A Guide for First-Time Homebuyers
When buying your first home, it can be a rather daunting experience, especially considering it’ll most likely be the most expensive investment you’ve ever made. Here are some helpful tips to guide you along your first home buying experience.
Break Down Your Down Payment
Your down payment is the percentage of your purchase price you put down for your home. The government of Canada has strict guidelines and brackets for down payment sizes. A home $500,000 and below requires 5%, whereas a home between $500,000 and $999,999 requires 5% of the first $500,000 and 10% for the portion above the purchase price above $500,000. A home over $1,000,000 would require a down payment of 20%.
Learn About CMHC Insurance
If you take out a mortgage that will be paying for more than 80% of your purchasing price, the Canadian Mortgage and Housing Corporation (CMHC) must insure your mortgage by law. You’ll be charged a premium dependent on how much you’ve spent on your down payment. Visit the CMHC website and use the calculator they provide to learn what your premium rates will be.
Study the Home Buyers Plan (HBP)
With your HBP, you’ll be permitted to borrow from your RRSP in order to buy your home—these funds aren’t taxable until they’ve been withdrawn. Click here for detailed information on the HBP.
Be Prepared for Inspection
Given the gravity of the purchase, a thorough, professional inspection and comprehensive, report will help you make an educated buying decision. It will only cost $300-$800 hinging upon the size of the home.
Understand the Mortgage Process
A mortgage is a real estate-specific loan you must be approved and pre-approved for when you buy your first home. When applying, ask your lender or mortgage broker bout mortgage terms, amortization, fixed rates/variable rates, open and closed mortgages, prepayment charges and about how you qualify for a loan.
Know Your Legal Fees
In order to complete a smooth transaction, you’ll need a real estate lawyer right when you make an offer on a home. A real estate lawyer knows the ins and outs of real estate law and will ensure you’re protected by reviewing your offer, any potential status certificates and confusing legal terms. They’ll also take care of any nagging legal work on closing day, providing peace of mind during a particularly stressful time. Legal fees cost between $1,000 and $2,000 when taking into account
disbursements, searches, registration, courier, and HST costs.
The Right Home is in The Right Neighbourhood
You want to move into a neighbourhood that’s the right fit for you. A house itself might look ideal to you, but it only becomes a dream home when it’s located in the right spot. Consider the type of home you want and your commuting distance to work. You also need to take into account the nearest schools and daycares in the area on top of grocery stores and malls. If you’re an outdoorsy person, you’ll want to be conscious of parks, trails, and other outdoor recreation in the area.
Bone Up On Home Insurance
You’ll be asked this laundry list of questions about your home:
What year was it built?
What type of construction was used (wood frame, brick, or concrete)
How many floors?
What size are the main living areas?
What size are the finished and unfinished basement areas?
How many bathrooms?
How many fireplaces? (Are they gas or wood burning?)
What size are any decks or patios?
What size are attached garages or carports?
What kind of swimming pool is in your home?
Are there any detached structures? (garage, sheds, or carriage houses)
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