First time home buyers tips.
Purchasing your first home is a very important decision in your life. Mortgage approval and financing is a part of it for most of us. A brokers Job is to explain your mortgage options and the related expenses that go along with owning a home. There are a few interesting and helpful websites for First time buyers such as – First-Time Home Buyers’ Tax Credit, Land Transfer Tax Refunds For First-Time Homebuyers and Home Buyers’ Plan (HBP)
Types of mortgages (general):
- No Down Payment (Conditions and existing laws apply)
- Cash Back Mortgages
- High Ratio Mortgages (less than 20% down payment) Insurance may be required.
- Conventional Mortgages (20% or more down, sometimes 25%.)
You should select the best mortgage option based upon your lifestyle, Income and Choices. Relying solely on the affordability limit is not enough, while shopping for a mortgage. Your normal lifestyle require expenses that are not included in the debt ratio calculations. Knowing the complete expense pattern is important.
This checklist will help you in the home buying process as you will discover how much you can afford and what to buy, what not to buy.
- Get Pre-approval and lock in your rate. The lock in period actually varies from lender to lender.
- Do your research. What do you want in a house? Which neighbourhood do you want to live in? Do you have children? If yes, then how close is the school and what is the school’s reputation? How is the area? What are the demographics, shopping options, hospitals and public transit? These are the common questions you should consider when buying a house. Put them all down and navigate to home buyers resources page as there are some good websites to help you in your research.
- Find a few Real Estate Agents, interview them, ask for referrals and verify them. The agent will assist in your home search and help to prepare the offer to purchase once you have found the home you want. Do not sign any contract with the agent unless you are sure that he / she is the person you really want to do business with.
- Settle on a few options. Look at them carefully. Visit the neighborhood during school hours, during the evening and at night – just drive by. Observe. Drive by the school, look at the students – they will tell you a lot about the neighborhood without talking to you. Find out how your next door neighbor is (tough Eh!)
- Make up your mind. Place an offer. Finally negotiate on the price, and seal the deal.
- Remember the first step? Call your broker or bank, ask if the rates have recently changed or not. Get or confirm the rate again. Always ask for clarification. Askif there are any current promotions — Air Miles, free gifts etc.
Decide on your mortgage choices one more time. Prepare the following documents.
- Accepted purchase and sale agreement
- Realtor MLS listing
- Proof of down payment (3 months bank statements/Gift letters etc.)
- Proof of closing costs (1.5% of purchase price)
- Employment Letter(s)
- Recent Pay Stub(s)
- If Self-employed – (T1-generals/Tax assessments/Business license)
- Other documents may be required in addition if requested by the lender
- Lawyers name and address Go to the link page to find the law society of upper Canada web page
- Your bank or agent will submit for approval to the underwriter of the financial institution. An Approval is generally received within a few days.
- Sign your Mortgage Contract — read the mortgage commitment, disclosure and other documents to sent you for your review and signature – normally your lawyer does this for you. You can choose your payment frequency and make other adjustments. Any additional documents that the lender requires will be contained in the mortgage commitment and must be provided within 10 days prior to closing.
- Final closing (Handover) – A few days prior to closing you will need to meet with your lawyer to sign final documents. Your closing costs and down payment will be due at this time.