Home buying process insights for first-time buyers

Mortgage brokers can be a big help to steer first-time home buyers through the process, and it doesn’t cost you a cent.

  • Nov. 24, 2012 3:00 p.m.

As we see with most first-time home buyers, there are a lot of questions that go along with the process of buying a home.

Mortgage brokers can be a big help to steer clients through that process, and it doesn’t cost you a cent as the lenders pay the cost to get the mortgage business.

To start with, first-time buyers can get pre-approval on a mortgage before you start shopping for a home.

Once an offer has been made, there is generally a one to two week period to remove subjects on the sale—such as home inspection, financing, etc.—before the deal is confirmed.

Once those subjects have been satisfied, a non-refundable deposit must be placed on the property. This deposit will form a portion of your ultimate down payment, but is intended to be security for the seller that the buyer is committed to seeing the deal through.

First-time buyers  will be exempt from paying the property transfer tax. If the fair market value of the property is less than $425,000 you are not required to pay this tax.

Otherwise, the tax works out to 1% of the first $200,000 and 2% on the balance over 200,000.

As for the HST, it is charged against new homes only.

Depending on the lender and how much money you have for a down payment, an appraisal of the property may be required, which will cost between $250 and $350.

Buyers also need to secure the services of a lawyer or notary public to handle the legal aspects of a real estate transaction.

Be prepared for a legal bill in the area of $1,000.

There will also be a property tax adjustment that is calculated by your lawyer. The seller is responsible for the property taxes while they lived in the home.

If you purchase prior to July 1, the buyer will be credited the amount due by the seller and you will be responsible for paying the entire tax bill on July 1.

If you purchase after July 1, the seller will have paid the property taxes and the buyer will be charged for the months of that year you will own the home.

For home financing, if it’s more than 80% of the property value or a less than 20% down payment, the property will have to be insured as a high ratio mortgage by the lender through CMHC, Genworth or AIG, and that insurance premium will be added to the mortgage.

This is an insurance for the lender in the event of a default on your mortgage. The percentage you pay will vary depending on how much money you have down. Typical fees range from 1.75% to 3.15% of the mortgage amount.

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