There is an endless supply of different types of homes available for purchase – ranging from condos to townhouses to fully-detached homes.
The key is to decide what you can afford and which amenities you prefer before heading out shopping for a new home.
Your best first step is to seek the advice of a mortgage professional and get pre-approved for a mortgage.
That way, you already know what your price range is – and, therefore, which type of home you’re in the market for – before you begin shopping.
Budgeting is also an important part of preparing yourself for the purchase of a home.
If you save for a down payment and up-front costs, such as closing costs and emergency reserves, much sooner, you’ll be sure to save enough to cover the many expenses facing a new homeowner, including moving, utility hook-ups, tools, maintenance supplies, window coverings and the list goes on.
Once you have the money available to make your home purchase a reality, you should weigh the following options to help decide what type of home is right for you:
Condo – a condo makes a great first home because it typically costs less than a townhouse or a detached home, which translates into a smaller down payment. But there are, however, monthly maintenance fees you must take into consideration when budgeting for a condo. Condos are also ideal for those who do not want to maintain a lawn or worry about clearing snow away from walkways and driveways.
Townhouse – if the condo life is not your forte and you’re not looking for a big yard to maintain, a townhouse may be your best home purchase option. A townhouse costs less than a fully-detached home and results in cheaper property taxes as well.
Many townhouses also come with monthly maintenance fees unless they are freehold townhouses. In situations where you pay a monthly fee, however, you won’t have to worry about outdoor maintenance or snow removal.
Detached home – if it’s privacy you’re seeking as well as a larger yard, a detached home is your ideal choice. Still, prices can vary drastically based on such variables as whether you’re seeking a spot in the city, a place in the suburbs or a more rural location.
Other considerations – the size of the home and property (if you decide not to opt for a condo) are also important things to consider before you head out shopping. While everyone has their dream home in mind, this is not always a practical purchase choice, especially if this is your first home purchase.
When it comes to location, think about in which area or neighbourhood you’d like to make your purchase, and which home features are absolutely essential – including what you can live without and what aspects are entirely out of the question.
Take a look at real estate ads for the area (s) you’re interested in to see what’s on the market and the price ranges.
Also drive around a few neighbourhoods and see what’s for sale and also visit open houses and new home builders’ show homes.
This can help crystallize what you want or don’t want in a home and also helps you to understand the market.
By making your first purchase a modest and affordable home, you will be putting money towards a mortgage that will build equity in that home.
And once you’ve paid down a significant portion of that first home’s mortgage, you will then have more money to put towards an upgrade into your dream home.
Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group in Red Deer.