First Time Home Buyers Guide

Is Homeownership Right For Me?

Purchasing a home is a big decision! Some critical information and questions to consider before purchasing are: 

 

Am I Financially Stable? 

It's crucial to figure out how much you can afford to spend before looking for a home. Your mortgage payment will likely be the most significant expense, but there are other costs you should be aware of. You don't want any unpleasant surprises! The more you know about your current financial situation, the more prepared you'll be when you meet with your lender or broker.  

 

It's essential to select a mortgage lender or broker to discuss your financing options and confirm that you are financially ready to buy a home. They will discuss mortgage terms and interest rates and explain what you must do to ensure that you get approved for a mortgage once you find your home.

 

Secure A Pre-Approval (Amount of Purchase):

It's a good idea to get pre-approved for a mortgage before you start looking for a home. But first, you need to understand exactly what "pre-approved" means. Getting pre-approved can help you narrow your search down to a specific home type, size or neighbourhood.

 

First Time Home Buyers Programs:

The maximum amount you can afford to spend on a home depends on these numbers and the size of your down payment. 

As a first-time homebuyer, saving your down payment can be a tricky part of buying your first home. You can avail yourself of various government programs.

 

For example, the First-Time Home Buyer Incentive allows eligible homebuyers with the minimum downpayment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage.

 

The program offers 5% or 10% of the home's purchase price toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making homeownership more affordable. In exchange for the incentive that will be repaid in the future, the Government of Canada shares in the appreciation or depreciation of the property, calculated based on the property's fair market value at the time of repayment.

 

The Home Buyers' Plan allows first-time homebuyers to contribute to their down payment by withdrawing funds, tax-free, from their registered retirement savings plan (RRSP). The funds are then paid back in instalments over up to 15 years https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html. Your lender can also assist with this process! 

 

Start Your Search!

That's where your trusted Krown Realty 'Realtors' come in! Now that you understand your financial situation, have your pre-approval and know your mortgage options, it's time to get excited and start thinking about the kind of home that suits your (your family's) lifestyle.  Deciding what type of home is best by working with your lender and real estate agent.

 

Making an Offer:

Once you've found the home you want to buy, you need to give the seller an offer to purchase (also referred to as a "purchase and sale agreement"). An offer is a legal contract that your real estate agent should carefully prepare, taking into consideration your pre-approval amount and the conditions you are requested related to the home of your choice. 

 

This Purchase and Sale Agreement is the contract that includes the agreed price (between the homeowner and you as the purchaser) for the home and all necessary purchase conditions (ex, down payment amount, finance approval deadline, home inspection deadline and requirements requested as part of the sale).

 

From Pre-approval to Approval

Your lender will now determine that all information collected during the pre-approval steps remains the same (ex, no job change/loss, no recent large purchases to change your TDS or GDS and no missed payments and the sort). Your lender will now take you from the pre-approval to approval based on the accepted offer on the home that you have selected. 

 

Lawyer Role/Closing (the standard closing time in NL can range from 4-6 weeks)

Your lawyer will play a critical role in taking care of the legal responsibilities of the purchase transaction. "Closing" the transaction entails several important steps, and your lawyer will carefully guide you through the process. 

Taking the Key