5 Essential Tips for First-Time Homebuyers
Buying your first home is an exciting time, but the ins and outs of the real estate market can be overwhelming for first-time buyers. From setting a realistic budget to getting approval for your mortgage, there are a few essential tips every first-time homebuyer should know.
1) Land Transfer Tax Rebates
Any time you purchase a piece of land, you have to pay a land transfer tax to the provincial government. The amount of tax you pay is usually based on the price of the sale, as well as any remaining debt or mortgage left on the property.
To make buying your first home more affordable, first-time homebuyers receive a rebate on this land transfer tax. And as of January 2017, this rebate will double to $4,000. This means that buyers won’t have to pay land transfer tax on the first $368,000 of the home’s purchase price. Official site here.
2) Pre-Approval for Financing
Before you even start the search for your new home, consider getting pre-approval for financing and your mortgage. Getting pre-approval will tell you how much you can afford for your first home, as well as your monthly mortgage payments. Here are a few ways to help yourself get pre-approval:
- Don’t change jobs – your financing is based on having a steady income
- Limit your other debt – don’t buy a new car or new furniture immediately before and after buying a new home
- Talk to more than one lender – compare banks, mortgage brokers and get a referral from your real estate agent
If you’re receiving any monetary gifts from family, such as your parents offering to cover the downpayment on your new home, make sure you chat with your finance people about whether it will affect your approval
3) Work with a Professional
The process of buying a home has many steps and nuances that, as a first-time homebuyer, you may not be aware of. While there’s nothing wrong with buying and selling a home privately, you do run the risk of things falling through the cracks. If anything is missed during the process, there could be serious implications. Using a professional will give you peace of mind that each step is being handled carefully and completely. Plus, in most situations, the seller pays for the real estate fees, though there are exceptions
4) Be Realistic About What You Can Afford
For most homeowners, your first home won’t necessarily be your dream home. Understanding this upfront will save you a lot of heartache – and money. Before setting your budget, come up with a list of things you want and need in your new home, but be realistic. Come up with another list of items that you’re willing to compromise on. Look around at local real estate listings to get an idea of what you can afford in your desired area
5) Be Aware of Additional Costs
When setting your budget, it’s important to understand that the list price of a home doesn’t necessarily include all of the costs associated with buying a home. While the list price will be the biggest cost, here are some other costs you can expect to pay:
- Legal fees
- Property tax
- Hydro & Union Gas deposits
- Activation fees for utilities