How can you use your RRSP to help you buy your first home?
A:
Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP. Talk to your financial advisor about the possibility of using your RRSP to help buy your home. To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.
Realtors use different factors to assess how much your house would be worth in the real estate market. For example, they will look at the selling price of other homes in your neighborhood over the past year. They will look at the condition of your house and any value added features you may have added such as a heat pump or new siding, windows etc. They will use all this information along with their experience to help you determine a good price to list your house for sale. This price will be what the realtor thinks you can sell your house for in a reasonable time frame. Contact me for a free appraisal.
To determine how much you can afford, you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines. Please contact your bank representative to give you advice for your unique situation.
In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries.
On the day one actually purchases their new home they are required to pay certain associated costs. In addition to the down payment, the prepaid property tax and homeowner's insurance premiums there will be other fees to consider: • Survey charges. • Land transfer taxes. • Attorney fees and Disbursements. • Garbage disposal fees. • Title insurance. • Fire insurance.
What is a home inspection and should I have one done?
A:
A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). A home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision.
A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 90 days) and for a set amount of money. It is a good idea to have a pre-approved mortgage in place so that I can ensure that I’m showing you properties within your affordable price range.
Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 75%.
What is the minimum down payment needed for a home?
A:
A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or a gift from a family member. It cannot be borrowed. Mortgages with less than 25% down must have mortgage loan insurance provided by either CMHC or GE.
Considering that most people start their house hunting on the internet, you are probably wondering why you should hire a realtor. You should consider hiring me for the same reasons you use and acquire the services of any professional - to help you find process and finish what is a big investment on your part. Internet sites don’t always have the most up to date information. Also I’m here to take the stress of negotiating out of the buying process for you. I’m working for you. As a knowledgeable professional I can make sure the process is smooth and enjoyable throughout.
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REALTOR® and REALTORS® are certification marks owned by The Canadian Real Estate Association (CREA) and are used to identify real estate professionals who are members of their local real estate board and CREA.
