You've picked a great time to buy your first home. Despite steady appreciation of home prices, relatively low interest rates have kept the costs of home ownership at near historic lows. You can enjoy peace of mind working with George, the industry leader in experience and service.
Here are some tips to help you with the process of becoming your own landlord:
Pre qualify for a mortgage
Being pre-qualified for a mortgage determines how much house you can afford. It also allows you to move more swiftly when you find the right house, especially when you aren't the only interested buyer.
Shop for mortgage rates and terms
A difference of even half a percentage point can make a huge difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 25 years, that's $10,500.
Using a Buyer's Agent
A buyer agent is legally responsible for representing the buyer's interest in a real estate transaction. Generally, the buyer agent is compensated by the seller at the time you purchase a new home. There Are some limitations To using a buyer agent, however. Before you decide, have George explain the advantages and disadvantages of using a buyer agent.
Features that help or hurt resale value
In some areas, a swimming pool actually detracts from a home's value and makes the home harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. George can point out features that hurt, as well as those which help, resale value.
Rate the houses you tour
After touring each home, write down what you liked and didn't like. Develop a rating system, which will help you narrow the field down to the house that's the best for you.
Incentives for the First-Time Buyer
There are many incentives to help out the first-time buyer. There are now Canada Mortgage and Housing Corporation CMHC approved loans that allow you to finance your purchase with five-percent down. CMHC now allows zero down if you qualify. You essential borrow the 5% down from the bank. Zero Down Mortgage is appropriate if you have a solid credit history and sufficient income to support your mortgage payments.
You will need to have a minimum of 1.5% of your purchase price for closing costs. You will also have default insurance on your mortgage. See your mortgage broker for details. The premium for Zero Down is 3.4% or 7.5% if self employed with no proof of income.
|Loan-to-Value Ratio||Premium on Total Loan|
|Up to and including 65%||0.50%|
|Up to and including 75%||0.65%|
|Up to and including 80%||1.00%|
|Up to and including 85%||1.75%|
|Up to and including 90%||2.00%|
|Up to and including 95%||2.75%|
For Full Details see this CMHC document or talk to your mortgage broker
Another option is the Home Buyers Plan. (HBP) In short, it allows the first-time buyer to withdraw from their RRSP funds up to $20,000 help with their down payment. It is to be paid back over a fifteen-year period.
The Property Purchase Tax Exemption helps first-time buyer reduce their purchase costs by not having to pay the 1% Property Transfer Tax on the first $200,000 and the 2% on the balance upto a maximum purchase price of $325,000 in the Capital Regional District, Greater Vancouver Regional District, and Fraser Valley Regional District. For all the detailed requirements please view the attached documents and talk with your notary, lawyer, or mortgage broker.
The details as provided by our Provincial Government are as follows:
On February 15, 2005, the Minister of Finance announced amendments to the threshold and mortgage pay down requirements of the First Time Home Buyers' Program.
Effective for applications for registration of transfers received by the Land Title and Survey Authority on or after February 16, 2005, the fair market value threshold for properties in the Capital Regional District, Greater Vancouver Regional District, and Fraser Valley Regional District is increased to $325,000 from $275,000. The fair market threshold for properties located outside these regional districts is increased to $265,000 from $225,000.
Mortgage Pay Down Requirement
The mortgage pay down limits are also increased for applications for registration of transfers received by the Land Title and Survey Authority on or after February 16, 2005. In the Capital Regional District, Greater Vancouver Regional District and Fraser Valley Regional District the pay down limit is increased to the greater of $13,000 and the amount that would reduce the mortgage to 70% of the fair market value of the property. For properties located outside these regional districts, the pay down limit is increased to the greater of $10,600 and the amount that would reduce the mortgage to 70% of the fair market value of the property.
Mortgage pay down limits for applications for registration of transfers received by the Land Title and Survey Authority prior to February 16, 2005 are unchanged at the greater of 70% of the fair market value of the property and $11,000 or $9,000 depending on the area of the province in which the property is located.
Pre-sold Strata Units
There is new information about how property transfer tax applies to pre-sold condos and other strata units. Retroactive to January 1, 2001, taxpayers who purchase pre-sold units will now have their tax based on their total cost rather than on the unknown fair market value on the date they register their property. This change is also of interest to first-time homeowners.
What is Fair Market Value?
Under the Property Transfer Tax Act, tax is payable based on the fair market value of the property. Fair market value is defined as the amount that would have been paid for the property had it been sold at the date of registration of the transfer at the Land Title office in the open market by a willing seller to a willing purchaser.
Usually fair market value is the purchase price. In other instances, such as where no money changes hands or the transfer did not take place in the open market, the fair market value must be determined by other means, such as an appraisal or by reference to the most relevant BC Assessment value.
An open market is where the property is offered for sale so that anyone likely to be interested in purchasing it may make an offer. Often for residential property this is done by listing the property with a realtor or by advertising in the press and putting out a "For Sale" sign. If your tax return is reviewed by this office you may be asked to provide evidence of how you knew the property was for sale.