Becoming a Homeowner

Congratulations, you are thinking of purchasing a home.

Are you prepared to make such an important purchase?
Do you have questions about what is involved in buying a home?

The first steps to take are to find resources and to ask questions, so you are better informed when making your first home purchase.

The following information is provided to help you address some of the questions or concerns that you may have.

Buying a home

Buying a home is one of the biggest decisions you will ever make. It is important to plan, prepare and educate yourself in order to make a good decision.

All potential buyers must consider their personal needs carefully before taking on this responsibility. Knowing the advantages and disadvantages of becoming a homeowner can help ensure that an informed decision is made:

Advantages to Homeownership

Financial Security: if housing prices rise, your home can provide you with some financial security due to capital appreciation
Flexibility: you can decorate or renovate your home to meet your family’s personal tastes and needs
Stability: having a place of your own

Disadvantages to Homeownership

Financial Stress: down payment, meeting regular mortgage payments and other ongoing costs
Maintenance: keeping your home in good condition requires time and money
Higher costs: you may pay more each month for a house than you did as a renter. There are also extra costs for maintenance and property taxes
More responsibility: you are responsible for payments, repairs and maintenance

It is important not to get overwhelmed by the disadvantages listed. Owning a home is a long-term investment and will always be one of the best investment opportunities available.

Reminder for all renters

If approved in this program, don’t forget you will have to give your landlord required notice of your intention to vacate.

Are you ready to buy a home?

Review this list of statements below. If most or all of these apply to you, then you may be ready to buy a home.

Over the years, I have demonstrated the ability to save money and I am generally pleased with the amount that I have saved so far.
I am ready to change my spending and lifestyle habits to support the additional costs of paying for and maintaining a home.
I have a continuous and reliable source of income.
I have worked hard to earn a good credit rating and continue to use credit wisely.
I am prepared to enter into a long-term commitment for my family’s security, both physically and financially.
Pride of ownership is important to me, and I would enjoy the opportunity to take care of my house inside and out.
I file an income tax return with Revenue Canada each year, even if I am not a Canadian citizen (ie. permanent resident status).

How much will it really cost?

The purchase price of your home is only one of the costs you will encounter. The following is a brief outline of the additional costs for buying a home, aside from the down payment and purchase price.

Mortgage Broker Fee

A fee may be charged by a mortgage broker to arrange a mortgage on your behalf. This is payable at the time of closing.

Home Inspection Fee

The inspection protects the buyer by revealing any problems in the property that you would want to know before you move in.

Mortgage Insurance

If you are applying for a high ratio mortgage (if you are making a down payment of less than 20%), you will have to pay for mortgage default insurance which protects the lender against default.

Legal Fees

You are expected to pay all legal fees required to arrange a mortgage on the purchase of your home. You must also pay for disbursements which are the costs involved in conducting a title search, drawing up the title deed, and preparing and registering a mortgage.

Land Transfer Tax

Payable by anyone who purchases property in Ontario. It is calculated based on the property’s purchase price and varies from 0.5% to 2%. A realtor or lawyer can help you calculate the tax you will pay on your purchase.

Land Transfer Tax Refund Program

As of December 13, 2007, first-time buyers of resale homes will be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.

For more information, visit the Land Transfer Tax Refund Program for first-time home buyers.

What can a real estate agent do for you?

A real estate agent will have considerable knowledge about market values and homes available in a given price range that can match your needs. While working with you to find a home that suits you, the agent will be able to do the following:

Review your list of needs and wants in a home and determine your price range
Answer any of your questions about the market
Preview properties so that you are shown only the homes that fit with your budget
Arrange appointments to show you the selected homes
Explain financing alternatives available and provide up-to-date information on interest rates and mortgage options
Write an Offer of Purchase and help you with all the details required to successfully complete the transaction
Negotiate on your behalf to help you get the best possible deal