As a first time buyer, you’re likely to have many questions about selecting, financing and buying your first home. How do we start looking for a home? How much money will we require to purchase the home? How much will the mortgage payments be each month and can we afford it? How does the home buying process work and what can we expect along the way?
These are just a few of the questions you’re bound to have at the beginning of your exciting journey to buying your very first home! A RE/MAX Sales Associate can provide the answers to your questions and walk you through the entire process, from viewing potential homes to making an offer to setting up mortgage financing.
Although buying your first home can be overwhelming, you can be confident that your RE/MAX Sales Associate will be available to help you every step of the way. RE/MAX can make buying your first home simple and straightforward, eliminating any confusion and doubt and allowing you the opportunity to enjoy your first home, worry-free.
Just a 5% Down Payment?
The following is an excerpt from the Canada Mortgage and Housing Corporation” website under the topic of Mortgage Loan Insurance: “Get into your home sooner. Mortgage Loan Insurance helps you do it”.
When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it. Having mortgage loan insurance means that if you, the borrower; default on your mortgage, the lender is paid back by the insurer – CMHC or a private company.
With the risk of losing their money removed, lenders have the confidence to make mortgage loans of up to 95% of the purchase price of the home (subject to price ceilings). That means your down payment can be as little as 5% of the house price. With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home.”
What Does Mortgage Loan Insurance cost?
There are two components: an application fee and an insurance premium.
The application fee typically ranges from $75.00 to $235.00 and mortgage loan insurance premiums range from 0.5%-3.75% of the amount of your loan (additional charges may apply), depending on the size of the loan and the value of your home.
The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments, or paid off in a lump sum at the time of purchase to save interest charges on the premium itself.
Where can Mortgage Loan Insurance be Obtained?
See your lender, who can obtain mortgage loan insurance from CMHC or private insurer. CMHC will insure mortgages of up to 95% of the home’s purchase price or the market value of the property, whichever is less. (Restrictions may apply. Contact your local lender.) Both new and resale homes are eligible.
Here are some of the criteria that must be met: The home must be in Canada and must be your principal residence. Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can’t be more than 32% of your gross household income (GDS ratio). Your total debt load can’t be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. For details, please contact CMHC or your local lender.
Right Now, 3 Million Canadians own Homes with Insured Mortgages.
Ruth and Sidney lived in a rented Revelstoke home for seven years. When the landlord decided to sell the home, he offered the couple the first opportunity to buy it. While his price was fair, Ruth and Sidney didn’t have a 25% down payment saved, so they couldn’t qualify for a conventional mortgage.
While looking for other options, they found they could be eligible for mortgage loan insurance that would allow them to buy with as little as 5% down. It should be noted that the protection provided to the lender by the insurer does not relieve the borrower(s) of the obligations under his/her mortgage contract.
* The information provided using this website is only intended to be general summary information to the public. It is not intended to take the place of either the written law or regulations.
How To Make An Offer
When you have found a home you are interested in buying, your RE/MAX Sales Associate will walk you through the process of drafting an offer to purchase. Your sales associate will communicate the offer to the seller or the seller’s real estate agent for you. Some properties are in demand so you will not be the only interested party making an offer. Your RE/MAX Sales Associate will assist you in generating an offer that is reasonable and protects your interests using specified terms and conditions.
An offer can be drafted with or without conditions; an offer without conditions is known as a firm offer and one with conditions is known as a conditional offer. A conditional offer represents the party with the placement of certain conditions on the purchase. Some of these conditions could be “subject to financing approval”, “subject to the strata council allowing pets”, “subject to the buyer’s house selling”, “subject to an approved home inspection”, among many others.
The seller may accept your initial offer, reject your offer or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, the closing date or any other items. Offers can be countered back and forth between the parties until one of you accepts or rejects, ending the negotiations.
There are many components to an offer that you should be aware of and understand. Your RE/MAX Sales Associate will answer your questions and explain the entire process to you so that you are comfortable with the steps involved.
Terms Used in Offers
An offer includes certain “terms”, which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller’s mortgage (assumability).
Inclusions and Exclusions
These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.
A deposit is provided from the buyer to the seller as a token of the buyer’s assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Your RE/MAX Sales Associate can assist you in proposing a certain and appropriate amount for the deposit.
Items that are usually put in place to protect a party’s interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes.
Possession or Closing Date
This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.
This is the amount that the buyer is offering to pay for the property. The price is usually dependent on market conditions and may differ from the seller’s current asking price.