Lifestyles

Of Prime Interest: First time home buyers have a lot to think about

We are seeing many first time home buyers and there is a lot to know about purchasing that first home. A mortgage professional can help make the process a whole lot easier.

Our service is free and you can rest assured you will be offered the best possible rate as well as good sound advice and direction throughout the process.

Speak with a mortgage professional as soon as possible. This will allow you to shop in a price range that is realistic to your situation. We will pre-approve your mortgage before you even get started.

Once you have an accepted offer on a new home, there is generally a one- to two-week period to remove subjects such as home inspection, financing, employment verification, etc.  Once those subjects have been satisfied you will be required to put down a non-refundable deposit on the property. This deposit forms a portion of your down payment and is credited to you at closing.

As a first time home buyer you will be exempt from paying the property transfer tax if the fair market value of the property you are purchasing is less than $425,000.

If you are purchasing a brand new property, HST will be charged.

HST does not apply to pre-owned homes.

First-time home buyers may also be eligible for a 15 per cent tax credit for closing costs.  The First Time Home Buyers Credit (FTHBC) provides a 15 per cent credit on a maximum of $5,000 of home purchase costs such as legal fees, land transfer tax, etc. This translates into tax relief of approximately $750.

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

If you have a home inspection completed, the cost for this runs $300 and up.

You will be required to retain the services of a lawyer or notary to handle your real estate transaction. Be prepared for a legal bill of approximately $1000.

There will be a property tax adjustment that is calculated by your lawyer. The taxation year is January to December and you will be responsible for the property taxes from the day you take possession.

You will also be required to purchase Home Owners Insurance for your new property.

If you are financing your new home to more than 80 per cent of the property value, less than 20 per cent down payment, the property will have to be insured by CMHC, Genworth or Canada Guaranty. The insurance premium is added to your total mortgage and amortized over the life of 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 1.80 per cent to 3.15 per cent of the mortgage amount.

Mortgage rates remain low and these low rates are attracting many first time home buyers.  The best five-year fixed rate is currently 2.89 per cent with amortization up to 25 years (insured) 80 per cent LTV and up and 35 years (uninsured) 80 per cent LTV or lower.

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