First Time Homebuyers Guide

Frank Ingham

Congratulations!

Buying your new home can be such a rewarding experience. This guide has been created to help you through the steps of purchasing your home. Whether you are buying a condo, townhouse, house, fixer-upper or brand new home, this guide will help you navigate the process.

It will explain who the participants are in the home buying process and what they do. It will also help you understand the mortgage approval process, and the costs involved in purchasing a home. Use this guide to provide you with reliable answers to your questions. Your home buying team will be able to discuss any of the areas in more detail. Again, congratulations on buying your first home.

The Home Buying Process

Step 1: Pre-approval

When you first decide you want to purchase a home, it is wise to get a pre-approved mortgage. The pre-approval will tell you how much of a mortgage you qualify for, ensuring you are looking at homes in your price range.

Step 2: House Hunting

Once you know your price range, your realtor will begin researching the available properties and will show you homes that fit your criteria.

Step 3: Offer In and Accepted

Once you’ve found the home you are interested in, you will make an offer, subject to financing. Your offer may also have other subjects, such as subject to a satisfactory home inspection or subject to review of the strata minutes. Once the offer is accepted, you will provide a copy of the purchase agreement to the mortgage broker.

Step 4: Lender, Insurer, Appraisal

Your mortgage broker will work with the lender, insurer, and appraiser to get you final approval on the financing. Your mortgage broker may ask you for further documentation at this time. You will want to collect the requested paperwork and submit it to your mortgage broker in a timely fashion.

Step 5: Firm Sale

Once you have met all your financing conditions, your mortgage broker will instruct you to remove the subject to financing. This is done with your realtor. You may remove other subjects at the same time, such as “subject to a satisfactory home inspection”. Once all the conditions are off, you now have a “firm sale”. You will give your deposit, and instructions from the lender will be sent to the lawyer’s office at that time.

Step 6: Moving Details

The lawyer is now receiving and preparing mortgage documents. You will want to use this time to start preparing for the move.

Step 7: Lawyers

The lawyer will call you into sign, usually about 3-4 days prior to the completion date. The completion date is the day that the money is given to the sellers and the property is transferred to your name.

Step 8: Move In

Usually your possession date will be the day after the completion date. This is the day that you receive keys and can move into your new home.

Step 9: First Mortgage Payment

Unlike with rent, you pay your mortgage at the end of the month. (If the purchase of your home was completed on June 1, and you chose monthly payments, you will not have a mortgage payment until July 1. If you chose weekly payments, the payments would come out at the end of every week.) You will receive the details of the mortgage repayment from your mortgage lender.

Your Realtor:  Frank Ingham

Your Realtor is your partner in the home buying process. 

Once your Realtor understands what type of home you are looking for, they will begin researching the market on your behalf. They will search all the available properties for sale and will show you the ones in your price range that meet your criteria. Once you have found the home you are interested in, your Realtor will prepare an offer and represent you in the negotiation process.

Generally you do not pay a fee to the realtor who represents you when you are buying a home.  The realtor is paid by the seller of the home. Realtors are licensed through provincial bodies and are knowledgeable about the markets they work in.

Your Mortgage Broker

Your mortgage broker is another key partner in the home buying process.

Your mortgage broker will take time to understand your financial needs and will research the market to find the best mortgage for you. Your mortgage broker will represent you to the lenders, and will negotiate terms on your behalf.
Usually there are no fees to use a mortgage broker, as they are paid by the lenders.

Lender

Your mortgage broker will choose the lender that best suits your requirements. The majority of your contact with the lender will be after your mortgage funds. You will receive contact information you can use when you want to make any changes to your mortgage in the future.

Insurer

If you have less than 20% of the value of the property as a down payment, you will be required to have mortgage insurance. Mortgage insurance protects your lender against any losses incurred. Your mortgage broker and lender will arrange this insurance for you. The insurance companies in Canada are CMHC (Canadian Mortgage & Home Corporation), Genworth Financial, and Canada Guarantee.

Appraiser

The appraiser’s role is to provide the lender with a market value of the home. The market value is the price that the home would sell at with reasonable exposure on the market to a large number of buyers. Your mortgage broker will arrange the appraisal for you.

Home Inspector

A home inspector provides you with information on the construction on your home. They will make you aware of any repairs that need to be done in the near future, and will let you know what types of repairs you can expect in the next few years. Your Realtor can provide you with some names of quality home inspectors.

Lawyer

Your lawyer (or notary) will transfer the property to your name, and will draw up and register mortgage documents. Your lawyer liaises with your lender and realtor to ensure they have all the required paperwork to process the purchase. Your mortgage broker or realtor can refer you to a lawyer (notary).

Documentation Required

In order to process your mortgage application, we will require documentation to support your mortgage application. Please note that there may be other conditions not listed here that we might require.

Proof of Income

Employees:

Commissioned or self employed:

Down Payment Verification

If your down payment is from savings in your bank account, provide three months of bank statements. The statements must state your account number and name.

If your down payment is from investments (RSP, GIC, Stocks, Bonds), provide a copy of a recent account statement (showing the original investment/purchase date).

If your down payment is a gift, provide a copy of a gift letter (template will be provided) and proof that the gift has been deposited into your account. 

Additional Documentation

• Offer to Purchase and MLS feature sheet for the new property
• Disclosure Statement, Form B and 2 years Annual General Meeting Minutes from Strata Corporation
• Void cheque where mortgage payment will be withdrawn
• Name of lawyer (notary) you will use for this transaction

Descriptions of Closing Costs

Legal Fees

A lawyer or notary will be necessary in the home buying process. Your lawyer will prepare the mortgage documents, have you sign the documents, and will transfer the property into your name. (Estimated Cost - $900 - $1200)

Appraisal Fees

An accredited appraiser will look at your home and determine if the price you have offered is what the home is worth. They will compare recent sales of similar properties to determine the estimated value of your home. They will provide a report to your lender that confirms the value. (Estimated Cost - $250 plus tax)

Property Transfer Tax

• The Property Transfer Tax (P.T.T.) is calculated as follows;
• 1% on the first $200,000 and 2% on any amount in excess of $200,000.
• The P.T.T. on a home purchased for $375,000 amounts to $5,500.
• This tax is waived for a first time buyer who meets the following qualifications:
• You are buying your first home
• You are a Canadian Citizen
• You have been a British Columbia resident for 12 months or more
• Purchase price is no greater than $425,000 (Partial Exemption between $425,000 - $450,000)
• Buyer will occupy the property within 92 days of purchase
• Buyer will live in the residence for a minimum of 12 months

Property Tax Adjustment

You may have to pay some of your annual property taxes at the time of closing. This would be done when you sign at the lawyer’s office. Because every situation is different, you are best to confirm with your lawyer what you will owe.

Interest Adjustment

If you have chosen monthly mortgage payments, and your payment comes out on the first day of the month, you may have an interest adjustment. If the purchase of the home closes on May 29, for example, you will have to pay for three days of interest on your mortgage. (May 29-31). If the purchase closes earlier in the month, you may have a larger interest adjustment. It is best to talk with your lawyer and mortgage broker to find out if there will be an interest adjustment, and what that amount will be.

Title Insurance

Title insurance is sometimes used instead of a survey, and may be requested by your mortgage broker, lender, or lawyer. Your mortgage broker, lender, or lawyer will discuss title insurance with you if it is applicable for your transaction. (Estimated Cost $199)

Fire Insurance

Fire insurance ensures you have adequate coverage to pay off your mortgage in the case of fire. The lawyer will want proof that there is fire insurance in place when you go in to sign the papers at their office. Ask your mortgage broker for a referral to an insurance agent who will be able to assist you.  If you are purchasing a condominium or townhome strata, check that fire insurance is covered in your strata or maintenance fees.  Additional insurance will likely be required to cover you for your personal belongings replacement.

High Ratio Insurance Premium

When a borrower has less than 20% down on the purchase of their home, they must pay a mortgage insurance premium. The premium varies, so you should check the amount with your mortgage lender. Most people will add this premium on to their mortgage and it will be incorporated into the mortgage payment. You do have the option of paying this amount up front.

Home Inspection

Many people choose to have home inspections, although most of the time it is optional. A home inspector will look through your home and provide you with their professional opinion on the construction of the home. They will advise of any maintenance needing done, and will help you understand what you can expect for maintenance expenses in the next few years. (Estimated Cost $400)

Mortgage Processing Fees

Depending on your application you may have a mortgage processing fee. This is a fee charged by the lender and/or mortgage broker to process your application. These fees will be disclosed to you prior to your proceeding with a mortgage commitment.

Survey 

Most financial institutions require surveys. Surveys confirm where the home is sitting on the lot and make the lender aware of anything unusual about the property. You may be able to get an acceptable copy of the survey from the previous owners or buy Title Insurance, and save the survey fee.

Utilities Connection Charges

Some utilities charge a move or connection fee. You will need to contact each utility provider to find out their charge.

Royal LePage Sussex

2397 Marine Dr. • West Vancouver, BC
V7V 1K9
Cell 604 230-8167
Phone 604 985-2911 • Fax 604 985-3002
frankoingham@gmail.com
www.frankingham.com