First Time Home Buyer

Congratulations! You have reached the point where you want to buy your first home. Now that the decision has been made, you may want to know what’s next? Here are some ideas.

Firstly, let’s figure out what you can afford to buy then get you pre approved for a mortgage to start house hunting. This is a simple process of looking at how much money you make and how much debt you are carrying.

Next, we look at your credit rating, this will determine what rate and how much downpayment you may require. The better the credit the lower the possible downpayment (5%).

Lastly, downpayment. Based on your credit score you can put down as little as 5% (on purchases less than 1 million). The size of your downpayment will determine a few things in the house hunting process, how much you can afford, the size of your mortgage payment and whether or not high ratio mortgage insurance is required (CMHC, Genworth or Canada Guaranty).

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Patrick Sawler helped my spouse and I find the best terms and percentage rate available when we were in the market for a new mortgage. We recommend his service to anyone in need of help when securing a mortgage.

Victor and Doris Shea

Even if the downpayment is not sitting in your bank account, home ownership is still a possibility for you.

Here are a few options.

RRSP home buyers plan

You can borrow up to 25K from your RRSP’s (50K if a couple) and take 15 years to pay it back.

Gifted Downpayment

Receive your required downpayment from a blood relative (mother, father, sister, brother).

Borrowed Downpayment

Some but not all lenders allow for borrowed downpayment, where you borrow from your own available credit ( line of credit or credit cards) as long as you have the ability to debt service this loan in addition to your mortgage.

Since you are a fist time home buyer, you may also qualify for the First Time Home Buyers Tax Credit.
A rebate possible of $750, based on current taxation rates.

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Lastly and importantly don’t forget about closing costs.

Here are some costs to consider.

1st time home buyer

Home inspection could cost you between $300 to $500.
Land transfer tax is 1.5% of the purchase price. So if the house cost you 300,000. Your land transfer tax will be $4,500 in Nova Scotia. You must show the bank confirmation of this along with your downpayment.
Legal and lawyers fee’s. You should estimate between $800 and $1,500 for legal closing cost related to buying your home, this may also include the cost of title insurance that the lender may require at 150-300.
Appraiser fee’s. If you go with high ratio mortgage insurance, this is covered by the insurer. Otherwise this may cost you from $400-$600 depending on the location and the complexity of the report.
Property insurance. You will and your lender will want to protect your new asset with property insurance. Provide your Solicitor or Lawyer a copy to provide to the lender to confirm that coverage is in place.
Let’s not forget about property tax. Some lenders allow you to pay that with your mortgage payment. If that option is not available then just contact your local municipality to arrange for pre authorized payments.
Finally make sure you meet with your solicitor prior to closing and that everything the lender requires from a legal standpoint has been met. Now all that remains is to pick up your keys from your lawyer on closing day.

A lot to juggle on your first time around. If you feel a little overwhelmed or you just have more questions please feel free to call. No pressure, just solutions.