(upbeat music) – Welcome back to this edition
of The Home Buyer's Academy. We're joined by Melody Wilson today from Re-Life team at REMAX Elite. Welcome to the show, Melody. – Thanks, Yang. – Today we're gonna answer some questions for our home buyers from
a realtors perspective. So, first question I wanna ask is what are the top things you should know as a first time home
buyer, buying a new home? – So, I have five things that
you might take down as a note. The first thing you want to do absolutely is the difference between a pre-approval and a pre-qualification. So, a lot of people think,
"Okay, I wanna buy a house.
"I'm gonna run into a show home, "I'm gonna go talk to a
realtor and look at a house." but the biggest thing is you need to talk to a mortgage broker, a bank, you need to understand what
you're actually qualified for. Those mortgage calculators
on the internet. – Yeah. – They're fun.
– They are fun, I like 'em. They're not accurate because
– Oh, no. – You could be very let down
if you put the numbers in and think, "Oh, I could
buy a $500,000 house, "run and go see Yang," and then you write an offer and
everything falls apart. So, pre-approval is important and the reason, the difference
between pre-approval and pre-qualification is pre-approval they actually pull your credit. Pre-qualification is
just someone at the bank just quickly running quick numbers and saying here's your pre-qual. That's not good enough
because they may not know that maybe you went
bankrupt a couple years ago or you have some big car loans or leases. And so that's going to affect
your ability to buy a home. So that's the first one. – Yeah, so remember,
always get a pre-approval not pre-qualification.
– Right. Second thing that you wanna think about when you're buying a
home is the equity gain in your property, so is
that important to you? So, people think, do you
know what equity gain is? – No, I'm not sure. – So, when you buy a
home it's worth X-amount, let's say $450,000. In five years when you
wanna sell your house, you're assuming that
the value is now higher. – Yep.
– Let's say 475. – Okay. – So you're expecting
your equity in your home to gain $25,000. If that's important to
you, you have to think about the type of home you're buying and the area you're buying in. Some areas don't have the
same type of equity gain. – Okay, so in Edmonton,
what would you choose as a quadrant then for
highest amount of (mumbles) – Highest amount of equity gain? – Yeah.
– The River Valley neighborhoods. Anything River Valley.
– Okay. – The lowest areas, suburban areas outside the Henday. – Oh.
– Just because you think about the demand, right? So, River Valley areas, there's not new land popping up there. You have to buy a house and
rip it down or renovate it. The new areas in Edmonton keeps expanding, so there's still more inventory. It's the demand. – Okay. Number three? – So, number three is make sure you don't let emotions make a decision 'cause it's–
– No emotions. – This is why I said it's so important to have a realtor working on your side, 'cause we're here to
kinda help balance out what you want, what you need, and making sure you make a decision not based on just what you love. 'Cause sometimes what you love, let's say you're like,
"Oh, I love this home.
"It's got so many
upgrades, blah, blah, blah" but it back onto the
Anthony Henday. (laughs) And some people think,
well I can afford it so that's why I'm gonna do it. But that's letting your
emotions make a decision and that's not always a good thing when you're buying a house. You ideally wanna stay in your home for at least five years.
– Yep. Because if not, your equity falls down and then you're losing
money when you sell. And a quick note, when
you're in a declining market, like we are right now, five years is not necessarily long enough to stay in your home
to actually gain value, so you gotta think a little bit long-term.
– Yep. – Okay, no emotions when buying home. Just make sure–
– Not no emotions 'cause obviously it's a
very emotional decision. Maybe you're expanding your family so it's fun but you just gotta make sure you're balanced with
all that kind of stuff. – Gather the information, digest it, think overnight, and then make a decision. – Right and have a professional
kinda guide you along. Like you have a financial advisor, – Yep.
– Right? You're not making
investments for yourself. Usually you have a financial advisor helping you make decisions based on what you're looking for. – Okay. – So fourth thing is as
a first time home buyer did you know you can access
your RSP for down payment? – Yep.
– So that's a big thing. There's also usually incentives, it always changes depending on government but there are also some other incentives as first time home buyers, as well. And down payment, again,
that's a big thing. Where are you getting
your down payment from? If you are accessing your RSP, you have to understand
that it will take some time to take it out, in terms of the timeline of buying a home.
If you're getting a gift from your family, can not be a friend, has to
actually be a family member. – Family member.
– Yeah. – Blood related.
– Yes. It's the government rules, nothing that can be done about that. So, just knowing where your
down payment is coming from and making sure it's accessible. There's a lot of little nit-picky things about that, too 'cause mortgage rules have just gotten really strict but as a first time home buyer, make sure you know where your
down payment is coming from before you start your search.
– Okay and then number five I think is pretty important, right? – Yeah, number five's my favorite. So, you signed off, you bought a home, let's say your building with Sterling or you've bought a resale home and you've removed
conditions, so it's sold now. Now does not mean from
now until possession, let's say three months or two
months or a month from now is the time to go buy a
new car and get car leases, or go get furniture on credit,
now you can buy furniture if it's all cash but if
you're putting credit, that is not a good thing. And why it's not a good thing is that you could possibly not qualify for your home, which
is a very scary thing. So, when you're about to
get keys the next day, you find out, oh my goodness, I can't actually afford to buy this home.
– Yeah, don't buy a new Porsche. – The total debt service
ratio that they use, you could be really tight. Now, you might have enough
room but just rule of thumb, don't get into massive debt
right before you buy a house. – Yeah, maybe after you receive your keys when the credit shows and
you have the house already, then you can go car shopping. – Right.
– Or furniture shopping. – Right. – Okay, thank you Melody–
– You're welcome. – For touching on that. Thank you so much for
tuning into this episode of The Home Buyer's Academy,
presented by Sterling Homes. Don't forget to subscribe below and click on that bell button to get a notification for
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