A true First Time Home Buyer is when neither you or your spouse have owned a Home before.
HOW MUCH CAN I AFFORD?
It is also important to be educated on your personal financial situation, this includes knowing your credit score and any other regular expenses that you incur. This will ensure that there are no surprises along the mortgage process. Obtain a Pre-Approval to secure a mortgage. The lender will analyze your current income, debt situation and credit history in order to qualify you for a maximum loan amount. This gives you an idea of your purchase price range.
You can contact your lending institution or meet with a mortgage broker. If needed I can assist you with finding you a mortgage specialist.
MORTGAGE QUALIFYING RATIOS
Gross Debt Service Ratio (GDS)
Payments on the mortgage, including taxes and heat cannot exceed 35% of your qualifying income
GDS* - 35% max = Principal + Interest + Taxes + Heat
Total Debt Service Ratio (TDS)
Payments on the above, plus outside debt payments (loans, credit
cards, lines of credit, etc.), cannot exceed 42% of the qualifying income.
TDS* - 42% max = Principal + Interest + Taxes + Heat + Debt Payments
*If you have an excellent credit score and have at least 5% down there is no GDS requirements and a TDS maximum of 44%.
• Excellent credit is defined as a credit score of 680 +
• Good Credit is defined as a credit score between 625 & 679
DID YOU KNOW OF THE 3 TAX CREDITS FOR FIRST TIME BUYERS?
Land or Property Transfer Tax Refund : Qualified first time home buyers may be entitled to up to a maximum refund of $2,000 on Land or Property Transfer Taxes. There is also a first time buyer’s refund for homes purchased in the City of Toronto.
First Time Home Buyers’ Tax Credit: Qualified first time home buyers could receive a 15% income tax refund on a maximum of $5,000 on home purchase closing costs.
RRSP Homebuyers Plan: Usage of tax-free withdrawal from RRSP of up to $25,000 without penalty. Your partner can contribute an additional $25,000
to double it. However, you must begin repayment to the RRSP within two years of withdrawing the funds.
HOME BUYING PROCESS
Your Real estate agent will show you properties that meet your criteria. Once you decide to make an offer on a property , your real estate agent will prepare the offer. You might include conditions like financing , Home Inspection , Status Certificate Approval ( For Condominiums and Townhouses).
Once the conditions are fulfilled or waived the property is purchased. On the closing date also known as completion date is when you will receive the keys to the property and ownership.
COSTS INVOLVED WHEN BUYING A HOME
*Down payment: The down payment can be as low as 5%, this is called a high-ratio mortgage.
* Mortgage Loan Insurance Premium: If you are obtaining a high ratio mortgage, as mentioned above, your lender may require mortgage loan insurance. The cost of this insurance is up to 3.15% of the mortgage amount depending on down payment and the premium is added on to the mortgage.
* Appraisal Fee: Average cost is between $250 & $350.
* Home Inspection Fee: Average cost is between $300 - $500, depending on size of the house and any suspected issues.
* Land Transfer Tax: This fee is payable to the provincial or municipal government upon closing, it is commonly a certain percentage of the purchase price on the property.
* Property Insurance: Your lender will require you to obtain property insurance, as the home
acts as collateral for the mortgage. The insurance must be in place on closing day.
* Title Insurance: Provides coverage in case of problems with the property title among other things. The cost is relatively low, usually a few hundred dollars. Title insurance can insure the borrower over any discrepancies that a survey may show.
*Legal Fees & Disbursements: These fees will be due at closing and can cost between $500 - $1,500.
Let me help you find your Home. Call Jane Today 647-926-2165