15 Money Saving Tips for First-Time Home Buyers

Have you decided it’s time to buy your first home? You may be considering how this decision will affect you financially.

Buying your first home is a huge financial commitment and arguably one of the largest financial decisions you will make in your life.

Even just coming up with the down payment is not an easy task. And if you have already done this, high five to you (yes, I am that girl that loves her high fives)!

But after your down payment, you’ll have more expenses come up including legal fees and other closing costs.

So, I’d like to give you 15 tips to help you save money during your home buying journey.

So let’s get to it so you can start now saving yourself some money!

  1. BUY WITHIN YOUR MEANS

According to management expert Timothy Kloppenborg, buy the home you can afford or you will spend every cent you earn paying for your first home. Search for a house in the market within your means or you are able to pay mortgage and property taxes required.

2. FIRST-TIME HOME BUYERS TAX CREDIT

The Canadian Federal Government has a tax credit specifically for First Time Home Buyers aptly called The First Time Home Buyers Tax Credit (HBTC). It is mean to help offset some of the costs associated with buying a home.

First time home buyers who intend to live in their new home within 1 year of closing on the home can apply for the tax credit. Also, to be considered for the credit, a first time home buyer and/or his/her spouse or common law partner must not have owned another home in the year of the home purchase or in the last 4 years before the purchase of their new home.

For more information, please visit the CRA website.

3. HOME BUYERS’ PLAN

The Home Buyers’ Plan (HBP) is a program for Canadian home buyers that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home.

For more information, please visit the CRA website (http://www.cra-arc.gc.ca/).

4. STUDY THE MARKET

This is one of the (many) areas your Realtor can prove to be a valuable asset. And I’m happy to help with this! If you have questions about a neighbourhood or what homes are listed and selling for in a particular area, give me a shout!

Knowing the above information will give you a good starting point from which to determine how much you’re willing to pay for a home in your target area. And this will go a long way towards arming you with the right information during the negotiation process.

So do your homework and really understand where the market is at and what the market is doing so that you can fully maximize your budget.

5. SHOP AROUND FOR MORTGAGE

To get the best mortgage, you need to shop around. Thanks to the Internet, this has never been easier searching for the different mortgage options available. For you to get the best deal and save money, you can compare the different rates. Weight the different rates depending on the term length and the rate type. There are lots of sites where you can easily compare mortgage rates. To calculate rates based on your preference, you can use this online mortgage calculator.

6. GET PRE-APPROVED FOR A MORTGAGE

Before hiring a realtor, get a pre-approved mortgage from your Lender. Getting pre-approved for a mortgage before starting your search for a home will save you time and make you a serious buyer. It will also help you to set your sights on homes you can afford, based on your pre-approval. This will help you to focus your search better, helping you to select a home that suits your needs and budget. Once you receive your pre-approval, it is usually valid for 90 days. Some pre-approvals are valid for 120 days. Make sure to obtain accurate information from your Lender about the terms of the pre-approval.

7. USE A REALTOR

No need to say more. It’s really that important. You need someone on your team helping you to choose a home that doesn’t give you headaches and regrets after the deal closes. Yes, this has happened to people. They regret their decision soon after all is said and done. Too late. Don’t be that person. Hire a realtor with a solid reputation. A local realtor will act as a resource for you and guide you through the home buying process. You’ll definitely get the most bang for your buck with the right realtor.

8. GET A HOME INSPECTION DONE

A home inspection is very important. Don’t skip it! Your home inspector will:

  • Identify safety issues or potential safety issues in the home.
  • Inspect the basement for water intrusion and proper construction.
  • Check the structural integrity of the home.
  • Determine the condition of the air & heating system, the state of the roof, and the operations of the electricity and plumbing.
  • Guarantee that any important devices that are part of the home purchase are in working order.
  • Inspect the driveway, retaining walls, grading and check for any property drainage issues.
  • Identify any ventilation or insulation issues.
  • Ensure heating or fireplace devices are safe and show no evidence of failure.
  • Inspect all gutters, downspouts, overhanging and accelerator for defect, rot and other damages.

9. DON’T RUSH THE TRANSACTION

You may be anxious to close that deal and make the home yours. But regardless of how you are feeling, please don’t rush the transaction. If you’re feeling pressured to make an immediate offer but haven’t taken the needed time to acquaint yourself with the local market, you won’t know if you’re getting good value for your money. Even worse, you may be tempted to do something irrational in your emotional desire to “win” a bidding war. So keep calm and consider all aspects of the transaction.

10. ADD INSPECTION CLAUSE

An inspection clause provides that it is the right of the buyer for the newly purchased home to be inspected within a specified time period. As the home buyer, putting this clause in protects you, allowing you to  cancel the contract or negotiate repairs or fixes as a result of certified home inspector’s findings. The home inspector examines the property’s interior and exterior, including the electrical & finish conditions, state of plumbing, as well as elements of structure and ventilation.

11. NEGOTIATE EFFECTIVELY

You can position yourself to negotiate more effectively with your Realtor by doing the following:

Get your finances in order before you start looking for a house

  • Having in mind what you can comfortably afford.
  • Having excellent market knowledge of your target area.
  • Having knowledge of the features you are looking for in a home and what you are willing to compromise on, as well as what you are not willing to compromise on.
  • Knowing when to be flexible and yielding in the negotiation process.
  • Keeping your emotions in check.

12. REDUCE UTILITY COSTS

Utilities can often cut into a sizable chunk of your monthly household expenses. Now that you are moving, it may be a good time to negotiate your utility bills. And shop around for better deals as well. Cable, internet and phone are things that most people see as a necessity. You might even want to look into bundling these services to provide you with the most possible savings.

13. SHOP AROUND FOR HOME INSURANCE

In addition to mortgage payments and other housing expenses, as a homeowner, you will have to pay for home insurance. Don’t just take the first quote you get. Shop around! Consider bundling your home, auto, life and other insurances together to save money because most insurance providers will give you a discount in exchange for your repeat business.  And some insurance providers will even lower your monthly fee if you do such things as installing reputable fire detectors in your home.

14. BUDGET FOR ADDITIONAL EXPENSES

Apart from the actual price of the house, there are associated fees and expenses that you will have factor in. For buyers, there is the land transfer tax also known as property purchase tax. The rate is calculated as a percentage of the buying price. The formula differs from one location to another. You may ask your agent or lawyer about the tax rates. In addition to property purchase tax, there are adjustment costs like gas charges prepaid water, lawn care services and so on. These are all your responsibilities as a homeowner.

15. BUILD AN EMERGENCY FUND

As a first-time home buyer it’s never too late to start building an emergency fund. Every little bit helps! Having an emergency fund can be useful if you have emergency repairs come up or appliances that need to be replaced. In the short term, it can even help you with closing costs since money may be tight once it’s time to close on the property.

So there you have it, friend! 15 Money saving tips for first-time home buyers.

These will help you to get the home that’s right for you and still be able to afford to do and buy the things you love (okay, not everything but enough to keep you content, right?).

Do you have any money saving tips you’ve been using to help you buy your first home? I’d love to hear it! Please share below!