Things To Consider…
before buying a house.
Guide for First-Time Home Buyers in Calgary
If you're a first-time home buyer in Calgary, utilize the following guide to gain valuable insights and avoid common pitfalls during your home buying journey.
Pre-Qualification: Meet with a mortgage broker to determine your affordability and establish a budget for purchasing a home.
Pre-Approval: While understanding your financial limits is essential, obtaining pre-approval from a lender will make you a more attractive buyer to sellers. Pre-approval involves applying for a mortgage and receiving a written commitment from the lender. With pre-approval, sellers know you are a serious buyer, and you can avoid pursuing homes beyond your price range.
List of Needs & Wants: Create two lists. The first should include must-have features such as the required number of bedrooms for your family's size or a one-story house for accessibility. The second list comprises desirable features, like a pool or den, that are not essential. As a first-time buyer, it's important to be realistic and understand that you may not check off everything on your wish list. However, these lists will help you stay focused on your priorities.
Representation by a Professional: Consider hiring a real estate agent who exclusively represents your interests as the buyer, rather than the seller. I am always available to assist you in this process!
Focus & Organization: Keep important items accessible to maximize your home search efforts. These may include:
Detailed maps highlighting your areas of interest.
A list or file of properties your agent has shown you.
Pen and paper for taking notes during your search, or make use of the portal where we will provide you with new listing information.
Visualize the Space: Imagine the house without furniture and picture how it aligns with your decor and lifestyle. Assess whether the layout suits your needs and if there is sufficient natural light. We will have tape measures available to help you determine if your furniture will fit comfortably.
Be Objective: Instead of solely relying on emotions, approach home selection with a practical mindset. Consider whether the property genuinely meets your requirements and aligns with your short and long-term plans. We will guide you in making the best decision for your unique situation.
Be Thorough: Investing a little extra money now can save you significant expenses down the road. Don't overlook these essentials:
Include inspection and mortgage conditions in your offer.
Arrange for a professional inspector to evaluate the property.
Request a walk-through within 24 hours of closing to ensure no unauthorized changes have occurred (e.g., replacing a valuable fixture with a cheap alternative).
It’s understandable that this can be an overwhelming experience. That is why it’s always recommended to have a professional to represent you, as we'll handle all of the intricate details.
Understanding Closing Costs
Congratulations on finding your dream home! With the seller accepting your offer and your loan approval in place, you're just one step away from getting the keys to your new home: the closing process.
The closing, also known as settlement, involves the transfer of property ownership from the seller to the buyer. This process can seem overwhelming, as buyers are required to sign numerous documents and provide a substantial down payment along with various closing costs. Unfortunately, many buyers pay these fees without fully understanding what they are for.
As a responsible buyer, it's important to familiarize yourself with both mortgage-related and government-imposed closing costs. While specific fees may vary depending on your location, here are some common ones to be aware of:
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Varies, but set aside around $500. Mandatory if applicable.
The buyer must reimburse the seller for any property taxes or utilities the seller paid after the buyer takes possession.
For example, if the seller pays property taxes for the next 12 months, and the buyer takes possession 3 months later, the buyer would then reimburse the seller for 9 months’ worth of property taxes.
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$1,000-$1,500 (varies depending on the complexity of the purchase). Mandatory.
Lawyers handle administrative details and make sure the title is transferred properly.
Make sure you find out exactly what services your lawyer is performing and how the legal fees break down.
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Starting at $100. Mandatory.
These are reimbursements paid to your lawyer for miscellaneous fees like mailing costs, bank charges, photocopies and land transfer fees to register the property in your name.
As of January 1, 2020, the land title transfer fee is a $50 base fee plus $2 for each $5,000 or (portion of $5,000) of the land value.
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$350-$750. Not mandatory (but strongly recommended).
Have the property professionally inspected before you buy to ensure you’re aware of its true condition and can afford any necessary maintenance or repairs.
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Varies. Mandatory if down payment is less than 20%.
This covers the cost of the home should you default on payments.
Your premium is based on various factors such as the size of the down payment and the mortgage’s amortization period.
The premium can be paid upfront or throughout the amortization period.
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Around $300. Not mandatory.
This covers the lender against defects in the title, which could include overlooked back taxes, conflicting wills and existing liens from other mortgages or home equity lines of credit.
This insurance is legally complex, so be sure to research and seek advice on exactly what it can cover.
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$350-$500. Depends.
Your mortgage lender may require an appraisal to ensure the mortgage is reasonable given the property’s value.
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Varies based on the terms of your mortgage. Depends.
If you have to break an existing mortgage, you may have to pay a penalty fee that could be thousands of dollars.
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Varies. Not mandatory.
This includes the cost of any professional moving services you hire, truck rental fees, moving equipment and any related incidental costs.
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$ Varies. Depends.
You may have to pay fees for switching and setting up your utilities. This could include separate charges for gas, electricity, water, Internet, cable, phone and security systems.
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5% of the purchase price. Mandatory if you’re buying a newly built home.
You’ll be charged 5% GST if you’re buying a newly built house. However, you may be eligible for a partial rebate. Click for more information.
Remember to consult a local real estate professional to determine the specific fees and their amounts that you will be responsible for during the closing process. It's worth noting that you can negotiate these costs with the seller during the offer stage, and in some cases, the seller may agree to cover all the closing costs.
Crafting an Offer
Prior to creating an offer to purchase a home, it is crucial to have undergone pre-qualification and pre-approval by a lender.
This serves as a powerful negotiating tool, demonstrating to the seller your financial capability within your desired price range. Once you have identified the ideal home, it's time to prepare your offer.
While sellers are obligated to disclose certain problems with the property, these disclosures may not always provide a complete picture. To gain additional insight before making a final decision, here are six questions you may want to consider asking:
Why is the seller selling the house? We can analyze the property's history and inquire about the seller's motivation, which can aid in understanding their intentions.
How much did the seller pay for the home? We have access to this information for discussion. However, it's important to note that the purchase price is influenced by various factors, including current market value and any improvements made by the seller. The original purchase price might not accurately reflect the current value of the house.
What does the seller like most and least about the property? By asking the seller about their preferences, you can gain valuable insights. It's worth noting that what the seller appreciates most about the property may not align with your own preferences. For instance, if the seller emphasizes the vibrant community, but it doesn't match your taste, this information is pertinent.
Has the seller encountered any past issues with the home? Inquire about any problems the seller may have experienced while living there. For example, if there was a previous issue with a leak from the upstairs bathroom, it's essential to ensure that the repairs were completed adequately, preventing any lasting damage. Thoroughly assess the quality of the repairs.
Are there any nuisances or problematic neighbors? During your visits to the property, did you notice any noise disturbances, barking dogs, excessive airplane traffic, or poorly maintained neighboring properties? These observations may provide insights into the seller's motivations for moving.
How do the public schools in the area fare? As the quality of public schools significantly impacts a community's value, understanding the seller's perception can offer valuable information about the educational standards in the area.
