Affordability, finishes are just some considerations for first-time buyers
The decision to step into home ownership is an exciting milestone. But getting there involves some important considerations unlike any other purchase one will make.
Careful thought around financing, affordability, home styles, finishes, and timeframes will all better-prepare first-time buyers for their online or in-person look into what’s on the market.
When considering a new build, there’s a relationship between the buyer’s timeframe for moving and their priorities around interior finishes.
People who need to take possession of their new place, for example, within a few weeks, can go with a completed spec home, says Dave Armstrong, director of sales and marketing, northern Alberta for Streetside Developments.
However, being complete, it may not have the colour scheme that matches what the buyer had in mind.
“They might like the flooring, the countertops, and the paint, but you might not love the backsplash,” says Armstrong.
This changes with a longer-range need for possession, where there’s an opportunity to add finishes they prefer.
“If you can plan it out, and prebuild, then you can make all of our selections and you can get exactly what you want,” says Armstrong, adding, while timelines change depending on the product, generally, “in six to eight months, you should be able to pick everything.”
Based on affordability, first-time buyers commonly choose apartment-style condos, townhomes, and duplexes.
In making a decision about the type of home, Armstrong says it’s important to know the “type of living you want.”
“A lot of people are very busy nowadays. Do they want a unit with a condo fee or (without condo fees) — familiarize yourself with both, and determine what’s right for you,” he adds.
Depending on the development, condo fees typically cover, among other expenses, exterior maintenance, landscaping, and contributions to its reserve fund.
All apartments have condo fees, but townhomes can either be part of a condo management structure, or free-hold, which means the buyer owns the exterior of their home and the land it sits on, and is therefore responsible for the upkeep of these areas.
Touring show homes can be a helpful part of a house hunter’s research. Beyond demonstrating a floor plan, it can give a potential buyer a broader look at what they can expect from a development.
“When you go and look at a show home, it’s one thing to look at home that particular model flows and how it lives,” Armstrong says. “But if you don’t like that floor plan, that show home still shows you the level of finishing and build quality that builder can deliver.”
While it’s natural for an apartment or townhome buyer to look into how it lines up with their needs today, planning for that next step can pay off.
“We’re seeing some very educated first time home buyers come out and say ‘I want to buy this townhome, I only want to live in it for five years, and then I’d like it to be a rental.’
“You should take that into consideration when putting in your finishes,” he adds, singling out luxury vinyl flooring as an example of a durable option. “We have a lot of really high-quality, low-maintenance finishes nowadays compared to what we had in the past.”
But before pouring through home options, it’s important for the buyer to know what they can afford.
“I think the first step is to start the conversation with a mortgage professional as early as possible,” says Reema Kaushik, mortgage adviser with CIBC. “That’s one common mistake. At the time of the home purchase, (some) just assume that they are ready to buy a home. Mortgage advisers can support them by helping them understand what they’ll be pre-qualified for, what to expect, and support them with the home-buying process. Also, it’s important to figure out what they can afford, take time to understand the financial picture, focusing on areas such as income, affordability, debt payments, credit history and savings.”
A substantial new benefit to people taking their first step in home ownership, says Kaushik is the first time home buyer’s incentive program rolled out by the federal government last month.
“We’ve recently helped people who had difficulty qualifying in the past because of capacity issues,” she adds. “It not only reduces mortgage payments for people, but it also reduces the insurance premiums.”
While the type of mortgage can depend on a handful of factors — such as needs and budget — Kaushik generally encourages “firsttime home buyers, especially, to go for a stronger commitment of a fixed rate.”
“People have a certain budget in their mind to make payments every month, especially first-time buyers.”