It’s so exciting! You might have thought you’d never own your own home. Now it looks like it can become a reality.
Before you jump in, whether you’re interested in Toronto or Stouffville houses for sale, first-time home buyers in Ontario should learn as much as they can about the marketplace. Real estate markets in Ontario have performed far better in the past year than most people expected.
4 Things First-Time Homebuyers in Ontario Need to Know
Even for experienced home buyers, there’s much more to buying a home than most people realize.
- Do Your Accounting – If you’re thinking about buying a home, you probably have an idea of what you can afford. But, while many homeowners have a general understanding of the costs of owning a home, they don’t always know the costs of buying a home, or how much money they actually have to invest in a home.
Closing costs are the costs, beyond the down payment and mortgage payment, that buyers are responsible for before closing their purchase of a home. They include Ontario’s land transfer tax, lawyer fees and title insurance, among others.
Before deciding how much you can invest in a home, find out if you qualify for the Home Buyers’ Plan. This allows you to withdraw up to $35,000 from your RRSP to help finance the purchase of your first home.
- Double and Triple Check That You’re Ready for the Down Payment – You’ve already got this one, right? Except you won’t really know how much you need for a down payment until you find the home you want to buy.
Here’s a quick review of down payment guideline as set out by the Financial Consumer Agency of Canada:
- If your down payment is less than 20% of the purchase price, you need mortgage default insurance, and to budget for the insurance premiums that go with it
- The minimum downpayment for a home priced at $500,000 or less is 5%.
- For a home priced at $500,000 to $999,999, the minimum down payment is 5% of the first $500,000 of the price and 10% for the remaining portion of the purchase price.
- For homes priced $1,000,000 or more, the minimum down payment is 20%
- Get Pre-Approved for Your Mortgage – If you’re fairly certain you can handle closing costs and the down payment for the homes you’re considering, the next step is to get pre-approved for your mortgage.
But be careful here. First, don’t just use an online calculator. They are great for getting an idea, but not reliable when it’s time to make an offer on a home.
Second, even if you talk to a reliable mortgage lender, get them to give you an estimate of your credit score, versus actually checking your credit score. Each time your credit score is investigated, it can lower your credit rating and the amount of the mortgage for which you can qualify.
- Find the Right Real Estate Agent – Here’s what to look for in the right real estate agent:
- Specific experience in the neighbourhoods you want to live in
- Specific experience working with first-time home buyers.
- Eager and ready to and help with your decision-making.
- Skilled at negotiating to make sure you save money wherever possible.
To find out more about buying a home in Ontario, check out our article “Why 2021 Will Be Another Great Year to Buy a Home”.