are in the Kelowna, BC area, I'd highly recommend Rampone-Marsh Mortgages.
#2 -- START SAVING FOR A DOWN PAYMENT
So you've got pre-approved -- now what? You need to start saving for your down payment. A down payment is the amount of money you put towards the purchase of your home and it is deducted from the purchase price. Your mortgage will cover the rest of the price of the home. In Canada, the minimum amount you will need for your down payment depends on the purchase price of the home you'd like to buy. For example:
Saving up for your down payment can be one of the most difficult challenges you will face. You're not alone since this is one of the most difficult challenges when it comes to millennials and home ownership. I highly recommend implementing a savings strategy that will help you achieve your goals. This is the strategy I use for saving:
Necessities (50%) -- This is everything you require to live. Essentially, this is your "fixed costs" of living (Ex. Food, rent, insurance etc.). Your non-negotiables.
Investments (10%) -- This is your investment account. You should put 10% of your entire pay check into some form of investment like a TFSA.
Long Term Spending (20%) -- Your Long Term Spending account should be used for something you are planning on purchasing in the future. Like a new car, vacation or saving up for your down payment.
Education (10%) -- The #1 investment you can make is on yourself. You should be saving money each month to invest in your education, whether formal or informal. I use this account to invest in books.
Play (10%) -- This is your fun money! Spend it.
#3 -- SEARCH YOUR PREFERRED NEIGHBORHOODS
Now that you have been pre-approved and have saved for a down payment, it's time to get out and start looking at properties in your preferred neighborhood. It's a good idea to recruit the help of a REALTOR® (See #4) to help you navigate the local Real Estate market. If you are in Kelowna, BC, I've copiled a list of the average residential, townhouse and condo prices in each neighborhood for 2017. Depending on what you are looking for, this will give you a good idea of what you can afford in each of the respective neighborhoods.
#4 -- HIRE THE RIGHT BUYER'S AGENT
If you've never purchased a home before, than hiring a REALTOR® is an absolute must. It's important to find a REALTOR® that you like, trust and share similar values with as you are going to be working together for a period of time. A REALTOR® is going to help you with the following:
Drafting Contracts -- Buying a home usually requires dozes of forms, reports, disclosures and technical documents which can be very stressful if you've never purchased a home before.
Area Knowledge -- REALTOR®s can provide you with local information on zoning, schools and neighborhood knowledge.
Negotiating -- A REALTOR® is going to negotiate the best deal possible for you. If you've never had to negotiate a deal, leave it up to the experts!
Experience -- You are probably only going to buy and sell a few properties in your lifetime. REALTORS® do this for a living and are up to date on current laws and regulations.
Emotional Moments -- Having an objective third party helps you stay focused on the issues at hand.
Ethics -- REALTOR®s must adhere to a strict Code of Ethics which is designed to protect your best interests. As a REALTOR®'s client, you can expect an honest and ethical treatment in all transaction related matters.
#5 -- STICK TO YOUR BUDGET
Lastly, stick to your budget. This is probably one of the most important rules when purchasing your first home and I can't emphasize it enough. Just because a bank or Mortgage Broker pre-approves you, doesn't mean you should buy the most expensive property you can! Chances are they are not considering what happens if you over reach and the impact it will have on your personal budget. If you can't adhere to a saving strategy (See #2), then you are probably stretching yourself to thin.
If you are looking at purchasing Real Estate in Kelowna, BC and have any questions, please do not hesitate to leave a comment or contact me directly.
Yours in Real Estate,
Kyle B. Janzen & Associates