Purchasing your first home can be an overwhelming, exciting experience – and there are tomes of advice for getting through the process unscathed. However, what can newly-minted homeowners expect after a few months in their new abode?
Six months ago, Adrienne Fraser, a PR consultant and small business owner, and John Harry, a sound designer and mix engineer, made the leap into first time ownership. Here they discuss the realities of their foray into the market, and encountering the unexpected.
What spurred you two to buy a home?
AF: At first we were just interested in looking at the market to get a sense of what things in the city cost, etc. I had always been under the (perception) that we could only be able to afford a condo and then would have to trade up to the home that we eventually wanted.
After months of checking out MLS listings we decided to visit a semi, just in case. We ended up falling in love with it and our real estate agent Nadine Itiniant gave us some really good advice. She said we would only be first time homeowners once. This means there is only one shot at the reduced land transfer tax (which in Toronto is quite hefty). It also means that we were each able to draw funds from our RRSP’s to help finance the payment.
Six months on, how’re you settling into first time ownership?
JH: It’s amazing. There is still a lot of learning that we need to do, but it’s better to dig in, and have blistered and dirty hands, rather than waiting for opportunities to go by. But be thoroughly prepared to deal with any situation.
AF: It has been a lot of fun! There are always lots of hidden costs and spending you can’t anticipate. For example, we’ve got a squirrel that is trying to move into our second floor roof, so we’re spending money on supplies and our Sunday afternoons trying to patch up the hole. Other than the little surprises, I am truly enjoying it! There is something really special about being able to call a home your own. All of the work that we put into it directly benefits us and we are starting to connect with our lovely community and tap into the sense of pride that comes with home ownership (we’ve got roses in our backyard now!).
What were some of your biggest concerns before signing the mortgage?
JH: I think the biggest concern we had was “are we doing this right?”.
There are so many different routes to take – do we get private mortgage broker? Which banks have the best rates? How long do we fix our mortgage for? Is that even the house that we want? Can we even afford the house we want?
I’d like to say we did a fair share of homework before we jumped in, but a big portion of the decision making we did was really by gut instinct. We were almost at a loss as to where to draw advice from; both of our parents had gone through purchasing and financing their homes in a different decade! So that doesn’t really leave a lot of room for relevant information, in terms of what the market is currently up to. We had to really make a lot of the decisions with us and our future plans in mind, which is on of the biggest challenges you could imagine.
I don’t want to think of it in terms of ‘concerns or fears materializing’. We are young, and there are dozens, if not hundreds of ways we could have responsibly (or otherwise) have put ourselves into debt. It took less time that I thought to be okay with the fact that we just have outstanding debt.
AF: The toughest thing for me, mortgage-wise, was understanding how the financing repayments worked. We chose to go an unconventional route and take a portion of the loan in a fixed mortgage and the rest as a line of credit. Because I am a freelancer, it made more sense to have a loan where we could control the payments and not have to worry about funds getting tied up.
Since we are both newly established professionals, it was difficult convincing a bank to loan us money. Because we were worried about that, we worked with a mortgage broker who really helped up properly communicate our financial situation to the bank.
How does the real cost of home ownership look compared to what you expected?
JH: In all honesty, it looks a lot more manageable and maintainable that you would initially think. There is a point when you get past the intimidation, and you are staring numbers in the face and even throwing them at each other and essentially making the rules (within limits). I think Adrienne is a little more ambitious than I, in that.
AF: It’s pretty on par. We spent a lot of time researching all unexpected costs and created a monthly budget. Each month, we’ll check back in to see where we are at. Now that we’ve been in for a few months we have a good idea of the average costs per month. Again, it was a matter of knowing little tricks like how to conserve energy in the summer, use water during off-peak hours and figure out how to D.I.Y things before calling someone else to do it.
What unexpected costs have materialized?
JH: There are more rainy days than you think…especially with the summer we’ve had.
The biggest cost that we didn’t initially plan for was the fact that our basement leaked. The interesting part about owning a home is that your are genuinely invested and interested in its history and well being. When we saw the house, it was originally listed with a quoted repair for the fact that basement had water issues. (I think that was one of the major turn offs that allowed us to sidestep a bidding war with other potential buyers at the time.) Once we had a little more access to information, and played a little bit of detective, we were granted enough information to shed light on the basement’s tendencies to leak stemming from a “dig down” renovation that the previous owner had spearheaded. Long story short, the house was listed with a tiled basement and “exercise/yoga room”. We initially thought that we would wait until the fall to deal with the water issues, however, after finding out about the possibility of owning an indoor pool of sorts, we bit the bullet and had a sump pump installed. Just in time for potentially one of the wettest spring/summers I think we have had in years!
What other challenges have you faced since moving in?
JH: Adrienne has probably already mentioned our squirrel issue, and its unwanted tenant-ship within our home. There have been a slew of projects that I have taken on – in and outside of my comfort zone – upon Adrienne learning that I am a “handy man”.
How has homeownership influenced your lifestyle?
JH: Your priorities change, that is a given. I don’t ever picture us staring at our bank accounts and saying “we can’t afford to go out and party tonight”, but there is definitely a sense of “I don’t want to stay out late cause I am ripping down a wall in the basement that has mold inside of the dry wall tomorrow morning”, or genuinely thinking that a trip to home depot is going to put you off of your monthly budget. It’s like that scene in Old School where Will Ferrell tells his friends about his “nice little Saturday” with a trip to Bed, Bath and Beyond. I don’t think we are quite that lame, but the responsibilities we have now, have taken on a different role in our lives because we are genuinely interested and excited about all these new things in our lives! I remember having a conversation with a friend of mine that went along the lines of “Hey what did you do today?”, (them responding) “Nothing, you?”, (and responding with) “I just installed a new window in my basement and am now hanging shelves in my kitchen!”.
What advice can you give to fellow first time home buyers?
AF: Do your research and make sure you truly understand the costs you may have to incur. From a finance standpoint, be prepared to spend on land transfer tax, home insurance, home inspection and locksmiths right off the bat.
It’s also important to be realistic with how much you can afford. Aim to put down 20 per cent of the purchase price up front in order to avoid having to buy mortgage insurance. Always make sure you have at least three months of living costs (everything from bills and mortgage payments to food) saved up in an emergency fund.