1. Find a REALTOR®
When you’re ready to buy a home, ensure a smooth and easy process by first choosing a REALTOR®. A professional REALTOR® helps you find the right home in the right neighbourhood. Using their professional training and extensive resources, a REALTOR® will negotiate on your behalf, help you manage all the paperwork, and connect you with their network for mortgages, house repairs and more. Choosing the right REALTOR® is the essential first step in purchasing a new home.
2. Determine your budget
You will need to determine how much you can comfortably afford before you start your new home search. Talk to a financial institution and they will walk you through what you can afford based on your present household budget and your annual income. Having a realistic amount in mind will assist greatly when you start looking into the many homes available on the market. A REALTORS®’ comprehensive knowledge of the local housing market will provide you with information on different neighbourhoods and their associated costs of living. Order a copy of your credit rating to avoid any surprises as the lender will check it before approving you for a mortgage.
3. Consider Mortgage Options
A mortgage is a loan generally used to purchase a home. There are different types of mortgages depending on your situation, so do not be afraid to talk to more than one financial institution to explore your options. Your REALTOR® can assist you in determining the type of mortgage which is best for you. How much you pay for a mortgage depends on how much you borrow (the principal), the loan’s interest rate, and how long you take to pay it back (the amortization period and term).
4. Mortgage Default Insurance
If your down payment is between 5% and 19.99% of the mortgage amount, you must obtain mortgage default insurance, commonly referred to as CMHC (Canada Mortgage and Housing Corporation or Genworth) insurance. This policy protects the lenders in the event that borrowers stop making payments and default on their mortgage loan. For more information on Mortgage Default Insurance, please click here.
5. Homeownership Government Programs
For home buyers who meet certain criteria, there are federal government assistance programs to help you reach a homeownership goal. Some of the available programs include First-Time Home Buyers’ Tax Credit, Home Buyers Plan and CMHC Green Home program. For a more comprehensive list of government programs, go to Service Canada. Your REALTOR® will be able to provide valuable advice about available programs and how they can help you become a homeowner.
6. Searching for a home that’s right for you
Starting your new home search requires some questions you need answered such as: What neighbourhoods do you want to live in? What are your must-have amenities such as schools, parks and bus routes? Do you need a garage or a driveway? All these questions are important for an effective home search. Your REALTOR® can help you effectively identify your home needs and wants, as well as provide you with detailed information about new listings that meet these requirements. A REALTOR® will take you to homes for personal “walk-throughs,” and give you objective advice about each property you view.
7. Making an offer
After researching and viewing many homes, you’ve found a home that you love! Work with your REALTOR® to help draft an offer. An offer is a formal, legal agreement to purchase a home that your REALTOR® will give to the seller agent to either accept, decline or counter. Conditions may be placed in the offer as well. If the seller presents a counter offer, your REALTOR® will work with you in negotiating and represent your interests. If the seller accepts your offer, congratulations on your new home! All offers also need to be accompanied by up-to-date identification for Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) requirements. For more information on FINTRAC requirements, please click here.
8. Closing and related costs
Fees associated with the purchase of any home are called closing costs, which include legal, administrative and disbursement fees. Your REALTOR® will assist you in understanding what these fees mean and how much they cost. These costs are over and above the price of your home, so you will need to budget these costs accordingly. Also, you will need to secure the services of a lawyer to process the legal requirements in purchasing a home.
9. Move in and enjoy your new home!
Your home purchase specifies a possession date, which means when you can legally move into your home. Your lawyer will provide you with the house keys and your REALTOR® will convey any information about your new home such as alarm codes. If required, your REALTOR® can provide recommendations on moving companies, landscapers or any other service you need to make your new house your own.