The Canadian Real Estate Association (CREA) provides a number of different resources to help you buy a home. It provides helpful advice on the basic knowledge you need before buying a home, plus useful advice to guide you throughout the process. Topics covered are:
1. Assess Financial Readiness
Assess your present household budget and your annual income to determine if you are eligible for a mortgage and how much you can comfortably afford.
2. Consider Mortgage Options
A mortgage is a loan, generally used to buy a property. How much you pay depends on how much you borrow (the principal), the loan's interest rate, and how long you take to pay it back (the amortization period). Do not be afraid to negotiate interest rates and mortgage terms with different lenders. They are offering you a product and talking to more than one lender helps you make an informed decision.
3. Mortgage Default Insurance
When you buy a home with less than a 20% downpayment, the mortgage needs to be insured against default. This type of insurance protects the mortgage lender in case you are not able to make your mortgage payments. It does not protect you.
4. Research Government Programs
The federal government has assistance programs to help homebuyers. Research government program requirements to see if you are eligible for things such as First-Time Home Buyers' Tax Credit, Home Buyers' Plan (withdrawing from your RRSP), etc. The provincial government also offers incentives to First-Time buyers.
5. Finding a Home
Finding your perfect home can be a long process. Your REALTOR will help identify the right type of home for you and continually research new listings in neighbourhoods that meet your needs. Your REALTOR will assist with questions such as: Where Do You Want to Live, What Type Of Home Do You Prefer, What Type of Ownership Are You Looking For, etc.
6. Making an Offer
After seeing many different homes, you have finally found one worth of an offer! What are the next steps?
7. Closing and Related Costs
Closing costs are the legal, administrative and disbursement fees associated with buying a home. Understanding these fees will help you budget more accurately. Remember these are additional costs over and above the price of the home.
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