There are a number of things that first-time homebuyers should do to prepare for home ownership. The first step is to arrange a mortgage pre-approval. This will tell you if you are financially ready to purchase a home, and if so, what price you can afford. If you are not yet in a position to buy, your mortgage professional will let you know what steps need to be taken to get there. A pre-approval will also lock or guarantee your interest rate for up to 120 days. This protects you against increases if rates should go up. If rates go down you will still receive the lowest rate in effect throughout the 120 day period - so you can't lose.
ASSEMBLING A TEAM:
Very early in the process you should begin to assemble a team of professionals to guide you along the way:
- You will need a reliable realtor to help you find the ideal home to suit your needs. The realtor will help you write up an Offer to Purchase and negotiate on your behalf to get the best possible price. They will work with you to ensure that all purchase conditions are fulfilled on time.
- You will also need a qualified mortgage professional to help arrange your pre-approval, find the best possible mortgage and rate, and work with you during the approval process to ensure that all lender conditions are fulfilled.
- A knowledgeable home inspector is essential to ensure that there are no issues or defects that could impair the value or safety of your home. They will prepare a detailed report and inform you of any changes or repairs that
need to be made.
- A lawyer protects your legal interests such as ensuring that the property you are buying does not have liens against it. The lawyer will review all contracts before you sign them and register your name on title and on the mortgage. It is best to hire a lawyer that is well versed in real estate law.
If you don't have contacts in these businesses, ask people you know for referrals. Arrange an appointment with each candidate and ask questions until you are satisfied that they are knowledgeable about what they do and will work hard to help you achieve your goals.
INCENTIVES FOR FIRST-TIME HOMEBUYERS:
First-time homebuyers have a number of Government programs and incentives available to them that current and previous homeowners don't. The following Government initiatives are available for first-time buyers only:
The Home Buyers Plan (HBP):
This is a government program that allows first-time homebuyers to withdraw up to $25,000 tax free from their RRSP ($50,000 per couple) to purchase or build a home. The funds can be used for the down payment or for purchase related items such as furniture, moving expenses or closing costs.
This program has a number of qualifying requirements. Here are some of them:
- You must be a resident of Canada and the home must be your principal residence.
- The funds must be in your RRSP for a minimum of 90 days.
- To be eligible you cannot have owned a home in the preceding 5 years.
- You must replenish your RRSP over a 15 year period, or sooner, to avoid paying tax.
Land Transfer Tax Relief:
The government recently eliminated land transfer tax for all first-time homebuyers. This is a significant since the land transfer tax amounted to almost 1% of the purchase price. Buyers who are not purchasing their first home must still pay this tax.
Homebuyer's Tax Credit:
The first-time homebuyer's tax credit is a new federal budget initiative that provides up to $750 in tax relief to first time buyers to help with their home purchase.
City of Kingston Down Payment Assistance Program:
From time to time, the City of Kingston offers down payment assistance programs designed to help first-time buyers with their down payment. Applicants must be buying a home in the City Kingston or the County of Frontenac. You must have a mortgage pre-approval and there are restrictions on purchase price and income. Upcoming programs will be advertised in local newspapers and details can be found at
www.cityofkingston.ca/homeownership .
WHAT IF I DON'T HAVE A DOWN PAYMENT?
The government of Canada recently eliminated 100% financing as an option for Canadian homebuyers. However, alternatives still do exist for buyers who haven't saved enough for the minimum 5% down payment. If you are interested in purchasing a home but don't have a down payment, you may qualify for one of these alternatives. Look under Down Payment Options on this website for more information or contact Janet MacDonald at 613-561-5047 ,
Colin Birkas at 613-929-7629 or
, or Jeff Dillon at 613-453-3663 or
