Frequently Asked Questions About Buying a Home
Question: “How can I compare my monthly rental payments to mortgage payments?”
Of course, the amount of your mortgage payments will depend on the price of the home you buy, the size of your down payment, prevailing mortgage rates, and the term and amortization you choose. But it’s actually quite easy to estimate typical payments using the mortgage calculators available online. One I like to use is: www.rbcroyalbank.com/rentorbuy
Question: “How do I know how big a mortgage I will qualify for?”
A pre-approved mortgage is a great way to know how much you can borrow for your home. This, in turn, helps you set a price that’s realistic for your financial situation. It’s important to note that having your mortgage pre-approved doesn’t obligate you to buy a home: it’s simply a way to know how much your mortgage lender will approve you for. A mortgage specialist will be able to answer your questions and address your concerns.
Question : “I want to become a homeowner as quickly as possible but I haven’t saved a large down payment. Any suggestions?”
You will be glad to know there are different options available, depending on how much of a down payment you can afford. A low down payment mortgage is required when your down payment is less than 20%. You can purchase a home with as little as 5% down. All low down payment mortgages require mortgage default insurance. Mortgage default insurance premiums can either be paid up front or added to the amount you borrow.
With the federal government’s Home Buyers’ Plan, you can use up to $25,000 in RRSP savings ($50,000 for a couple) to help pay for your down payment on your first home. You then have up to 15 years to repay your RRSP.
Question: “Where can I find up-to-date information on home prices and the Real Estate market in my area?”
The Multiple Listing Service (MLS) offers an easy to browse through home listings in every part of Canada. Easy links let you look at the housing market in specific cities by neighbourhood, price range, type of home and other parameters. It’s a great way to get a sense for the types of homes available in your community and their features and price ranges. Visit www.mls.ca today and see what properties are currently available.
The Canadian Real Estate Association (CREA) website helps you look at average home prices in communities across Canada and locate a realtor in your area. The site also includes useful home-buying tips and a glossary of common real estate terms. Go to www.crea.ca and check out what is happening in your local real estate market.
The Canadian Mortgage and Housing Corporation (CMHC) provides a content-rich website with detailed, step-by-step information on buying, selling, and renovating a home, as well as up-to-the-minute news of interest to homebuyers and sellers. Visit www.cmhc.ca and click on “Buying or Renting a Home”.
Don’t forget about MyHomeFinder.ca either. We have easy links to listings and great information on neighbourhoods as well.
Angela Slager is with CENTURY 21 Heritage House Ltd. in Woodstock, ON.