What to Know Before You Buy a House

Posted by Ed Machart on Friday, February 19th, 2021 at 12:52pm.

Entering the real estate market and buying a home can feel overwhelming. You may be asking yourself where to start and what do I need to know? Well, to help you get started, I’ve compiled a list of frequently asked questions to help you get you ready for your home search!

What Should I Do Before Starting My Home Search?

This is a great question because it means you realize that buying a home begins long before the house hunt. Saving for a down payment may take months or even years to accomplish and having a down payment ready to go is the first step on your journey to home ownership.

Next, you will need to look into your finances, set a budget, and interview lenders to shop for your ideal interest rates and mortgage options. Once you’ve decided on a lender, you’ll then want to request a pre-approval letter. A pre-approval will not only help you set a budget for your home search but will also encourage sellers to take your offer more seriously, since waiting for financing will not be as big a factor on your offer. 

What Are the Upfront Costs I Should Be Prepared For?

  • Down Payment
  • Home Inspection & Appraisal Fees
  • Home Insurance Costs
  • Land Registration Fees
  • Prepaid Property Taxes
  • Utility Bills
  • Legal or Notary Fees
  • Potential Repairs or Renovations
  • Moving Costs
  • GST on a Newly Built House
  • Mortgage Loan Insurance

How Much Should I Save For a Down Payment?

For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion.

What is CMHC Mortgage Loan Insurance?

If you want to buy a home with a down payment of less than 20%, you’ll need mortgage loan insurance. This protects your lender in case you can’t make your payments. CMHC mortgage loan insurance lets you get a mortgage for up to 95% of the purchase price of a home. It also ensures you get a reasonable interest rate, even with your smaller down payment.

How Do I Become a Preferred Buyer?

Preferred Buyer Status will help you in your house hunt, especially in a seller’s market, where homes that do come onto the market are sought after by numerous potential buyers. Increasing your deposit amount, being flexible on your moving dates and deadlines, keeping your offer uncomplicated, and having a mortgage pre-approval will all help you to be viewed as a preferred buyer.

Do I Need Professional Help?

Not only will you need the help of a REALTOR®, you will also need a team of real estate professionals in order to secure a home. 

Real Estate Lawyers will review the purchase agreement, help negotiate modifications, prepare closing documents, do crucial research on the property and liens, and fact-check legal descriptions of the building and lot. They will also deal with the disbursal of fees associated with buying the property.

A Mortgage Specialist or Broker will determine how much home you can afford and provide you with a pre-approval.

A Home Inspector will ensure your purchase is sound by inspecting the home to identify any significant issues. 

And, of course, a Real Estate Agent will work with you, providing a wealth of knowledge of the local market and the home purchase process, helping you to finalize the deal by ensuring all documents are in order and your best interests are protected.

Are There Any Programs to Help Me With My Purchase?

The Government of Canada offers various programs to support first time home buyers, from access incentives to tax credits, as well as the Home Buyer’s Plan. You can find more information on these programs on the CMHS website.

 

This list is a great place to start when you are at the beginning of your house hunting journey. For a more detailed breakdown of the entire process, contact me today!

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