For first time buyers in the Calgary real estate market: some tips and other useful information
As Calgary Real Estate continues to show signs of improvement, many first time buyers might consider investing now in the hope of beating a price increase. However, buying a first home anywhere is daunting enough without the added pressure of trying to ‘beat the market’, especially for those individuals who have little to no experience within the Calgary real estate market. In this entry, the first of three offering tips and advice to first time home buyers, we will remind you about the importance in picking a location (it is amazing how frequently we all are susceptible to ‘falling in love’ with a house and not heeding even the most common sense advice!).
For as many reasons as there are people, first time home buyers will be drawn to particular neighborhoods; some might love the energy of downtown Calgary, while some will prefer the tranquility of the suburbs. In the end, it doesn’t matter where your preferences lead you, some basic research is critical to finding not just the right house but the right location in the Calgary real estate market.
Start with a simple walk around your desired area in order to familiarize yourself with it; go more than once and at different times of the day or early evening – you will get a great feel for the ‘life’ of the community or area, its amenities, services (transit etc) and shops as well as a sense of safety (or lack thereof).
Since owning a home is normally a long term commitment, thinking long term is important. Even in those cases when it isn’t a home you plan to live in for 20 years, any potential purchasers of your home down the road will be thinking long term, so it is a good idea if you do it in the first place. Thinking about things like the quality of schools could be a factor that might not be important presently, but a few years down the road it might be. Also do a little digging into city/town/policing records which are all public: looking at crime statistics for the area might be a good idea, even learning about planned construction and other future changes could be worth it.
Also, don’t forget that more exposure to Calgary real estate – and we mean more neighborhoods and more open houses – is the best advice we can give to make sure you have the best insight into the workings of the Calgary Real estate market and ultimately make a solid decision.
Once you have amassed all the relevant information, it should give you a clear picture of the neighborhood, and a sense clarity and confidence when thinking about buying into it. It is also quite possible that even after all this research, you might still be on the fence about a location. Well, don’t forget about your Calgary REALTOR (the Calgary Real Estate Board has some great resources too) as a source of help and guidance, especially one that is specialized to your market, as we can provide invaluable insight into market trends and overall neighborhood vitality.
Even for experienced buyers of real estate in Calgary, the process of getting financing can be a stressful chore, and for first time home buyers it can seem overwhelming. By being prepared and by taking a systematic and planned approach you can avoid the stress and confusion that may come from securing financing for your new Calgary home purchase.
The very first step is to create a budget that you can manage and live with. This budget will encompass everything, from the cost of moving, monthly mortgage payments, cost of utilities for your new home, any additional taxes, fees, and any other expenses associated with purchasing your new property (don’t forget to include an amount for annual maintenance and depending on the type of property, periodic big ticket items like furnace, roof, or air conditioning replacement). If you’re purchasing a Calgary condo or townhouse you’ll also need to include the monthly condo fees (95% of Calgary townhouses are condominiums).
Once you’ve gathered and added all these items together, you’ll have a better idea of the overall costs involved and the type of property you can afford to purchase. Also, when making a budget, don’t forget that your income will likely change over time, as will some of the costs of your home. While it is difficult to estimate these future changes, flexibility in a budget is something to aim for.
Now that you have a budget, it’s time to start thinking about where you will get the capital. Unless you’re fortunate enough to have a huge savings account – something most first time buyers don’t have the luxury of – you’ll have to take out a mortgage from a lender.
I thought it might be helpful to actually define a mortgage, because we often take it for granted even though it is a very special type of loan. A mortgage in layman’s terms is an agreement where you put up collateral, normally in the form of a home you’re purchasing, in exchange for a loan of a specific amount, and a promise to pay it back over a prescribed time period and at a certain interest rate. In other words, it transfers an interest in a property to a lender as security against a debt. The term mortgage actually was derived from the old French “dead pledge” which meant the pledge to pay back the loan ends or dies when the loan is repaid or the property is foreclosed on.
The mortgage rate, or the rate of interest you pay back is very important, but equally important is the amortization period, which is the term of the loan. A low interest rate over a longer period could mean you’ll pay more at the end than a higher interest shorter amortization loan. It’s a good idea to talk with a lender *either a mortgage broker or a traditional banker* prior to looking at property. We can provide you the names & contact information for several Calgary lenders. The majority of first time buyers are more likely to get better terms through a mortgage broker who may have hundreds of funding sources competing for their clients *whereas a bank typically would have less than a dozen*. In addition, the Government of Canada’s Home Buyers’ Plan also allows first time buyers to withdraw up to $25,000 tax free from their RRSP’s to help with the purchase of a new home.
Our parting advice when it comes to financing Calgary Real Estate is: don’t be afraid, be smart. Educate yourself and gain some exposure by talking with several mortgage brokers and bankers; just like getting a feel for a new home location, the more familiar you are with your mortgage choices, the more confidence you’ll have knowing you’re choosing the right financing for you. Once you’re pre-approved contact us by phone or via email regarding finding the Calgary property of your dreams.