Being a first time home buyer is exciting, truly! It’s like entering a new stage of your life filled with a bright future ahead.
Amidst the excitement, you’ll ponder questions like whether to buy a condo or a single-family home. Do you need two bedrooms or plan for four in the future? Is outdoor maintenance something you really want to spend your free time doing?
Buying a house may be the largest purchase of your life, so it’s important to make your decision with all of the information at hand. Let’s break down the five steps separating you from first-time home ownership.
Step 1: You can never start saving soon enough.
Your parents have probably been telling you that for years – they’re not wrong. Save as much as you can and start as early as you can. Other ways to fund your down payment could be a gift from your parents, using an existing line of credit or borrowing from your RRSPs.
Step 2: Get pre-approved and be money smart.
Online mortgage calculators will never take the place of a professional Mortgage Specialist and it’s not enough that you think you know what you qualify for.
You should be energetic and excited as you embark on this journey! However, you need to know what’s realistic before you start shopping. The best way to prepare is by completing a pre-approval with your bank.
Understanding your Down Payment.
According to RBC, you’ll need a 5% downpayment for properties valued up to $500,000 which works out to $25,000. But, let’s say you find the perfect home for around $200,000 – your down payment would only need to be $10,000.
A down payment may seem like a lot of money but remember – it’s never too early to start saving. It’s better to save now and be prepared – even if you think you’re years away from purchasing a home. Your worst-case scenario, if you don’t end up buying a home, is having a big savings account!
Take Advantage of Government and Mortgage Programs
Home Buyers’ Plan:
Withdraw up to $35,000 tax-free from your RRSP to buy your first principal place of residence and repay the amount withdrawn within a 15-year period. Note that you may be eligible for this program even if you’ve owned a home before!
For example, if you sold your home in 2017, you are still entitled to enroll in this program in 2022. To see if you qualify for this program, just reach out to your financial institution or check the requirements here.
First Time Home Buyer Incentive in Alberta:
If you are looking to purchase your home in Alberta, you should be aware of incentives. The Alberta First Time Home Buyer Incentive is for all first-time home buyers with annual incomes under $120,000.
This incentive allows you to borrow 5% of the purchase price of a home without interest. Plus, it’ll lower your monthly mortgage payment without needing a bigger down payment. More information on eligibility can be found here.
First Time Home Buyer Tax Credit:
As a first-home buyer in Alberta, you could be eligible for an income tax credit of up to $5,000. When tax season comes around, you can include the $5,000 amount on Line 31270 of Schedule 1 on your tax return and receive up to a $750 tax rebate. Check your eligibility here.
CMHC Green Home Insurance Refund:
CMHC provides a partial refund on the cost of mortgage loan insurance if homes meets certain green building standards. These standards are R-2000, Built Green, ENERGY STAR, LEED Canada for Homes, CHBA Net Zero Ready or Net Zero home standards.
Avoid New Debt.
Besides saving enough money, it’s crucial to improve your finances in other ways. Avoid unnecessary debt, such as buying a new car or recreational vehicle and paying your credit card on time. This will make your mortgage process smoother and might even get you a better mortgage rate!
Have an Emergency Fund and Plan for Closing Costs.
Save a little extra cash for any emergencies. This will help with any unexpected stuff while buying the house and take care of your closing costs and legal fees. Also, make sure you set aside some budget for inspection fees, land transfer tax, and mortgage insurance.
If you buy in Meadows of Morinville, closing costs are quite minimal. This is even by comparison to standard closing costs when buying a house in Alberta. At Meadows, closing costs include lawyer’s fees, property tax adjustments, and monthly lease rate adjustments.
Step 3: Let the home shopping begin!
Once you have a clear financial picture of what home ownership looks like to you – hit the road and start touring homes. Consider these prompts to choose your ideal home: building type, yard preference, maintenance comfort, guest entertainment, and future family growth.
By process of elimination, you’ll have a better idea of what your dream home will look like. Let’s use Meadows of Morinville as an example. Meadows of Morinville has detached single-family home options for less than the average condo price in the city. In our community you can check off the following boxes:
- Affordable home ownership.
- A detached space with no shared walls.
- Done-for-you landscaping with easy maintenance.
- Easy access to big city amenities without sacrificing peace and quiet of small town living.
- Complete turnkey package
You can learn more about how Meadows of Morinville could be a fit for you on our website.
Step 4: Make your dream home decision
Narrow your favourite options down to a shortlist. Cross out anything you’ve looked at that doesn’t suit the lifestyle you’re creating and make your decision from there.
After making your decision, you’ll then move to the contract stage.
Step 5: Condition Removal
This is when you can really celebrate. Condition removal means your financing has gone through and the house is officially yours (insert happy dance here)! You can contact your utility provider and get those logistics organized for the last and final stage.
Step 6: Possession Day and Living Happily Ever After
Now that’s a happy ending we can get behind! After hauling and unpacking dozens of boxes, you’ll feel like never moving again.
Want to know more?
We’re happy to help! Just give us a call at 780.572.0800 or email sales@meadowsofmorinville.com
Contact Our Housing Consultant For More Information