What is the process?  What do I do?

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Once you have decided you want 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 go through all the steps needed to find out how much you qualify for, how much of a down payment you need and I will work to get your interest rate locked in for the next 120 days, a pre-approval.  One great benefit to having your pre-approval is you won't have to worry about any rate increases within the rate hold period.  Also, you will be given the benefit if rates drop before you get possession of your new house.

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How much money do I need down?

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Typically, all that is needed in Alberta for a First-Time Home Buyer is a 5% down payment.  To get a mortgage with a 5% down payment you would have to qualify.  If you are even thinking about purchasing your first home, then you need to talk to a mortgage broker to come up with an effective strategy for getting the money.  I have worked with several first-time home buyers and found some effective plans to save for a down payment. 

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What difference does it make if you are a First-Time Home Buyer?

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As a first-time home buyer, you have access to the Home Buyers’ Plan.  The Home Buyer’s Plan allows you to withdraw money from your RRSP.  You can withdraw up to a maximum $25,000 of your RRSP’s to put toward the down payment of your house.  By doing this it allows you tax-fee use of the money.  You are required to pay back the RRSP within 15 years starting in year 2.   If you buy a home together with a spouse or partner they can use their RRSP’s as well if they qualify for the Home Buyers’ Plan. 

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What are the costs for closing a new mortgage?

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There are several costs you need to be aware of when you are purchasing a house.  It is important to be aware that the closing costs will vary from province to province.  I believe in Alberta we have it good.  With that, here are some of the costs you can expect and budget for;

Appraisal Fee – This fee is not always required.  If you are putting less than 20% down most of the time there is no need for an appraisal.  If there is in these cases most of the time you do not pay for it.  If you are buying a property in Alberta in most the major centers or surrounding areas you can expect this cost to be approximately $250-$400, in rural areas a bit more because of the drive for the appraiser.  

Down Payment – This would be the portion of the down payment remaining for the purchase.

Legal Fees & Disbursements – In order to close the mortgage, you will have to pay a lawyer.  You will also be expected to pay for the disbursements.  This fee can range but in Alberta I would expect to pay in between $500 and $1,500.  

Interest Adjustment Costs – This cost is usually there to help the lender set up the payment frequency.  So if you closed on the 15th and your first payment was 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.

 
Title Insurance – Title insurance is pretty much required for every transaction in Alberta.  Title insurance is an insurance policy that protects the title of the property.  This cost is approximately $249.  This is dependent on the purchase price of the property.  

Property Tax Bill Adjustments – The seller is responsible for their portion of the property taxes, you will be given the money from the sellers for that.  In some cases there can be a small amount for adjustments.  

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House Inspection - When you purchase a house you never know what kind of condition it is in.  Especially the stuff you cannot see or do not know to look for.  You should hire a qualified home inspector.  This might cost you around $500 +/-, depending on location, size of the house and so on.

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