Financial Checklist for First-Time Homebuyers

For many, purchasing a home will be the largest expense ever incurred. Before diving in, it is essential to organize your finances strategically to better understand your budget, home requirements, and desired area. Here is a simple but comprehensive checklist to help you move forward toward this major, life-changing purchase.

Save, save, save—Experts suggest that you have at least 20% of the home’s purchase price saved as a down payment. This may allow you to avoid paying private mortgage insurance, which is typically between 1- and 2% of the loan value (split into monthly payments). Sure, that doesn’t sound like much, but it can add thousands each year to your mortgage payments. Of course, you can purchase a home without this saved money—many people do. Having a hefty down payment will allow you to save funds in the long-run.

Pay down your existing debt—Before you start the search process, check to make sure your credit score is “good.” If you don’t have a good or great credit score, you will likely not get the best interest rate. In some cases, you may not be able to secure a loan. Focus on paying down your credit cards, outstanding bills, and student loan debt in the months and years prior to purchasing your first home. A score of 720 and above is generally considered to be “good,” and 750 to 850 is “excellent.”

Have a payment strategy—Decide ahead of time if you want to take out a fixed-rate mortgage or an adjustable-rate mortgage. Remember that, though fixed-rate mortgages are great for long-term investments, an adjustable-rate mortgage might have limits on how much the rate can rise. However, ARMs are often predatory, as mortgage brokers are often paid a higher commission on these loans than on fixed-rate mortgages. Keep this in mind as you plan your finances.

Choose the length of your home loan—Most homeowners choose a 30-year mortgage, while some opt for a 15-year or 20-year. A shorter loan will often come with a lower interest rate, but it will result in higher monthly payments. Think about how long you want to live in the house, how much money you currently make, and how many funds you have saved in the bank.

Perfect your budget—You might have a lot of money saved up, but this is a very long-term, consistent expense. See how much you can afford to spend, then account for mortgage, interest, property taxes, homeowner association fees, and utility costs. Work backwards through your numbers; set a monthly budget that you will be comfortable paying, but something that would not put you in significant trouble if you were to lose your job.

What Options Do I Have While Building a Home?

Most homeowners don’t realize that building a home can take several forms. Not all “custom” homes are truly “customized.” When creating a home, you will need to choose between working with a production builder and a custom builder. Both types are excellent options, but there are a few key differences you should understand. Below, we have detailed the process of and differences between production and custom home builders.


Production Builders

A production home builder creates houses, townhouses, condos, and rental properties on land owned by the firm itself. They utilize stock plans or those developed by the real estate or building company to construct a high number of homes each year. According to the National Association of Home Builders (NAHB), most production-based home builders will offer the home and land as a package. You will be able to choose from a range of house plans curated by the builder, though sometimes they are chosen by a building community.

Whether or not you specifically purchase a home created by a production builder, the firm will create it—whether or not you decide to move in. In most cases, these professionals do not undertake “unique” homes. However, most firms allow for a limited amount of customization, which might include paint colors, countertops, faucets, flooring decisions, &c.

Though not truly “custom homes,” a production builder can save homeowners both time and money. Most custom homes take around six months to complete. Because of the simplicity design and practice in manufacturing many versions of the same home, a production builder may only take between three and four months to fully construct a home.


Custom Builders

The process of building a custom home is far less scripted than working with a production builder. There are no pre-determined choices or menus to choose from; everything is created by an architect from scratch. These homes are built on land you own or that you have acquired, and you can supply your own plans. In most cases, home builders will commission a set of floor plans to be created. Those opting for a custom home can work with separate architects and builders, or they can work with design-build companies who manage and oversee the entire process.

Homeowners who choose to create a custom home are more involved in the process, having many opportunities to make decisions and point designers in a preferred direction. You will be able to pick nearly any product within a category rather than selecting from a provided menu.

Because the custom build process is completely unique, homes are often more expensive and take a longer time to produce. The key to working with a custom builder is to establish a strict, realistic budget and stick to it throughout the process. Custom build prices are often dynamic, as decisions are made throughout the process.

Vancouver Land is in High Demand—Here’s Why

In recent years, Vancouver’s housing market has attracted a lot of attention. No, not for its natural beauty and the bountiful amenities. With a Multiple Service Listing Home Price Index (MPL HPI) of $1,046,900, this is Canada’s most expensive real estate market. Home and land prices have risen steadily over the past decade, making area real estate both inaccessible and a fantastic investment if you have the means. Here, we’re going to break down why, exactly, land costs so much in this part of the country.

Foreign buyers continue to be the largest drivers of Vancouver real estate. Wealthy foreign buyers, hailing primarily from China, are purchasing and investing in area property. David Lay, a geographer from the University of British Columbia, has found that, in the last 25 years, there has been an almost 1-to-1 correlation between Vancouver’s rising real estate prices and the surge in international immigration and offshore investors. Similarly, research from the University of Waterloo backs up Lay’s findings, conceding that Vancouver is an exceptional example of how globalization can significantly impact a local housing market. The accumulation and access to money experienced by these wealthy investors—much of whose money is earned outside of Canada—has led to the “decoupling of housing from local labor market participation,” according to the University of Waterloo study.

Ineffective regulation is a concomitant cause of this strange housing market. An investigation conducted by Globe and Mail found that, when Vancouver real estate agents were disciplined for wrongdoing, they often faced minimal fines and suspensions. Compared to the hefty commissions earned on massive real estate transactions, these fines are, to be frank, inconsequential. The investigation found the average fine of more than 100 disciplinary proceedings to be just short of $5,000. The potential commission on a $1.78-million home (the average price paid in metro Vancouver at the time of the investigation) is $22,500. As a result, many real estate agents see these disciplinary fines are part of the business process. To that end, the Globe and Mail investigation found that only a fraction of agents lost their licenses for misconduct.

These investment issues, coupled with a surplus of inexperienced and ill-trained realtors, has caused an insurmountable surge in the Vancouver housing market. There are currently more than 12,400 real estate agents in the Vancouver area—up more than 25% from 2012. Growth in the profession, along with errors and broken regulations, are due to the incredibly low bar of entry into the field. The Real Estate Board of Greater Vancouver (REBGV) states, “The No. 1 way to increase public protection is to have more than a 10-week online course to get your license.”

Of course, Vancouver’s real estate market is also tilted as a result of more standard, pedestrian reasons. The area is rich in natural beauty; nestled between the coast and the mountains, this part of the country’s rise in popularity can be likened to that of America’s Pacific Northwest. The city has a vibrant community and innovative amenities, making it an incredibly attractive place for potential homebuyers. If you are planning to purchase a home or land in the Vancouver area, be sure to do your research and understand the investment you are making.

Vancouver Homebuilders to Know

Vancouver homebuilders are capable and talented but finding someone who fits your specific needs can be difficult. Price, schedule, and customizability can cause conflict with a homebuilder, so it is necessary to make the correct decision from the beginning. These picks have been in the industry for years, prioritizing luxury custom home builds and process transparency along the way.


Clay Construction—Clay Construction is an award-winning custom home builder. They prioritize builder-client relationships to ensure everything meets the new homeowner’s needs—from timelines to floorplans. With nearly fifteen years in the industry, they know what it means to have a positive home building experience. The prioritize realistic budgets, schedule tracking, and reporting systems, ensuring high-quality work is created throughout the process. They also create custom home bars, home additions, and energy-efficient houses.


PHW Homes, Inc.—This full-service homebuilder has been in the industry for over thirty years. They specialize in creating custom homes, laneway houses, and renovations, providing the consult and tools necessary throughout the process. They offer great prices without ever compromising project quality. They serve Burnaby, Coquitlam, Hastings-Sunrise, Renfrew-Collingwood, Killarney, Richmond, New Westminster, and Vancouver.


NOVERO Homes and Renovations Ltd.—NOVERO has been in the Vancouver homebuilder business for over twenty-five years. They offer services such as: custom homes, demolition, floor plans, foundation construction, garage building, home additions, home extensions, home remodeling, house plans, insulation installation, new home construction, site planning, site preparation, concrete construction, custom cabinets, deck building, deck repair, door installation, door repair, title installation, and window installation. In essence, if it relates to our home, NOVERO can help.


Convex Development—With over ten years of experience, Convex Development clients understand what it means to experience efficient management and hard work. They have completed over fifty projects across the Vancouver area, limiting their load to just a few projects each year in order to ensure exceptional service and optimal quality. They are perfect for new home building projects, general site management, and construction management. They also provide services such as: major renovation, custom homes, home extensions, home remodeling, and new home construction.


Choosing Your Home Builder

Choosing a firm to build your new home is a difficult decision regardless of your property or personal taste. This decision is made even more difficult in Vancouver, a city with hundreds of talented building and renovating professionals. Choosing a builder is the first step in a series of important decisions, and we want to make that process a bit easier. Below is a guide to finding the builder suited to your Vancouver housebuilding project.


  1. Think about the type of house you want. Do you want to build a multifamily property? How large do you want the home to be? Which rooms (and how many of each) do you want? Answers to these questions will establish if you need a specialist or a general builder.


  1. Create a list of potential builders. Our site includes a directory of home builders in the Vancouver area—or at least it will. Use this resource to narrow down your options to those who offer the type of timeline and build you want. You can also search for nearby builders using Google or Google Maps.


  1. Consult your real estate agent. If you are planning to build a home, you have likely purchased a plot of land with the help of a real estate agent or broker. This professional will likely have insight and connections regarding local Vancouver home builders.


  1. Make a list of questions to ask potential builders. We have generated a few examples to start: Will they provide references of recent buyers and occupants? Does the builder have an established financing plan? Are there particular options for floor plans? Can a room be left unfinished? How much plan customizing is available? Do they offer a warranty program? What are the estimated taxes?


  1. Utilize their customer testimonials page. If you can, contact previous clients to ask if they were happy with the service provided. Do they like their homes? Did they have any problems? Would you buy another home with this builder? Consulting sites like Yelp is also an easy way to find relevant opinions.


  1. Consult the Vancouver Home Builders’ Association. This is a great place to further narrow your builder search and further explore your project’s potential. You can also check out this video: