What an exciting time! Whether it’s your first home or your fifth, one thing remains the same: It’s a big job involving a great deal of time, energy and of course, money. Rest assured, it’s all worth it. Pride of home ownership is one of life’s greatest joys and biggest accomplishments.
Here are answers to a few Frequently Asked Questions (FAQs) for home buyers, however, if you have more questions, I’m just an email, text or phone call away.
Question: How do I know if I’m ready to buy a home?
Answer: The first step in this process is to meet with a real estate professional who will help you understand the process, the costs, the current market conditions and also review your needs and goals. The next step would be to start the process of getting pre-approved for a mortgage to determine how much you can afford to spend on a home.
Question: How much do I need for a down payment?
Answer: Typically, you will need at least 5% down on a home up to $500,000 to qualify for a CMHC insured mortgage. If the purchase price is higher than $500,000, you will need 5% on the first $500,000 and 10% on the balance of the purchase price after $500,000.
Purchase Price = $700,000
Down Payment = 5% of first $500,000 or $25,000
+ 10% of remaining $200,000 or $20,000
= Total Down Payment of $45,000
Question: What are typical closing costs when you buy a home?
Answer: In addition to the balance of down payment after initial deposit with offer, here are a few possible additional costs on closing:
• Mortgage loan administration and/or appraisal fees, if applicable.
• Credit report fees.
• Mortgage insurance premiums if applicable (CMHC) – usually added to the mortgage amount being paid out.
• Title insurance policy premiums.
• Survey expense if applicable.
• Legal fees and associated disbursements (couriers, copies etc.).
• Pro-rated amounts for your share of any prepaid costs, such as utility bills and property taxes.
• Land transfer tax (if applicable) and title registration fees.