Are you ready to buy a home for the first time? First of all, congratulations! Buying a home is an exciting milestone, but the process can be confusing and overwhelming.
At ARC Insurance we understand that a home is an important asset and investment. In order to get it right the first time, we've created a simple guide for first-time homebuyers.
Do You Qualify for a First-Time Homebuyers Incentive?
Before you get into buying your first home, you should look into the First-Time Homebuyers Incentive. The Government of Canada offers a First-Time Homebuyers Incentive that is available if you have an annual income of $120,000 or less. The program was designed to make it easier for first-time buyers to purchase a home and lower their monthly mortgage payments.
You can borrow 5% or 10% of the purchase price of a home and pay back the same percentage of the value of your home if you sell it within 25 years. For example, if the home’s purchase price is $200,000, you receive a 5% incentive of $10,000. If the home’s value increases to $300,000 when you are ready to sell, you pay back $15,000.
The incentive works like a second mortgage on your home. It is subject to a mortgage loan insurance premium, but you don’t pay mortgage insurance on the incentive amount.
You can find out more about eligibility for the First-Time Homebuyers Incentive here.
Are Your Finances Healthy?
The next step for any prospective home buyer is to see how healthy your finances are. At this point, you should consider speaking to a mortgage specialist who can do a pre-approval, giving you an idea of where your stand financially and what mortgage amount you may qualify for.
You also need to determine the affordability of a home. Are you prepared for both the purchase of the home and the ongoing expenses of maintaining a home? Start by looking at your savings. When purchasing a home, you need to accommodate upfront costs such as the down payment and closing costs. If you don’t have any savings, start planning a budget and review your spending.
It’s also important to keep an eye on your credit. To qualify for a mortgage, you need to have good credit. Most banking institutions will allow you to check your credit for free through their online app.
Do You Know What You Want?
Once you know where your finances stand and what you can afford, it’s time to think about the kind of home you want to buy. Now is a good time to talk to a real estate agent. They can help you navigate current market trends and give you an idea of what style of home in what locations match your pre-approved mortgage amount.
In this step of buying a home for the first time, it’s important to really think about your wants versus your needs. How much space do you need? How close do you want to be to work? Do you have children? What schools are in the area? Are you willing to take on a fixer-upper?
Be prepared to be flexible and realistic when it comes to what you want compared to what you can afford. You may have to sacrifice some of your home desires to accommodate others. For example, you may have to forego a finished basement in order to get a spacious backyard.
This is where talking to a real estate agent, or even looking through real estate websites, will help you get a sense of the pricing of properties as well as the available features.
Buying the House
If you can make it through the financial hurdles and find a home you love, it’s time to put in an offer! Your real estate agent will help you determine the amount of the offer as well as any conditions you want to ask for.
The real estate agent then takes care of the rest, presenting the offer to the seller’s agent. The offer will either be accepted or you may be presented with a counteroffer. At this point, you can accept or negotiate until you come to an agreement or decide to walk away.
Once an agreement is reached, you’ll make a deposit on the home and the transition then goes into escrow. During this time, which is usually 30 days, the seller takes the house off the market. You can then have an inspection completed to ensure there are no hidden issues with the property. If the home inspection does reveal serious issues that were not disclosed by the seller, you can take back your offer and get your deposit back.
Otherwise, if you are satisfied and ready to move forward with the purchase, you close the deal by signing paperwork. You also go through with your mortgage and deal with any closing costs such as lawyer costs.
Getting Home Insurance
Home insurance is an important aspect of owning a home. Your home is a huge investment and you want to make sure that you protect not only the house itself but the contents within it. Likewise, you also want to protect those that live in and visit your property.
ARC Insurance provides insurance packages that include standard homeowners policies, which can provide protection for many different risks:
- Building Coverage: Protects your home if it is damaged or destroyed due to certain perils
- Personal Property Coverage: Covers any personal content damaged or destroyed by certain events
- Liability Coverage: Pays for legal defense costs and settlements if someone is injured on your property
- Addition Living Expenses Coverage: Covers the cost of temporary accommodation if you cannot live in your home due to damage caused by certain perils
Get in touch with us today to get your free quote on insurance policies that will protect your new home. And, again, congratulations!