First Time Buyer:
What is the Process? What do I do?
Steps to Buying a House 🏡
Once you have decided to buy a house, the next step is to find out how much you can spend and when you plan to take ownership. I will guide you through all the steps to determine how much you qualify for, how much of a down payment you need, and work to get your interest rate locked in for the next 120 days with a pre-approval. One great benefit of having your pre-approval is that you won't have to worry about any rate increases within the rate hold period. Also, you will benefit if rates drop before you take possession of your new house.
How Much Money Do I Need Down? 💵
Typically, all that is needed in Alberta for a First-Time Home Buyer is a 5% down payment on the first $500,000 and 10% for everything over $500,000. To get a mortgage with the minimum down payment, you need to qualify. If you're thinking about purchasing your first home, talk to a mortgage broker to develop an effective strategy for saving the money. I have worked with several first-time home buyers and found effective plans to save for a down payment.
What Difference Does It Make If You Are a First-Time Home Buyer? 🏠
As a first-time home buyer, you have access to the Home Buyers' Plan. The Home Buyers' Plan allows you to withdraw money from your RRSP. You can withdraw up to a maximum of $60,000 from your RRSP to put toward the down payment of your house. This allows you tax-free use of the money. You are required to repay the RRSP within 15 years, starting in year 2. If you buy a home with a spouse or partner, they can also use their RRSP if they qualify for the Home Buyers' Plan.
What Are the Costs for Closing a New Mortgage? 💰
There are several costs to be aware of when purchasing a house. Closing costs vary from province to province. In Alberta, here are some costs to expect and budget for:
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Appraisal Fee: This fee is not always required. If you are putting less than 20% down, there is usually no need for an appraisal. If required, the cost in major centers or surrounding areas is approximately $350-$450, and a bit more in rural areas due to the appraiser's travel.
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Down Payment: The remaining portion of the down payment for the purchase.
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Legal Fees & Disbursements: To close the mortgage, you will need to pay a lawyer and cover disbursements. Expect to pay between $2,000 and $2,500.
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Interest Adjustment Costs: This cost helps the lender set up the payment frequency. For example, if you close on the 15th and your first payment is due on the 1st of the next month, you might have to pay the first 15 (+/-) days of interest to set the first payment after that.
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Land Transfer Tax: This fee is paid to the Alberta Land Titles Office to register the property in your name.
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Mortgage Registration Fee: This fee is paid if you're registering a mortgage on the property.
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Title Insurance: Title insurance is required for every transaction in Alberta. It protects the title of the property and costs approximately $249, depending on the purchase price.
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Property Tax Bill Adjustments: The seller is responsible for their portion of the property taxes, and you will be given the money for that. There may be a small amount for adjustments.
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House Inspection: A house inspection is crucial to uncover issues that you may not see or know to look for. A qualified home inspector might cost around $500 +/- depending on location, size of the house, etc.
Become a First-Time Buyer Now! 🚀
Take the next step and contact me to ensure you receive expert and unbiased advice along with the professional service you deserve.
