Research and a better savings plan would have made the home-buying process easier
By Carla Wintersgill, Special to the Star
I spotted a gray hair in the mirror the other day. It’s not a coincidence its appearance corresponded with my first morning in our new home.
Last week, my boyfriend Jesse and I moved into a tiny two-bedroom, two-bathroom house in Toronto. Since buying our first home in late January, we’ve endured a bidding war, a termite scare, a tax surprise, endless paperwork and spent nearly every dollar we have to purchase our own home.
It’s a miracle all my hair isn’t grey.
It’s with 20/20 hindsight I can now see the things we should have done differently to make the process easier on ourselves.
The first would be to spend more time researching the process.
Buying a home means bouncing between three professionals – realtor, banker and lawyer – whose efforts you’re responsible for coordinating. It helps if you understand what’s going on. Often we didn’t, instead counting on the person we were dealing with to prompt us on the next step.
They say that ignorance is bliss, but, in our case, ignorance usually led to a series of frantic phone calls about something we should have taken care of sooner.
“Do your homework,” Mary Stergiadis of the Canadian Mortgage and Housing Corporation says.
She recommends attending a first-time homebuyers seminar, where potential purchasers are able to meet with realtors, mortgage lenders and real estate lawyers to get a better feel for what really goes into buying a house. It’s also a chance to become familiar with the real estate jargon that is a part of the transaction.
“Sometimes mortgage professionals forget that we’re dealing with first-time buyers,” she says.
Before even thinking about dipping your toe in the market, it’s important to understand all the costs of buying a home and maintaining the property in the future, Stergiadis says.
Websites of organizations such as the CMHC and the Canadian Real Estate Association are filled with factsheets, videos and toolkits for buyers to adequately prepare themselves for the process of buying a home.
The most embarrassing oversight Jesse and I made during the sale was not realizing there are both a municipal land transfer tax (in Toronto only) and a provincial land transfer tax. That’s a $3,400 miscalculation. And, because Jesse’s name is a on a family property, we don’t qualify for the first-time homebuyers land transfer tax refund.
We also didn’t realize all the land transfer tax would be due to our lawyer before closing. We ended up borrowing $600 from Jesse’s mother to make our closing costs because a cheque we deposited into our account hadn’t cleared in time to be included in the money order.
If you think you have enough money saved up for a house, save another $10,000. Everywhere we turned, there was another service that needed to be paid for: electrician, locksmith, home inspector, furnace technician, looming property tax, etc. Not to mention the buckets and buckets of paint and supplies we bought to spruce the place up.
As our bank accounts were dwindling, we could have done more to find potential savings, Stergiadis says. I did qualify as a first-time homebuyer and could have taken advantage of the Home Buyers’ Plan, which would have allowed me to withdraw up to $25,000 tax-free from my Registered Retirement Savings Plan.
I don’t have that much in savings, but I could have done what Stergiadis and her husband did when purchasing their first home. They deposited their down payment in an RRSP, collected a sizeable tax return to help manage closing costs and buy new appliances, and withdrew the cash when it was time to buy the house. The only catch to the Home Buyers’ Plan is that the RRSP must be paid back within 15 years. Very smart. Too bad we didn’t think of that.
Lastly, if we could do it all again, we would try to relax a little bit more. The whole home-buying process was a series of snafus. But no matter how many mistakes we made, eventually the sale worked itself out.
I couldn’t be prouder of our little house. I may have grey hairs now, but the trade-off was worth it.