First Time Buyers Guide

First Time Buyer
PDF Icon Download Radu’s First Time Home Buyer’s Guide Here

Radu’s First Time Home Buyer’s Guide

Buying a First Home can be a daunting process. For most people, their home is the largest investment they will ever make in a life time. Therefore, it is essential that careful planning and expert advice is sought as soon as possible. This Guide is structured in such a way as to answer as many questions as possible. Of course, the guide will not cover all the questions you may have, therefore it is recommended you contact Radu as soon as possible.

Step 1: What can you afford? (Pre-Qualification)

Knowing precisely what you can afford and the type of mortgage for which you qualify before beginning your house search will not only save time, it will also ensure piece of mind. Having a good idea of the price range that you can afford means having a better idea and understanding of the type of house and neighbourhood you can expect to get.

a. Mortgage Qualifier

You want to live in the nicest home that you can afford. And, you want to have enough money to buy the things you need and live the lifestyle you choose. You can achieve both of these goals by planning carefully and getting the right advice.

Listed below is a useful chart to give you a basic idea of what kind of mortgage you can expect to get. This is a preliminary estimate only and it is advised that you contact your Mortgage Specialist for more detailed pre-qualification information.

Chart

b. Needs & Expenses

Maintaining a warm, safe environment for you and your family is an accomplishment you can be proud of. One of the easiest way to make your that you can maximize your comfort is being prepared for the ongoing costs of owning and maintaining your home.

Listed below is a useful Needs Analyzer to make sure you’ll have enough money left over at the end of the month to enjoy your new home.

Chart

PDF Icon Download Both Charts Here - Mortgage & Needs

c. Home Buyers’ Plan (RRSP) & GST/HST New Home Rebate

The Canadian Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related disabled person. In general, the plan allows a one time withdrawal of up to $20,000 from an RRSP and is repayable in 15 years, by once a year equal payments (for a total of 15 annual payments).

Also available to Home Buyers is the GST/HST New Housing Rebate for purchases of new or substantially renovated homes. This guide, as well as the complete Home Buyers’ Plan can be found on the Canada Revenue Agency website and the Home Buyers’ Plan Guide can be downloaded as well.

pointer Canada Revenue Agency: Home Buyers’ Plan

Download Home Buyers’ Plan Guide

Pointer Canada Revenue Agency: GST/HST Rebate

Download GST/HST Rebate Guide

Step 2: Arrange Financing (Pre-Approval)

Now that you have a rough idea of the mortgage amount you can afford, the next step is to apply for a mortgage pre-approval. Your Mortgage Specialist will be able to guarantee the interest rate (generally for 45 - 90 days). With a pre-approved mortgage, you can shop with confidence, knowing how much you can spend for the home of your choice.

Step 3: Choosing the right home

Owning a home is more than just a financial commitment. It’s also an opportunity to create an environment of comfort and enjoyment that matches the way you like to live. Matching each buyer’s lifestyle to the type of home is very important.

a. House vs Condominium

HOUSE

Pros

You have more freedom to renovate or upgrade your home as you wish
You only pay for the amenities and utilities that you use, instead of a lump-sum condominium fee that may include services or features you do not want or need

Cons

You are solely responsible for all of the upkeep, repairs and maintenance
Expenses may vary by month, making it more difficult to budget for your costs

CONDOMINIUM

Pros

One monthly fee usually covers all of your maintenance costs, and you’re free from yard work and other outdoor chores
Maintenance fees pay for built-in amenities, such as fitness facilities, pools and games room

Cons

You are subject to the rules of your condominium. Plus, you have little control over the amount of your monthly condo fees, which are in addition to your mortgage payments
Condo fees are subject to change and you may have no choice but to accept increases as they occur

b. New Home from Builder vs Resale Home

New Home from Builder

Pros

You may have more flexibility when it comes to upgrading the features in your new home, such as finishing materials, flooring, plumbing and electrical fixtures
In most provinces, a builder warranty is usually available and covers major household systems like plumbing and heating
New homes are built to meet modern comfort and safety codes, using the latest building materials and technologies - the result is often greater cost and energy-efficiency

Cons

Homes in a newly developed area may not be completed on schedule and may not have immediate access to amenities such as schools or shopping centers - these are generally built after the residential population is complete
Noise and dust from ongoing construction may affect the comfort of your new home until the development is complete
Brand new homes, seldom come with landscaping or fencing, which can both be substantial expenses for any homeowner

Resale Home

Pros

You are most likely moving into an established neighbourhood, so you can see which amenities and services are already available
Your property may already have landscaping, fencing and mature trees
It may already have some upgraded features, such as a finished basement

Cons

An older home could mean higher maintenance costs in the short term, especially on major systems such as heating, electrical and plumbing
Resale homes come as they are, and you may have the added expense of changing wall colours, flooring or other interior design elements that don’t suit your taste

c. Why should I use a Real Estate Agent when buying a new home?

The question should be Why wouldn’t you use a Real Estate Agent when buying a new home? Many people feel that they don’t need a real estate agent to buy a new home direct from the builder, and this is true. However, there are many reasons why you Should use a real estate agent.

It doesn’t cost you Anything to use a Real Estate Agent when buying a new home
A Real Estate Agent can negotiate on your behalf to get you a better deal, or possibly many free upgrades
Builders are partial to their own homes. Real Estate Agents are not. A Real Estate Agent will give you the Pros and Cons of all the developments you are considering

If you are planning to purchase a new home direct from a builder, call Radu Medan today and have him represent you. Radu will be able to give you different perspectives and advice on the purchase of your new home and also be your negotiator, for FREE!

Step 4: Buying the Home (Offers & Closing)

Once the home search has begun, and properties have been eliminated, it is time to narrow the focus and “Get Serious”. This is the exciting stage, the one most frought with emotions and quite possibly the most stressful stage as well - Home Buying.

a. Making the Offer

After possibly months of searching, visiting properties and attending open houses, you have finally found the perfect home. It fits well within both your lifestyle and budget. Who knows, it may even have a white picket fence. You instruct your Real Estate Agent to draft the offer and present. After possibly quite a lot of jostling and back and forth offers, both you and the seller agree on a price and tentative conditions. The next step is the removal and satisfaction of those conditions (should they apply).

b. Satisfying Conditions

All offers have conditions that need to be met. Whether it is the Price, Closing Date or Title Search Date, no offer is without them. However, some have more than others. The most common condition in any Agreement of Purchase and Sale is the Mortgage / Financing condition. It Sets the terms and conditions under which the Buyer will seek final financing / final approval from the Buyer’s lender. Following this condition is the Inspection Clause. It is generally recommended that buyers seek a home inspection by a Registered Home Inspector on all Resale Homes. Sometimes, it is a good idea to have a home inspection performed even on a new house, as this will attest to the quality of the home builder.

Once all conditions have been removed or satisfied, the deal is said to be firm. At this moment, all parties are bound by the contract and the sale can proceed. The next step is the final closing and the legal work.

c. Closing / Taking Possession

Once the deal is firm, the legal team for both Buyer and Seller get to work. The Buyer’s lawyer will proceed with the Land Transfer, Title Search and with the adjustments. The Title is Transferred from the Seller to the Buyer and the new owner is registered on title. The Buyer’s lawyer receives the keys to the property and, on closing day, once the payment has been made by the bank, the key is given to the Buyer. And then, the real fun and excitement of home ownership begins.

Below is a chart that will help you keep track of the related home buying costs.

Download the Costs Chart

Chart