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I'm a first-time homebuyer. What should I know about mortgages?

If you are a first-time homebuyer, getting professional mortgage advice is a great place to start. We specialize in the kind of education that can help get new homebuyers off to a great start! Although mortgage debt is ‘smart’ debt, buying your first home is a huge financial decision and there is a lot to think about. It’s one of the most important financial decisions that most Canadians will make in their lifetime.

You want to take advantage of today’s low-rate environment but it can be overwhelming to sort through all of the options out there. I will help get you the right combination of mortgage features, privileges and rates that best match your needs. The right mortgage goes beyond just the rate–it’s important to also consider terms, prepayment options, refinancing penalties, restrictions, and fees.

Determine what you can afford 

Before you start shopping for a home – and long before you consider putting an offer on one – let me help you determine how much home you can comfortably afford. Having a realistic budget to start will bring you confidence, knowing that you are not overextending yourself. Remember that home ownership involves costs beyond the monthly mortgage payment such as utility bills, insurance, taxes, and home upkeep.

Be sure to talk to me about getting pre-approved, so you’ll get your interest rate guaranteed for a set period, typically 90 to 120 days.

Downpayment options 

Downpayment is one of your most important considerations before you look to purchase your new home. If you’re in the “saving up” stage of preparing for home ownership, this is a great time to meet with me so I can discuss your downpayment options. In most cases, you want to save five percent of the purchase price. Five percent down is required on homes up to $500,000.

For any home over $500,000 but less than $1 million, you need 5% downpayment on the first $500,000 and ten percent for any amount over that. If your purchase price is $1 million or more, a minimum 20% downpayment is required.

There is downpayment help available for first-time homebuyers:
 

  1. The Home Buyers’ Plan (HBP) – first-time homebuyers can withdraw individually $35,000 or $70,000 with a spouse tax-free from their RRSPs, provided they adhere to the repayment plan.
     

  2. Gifted downpayment from an immediate family member – can be a source of funds as long as the homebuyer receives in writing that they are not required to pay the money back at any time.
     

  3. First Home Savings Account (FHSA) - first-time homebuyers can withdraw individually $40,000 or $80,000 with a spouse tax-free from this account.
     

  4. First-time Home Buyer Incentive

 

Build a team of professionals.

I would be happy to help you build a strong team so that all aspects of your home-buying experience are efficient and professional. Your team will include a realtor, a lawyer, and a home inspector.

Plan for closing costs 

There are additional costs that come with buying a home so you will need to have some extra funds set aside to cover these expenses. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs. I can outline all of your closing costs so you won’t be caught by surprise.

I will also provide strategies to help you pay your mortgage off faster and shave thousands off interest costs.

There’s so much to consider. Work with me today so you can get into the market and start your wealth-building with smart debt! I will help you get off on the right foot in your home-buying journey.

Real estate agent
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