This guide is written for the First-Time Homebuyer's that may not be sure where to start.
Buying a house can be a very intimidating process for many. In this guide, I will be walking you through the entire process - Start to Finish.
Before we do, I’m going to help you understand what is involved in a mortgage. When buying a home, you will need a minimum of 5% for your Down Payment, and you will want to have an additional 2% for closing costs.
The down payment, is a minimum of 5% in most cases:
- The home must be located in Canada and is to be occupied as your principal residence.
- You have from your own resources a down payment of at least 5% of the purchase price of the home.
- You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
- You meet the lender's eligibility requirements regarding income, employment and credit worthiness.
Closing Costs are the fees that you will pay your lawyer. In reality, it is about 1-1.5%, however, I always 2% so that there are no surprises. Your closings costs are made up of an appraisal fee, Home Insurance fee (if applicable), Survey Fee (if applicable), home inspection (do yourself a favour, and please get a good home inspector), Legal Fees, Tax Adjustment (if applicable), Property Transfer Tax (if applicable), Interest Adjustment (if applicable).
Step 1: Getting Pre-approved
The very first step is of course, getting Pre-Approved. When you are pre-approved, you have an idea of what you can realistically afford. Book an appointment with your local Mortgage Broker, as they provide unbiased expert opinion, at no cost to you. We assess your financial situation, and get you a pre-approval on your what you can afford. Generally, we will request most of the documents up front to ensure that the we are giving you accurate information.
Step 2: House shopping
You’re Pre-Approved, and you’re ready to hit the market. Call up your favourite Realtor, and let them know how much you have been pre-approved for so that you can start looking at houses. Your Realtor will help find you find your dream home, make an offer on the house, and negotiate your purchase on your behalf.
Step 3: Getting Approved
If you’ve reached this far, congratulations! That mean that your offer has been accepted, and you’re one step closer to becoming a home owner. This is where we will send in your application to the lender that best fits your needs. Often times, different lenders may require different documents, and they will need to be collected to complete your application. Once all of the documents have been gathered, and sent, it is time for it to be reviewed.
Step 4: Underwriting
Underwriting is where the mortgage lender closely examines all documentation provided to make sure everything is correct, and no additional documents are needed, and are satisfied with your application.
Step 5: The Lawyers
Once your mortgage has been approved, and you have received your Letter of Financing, your mortgage application then goes to your lawyers office. Here is where you take your down payment to, sign your final mortgage documents, and deed, and any other documents that may need to be signed.
Step 6: Closing
You got pre-approved, found your dream home, got the approval, and signed all necessary documents. Your Realtor will meet you at your soon to be new home the night before you take ownership and walk through the house with you. The following day, the house will be yours. Congratulations on your purchase!