First Time Home Buyer Tips
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First Time Home Buyers Tips
Being one of the biggest financial investments that you will ever make, buying your first home can be a bit overwhelming. Recognize that this is an exciting time but also challenging and stressful. Finding the resources to help you with all the potential outcomes during the home purchasing process is the key to your success.
Here are 6 Helpful tips for you as a First Time Home Buyer to help ease the process.
1 Pre-Approved Mortgage and what it means
Getting pre-approved for a mortgage should always be done before you start seriously looking at new homes. Pre-approval is a quick and easy process and Mortgage Brokers will help you get your pre-approval and help you design your home buying timeline. Getting pre-approved is a quick and easy process with no cost to you. Now having said this, this is the maximum that bank is willing to give you, take some time and discuss your financial priorities to figure out how much you want to spend on your mortgage, this is a long term commitment. Avoid making the mistake of spending the majority of your budget on your mortgage, leaving you little room for other expenses.
2 Using a Realtor®
Your buying journey should include the assistance of a REALTOR®. A REALTOR® can help you navigate through the process, informing you on the current market and protecting your interests during the purchase. Their expertise will be invaluable along your home buying journey
3 First –Time Home Owner Incentives
The Government has several programs to assist the First-time Home buyer. Although each program is not applicable to all buyers, it is definitely worth your time to learn about each of them and see if you qualify. Here are some programs for first-time homeowners:
The Home Buyer’s Plan
The Government gives you the opportunity to take out funds from your RRSP’s (withdrawal limit $35,000) using The Home Buyers Plan and put it towards a qualifying home, with the condition of paying back the money you withdrew within 15 years.
The First Time Home Buyer Incentive
The First Time Home Buyer Incentive makes it easier for you to buy a home and lower your monthly mortgage payments. This program is a shared equity instrument. It works by getting an extra 5% or 10% of the down payment of your home and then repaying the Government either 5% or 10% of the property’s market value at the time of repayment.
The First Time Home Buyer’s Tax Credit
The First Time Home Buyers’ Tax Credit is a $5,000 non-refundable tax credit; eligible Buyers who purchase a qualifying home can claim a non-refundable tax credit of up to $750.00.
Land Transfer Tax Exemption
The British Columbia government has First Time Home Buyer Land Transfer Tax Exemption. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax.
4 Don’t Skip the Home Inspection
Home inspections are done to reveal a home’s true condition; this includes potential problems as well as maintenance items, which can cost you a lot of money. This also gives you an opportunity to add any repairs to be done as a condition or to request a price reduction based on the repair needed to be done. Having the peace of mind will help soothe the stress of the purchase.
The Average Home inspection in Canada is $250 - $600.
5 Closing Costs
Closing costs are often overlooked when it comes to saving for the purchase of a new home so being prepare for these costs will help make your purchase a smooth process. These costs include legal fees, home insurance, taxes, utilities, adjustment costs, new appliances and moving costs just to name a few. It is recommended to budget for 2-4% of the purchase price and have it set aside so there are no surprises. REALTOR®s can help you with determining these costs.
6 Pay off your Mortgage Faster
Paying off your mortgage faster can save you thousands of dollars over the years. Be sure to ask your Mortgage Broker about your options. Bi-weekly payments, instead of monthly, are an option, using the 3 extra payments per year as extra payments. In general any extra payments you can put on your mortgage will decrease the interest you pay and save you money. Check your mortgage contract carefully for your extra payment options as there are penalties for overpayments. Check out these tips and your mortgage rights when considering paying off your mortgage sooner.