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First-Time Home Buyers – What to Look for
Written by
staterafp
Published on
March 1, 2024
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First-Time Home Buyers – Essential Tips and Insights
Embarking on the journey of homeownership is an exciting and significant milestone, often met with anticipation and a sense of accomplishment. However, for first-time home buyers, navigating this new terrain can be overwhelming and fraught with uncertainties. As experienced financial planners in Edmonton, our objective is to equip you with essential tips and insights necessary for making well-informed decisions and achieving success in your home-buying experience.
At Statera Financial Planners, we understand the unique challenges first-time home buyers face, from assessing affordability and understanding mortgage options to leveraging government programs and incentives. Our expertise and guidance can provide you with the confidence and knowledge essential for this monumental undertaking. In this article, we will outline valuable advice and factors to consider when purchasing your first home, alleviating potential stressors and ensuring a seamless transition into homeownership.
Evaluate Your Finances and Determine Affordability
Before beginning your home search, it’s essential to gain a comprehensive understanding of your financial situation. This includes evaluating your income, expenses, savings, and outstanding debts. With this information, create a detailed budget to determine the maximum mortgage amount and monthly payments you can comfortably afford without compromising your overall financial stability.
Be cognizant of additional homeownership costs, such as property taxes, maintenance, insurance, utility expenses, and the need for some emergency savings as these can significantly impact your overall budget. A clear understanding of your financial landscape will provide a solid foundation for your homeownership journey and optimize your chances of securing an affordable and appropriate property.
Pre-Approval and Mortgage Options
Obtaining a mortgage pre-approval ensures that you are fully aware of your purchasing power and can confidently search for homes within your budget. A lender will review your credit history, income, and financial background to determine the loan amount and interest rate they are willing to offer. Mortgage pre-approval helps to expedite the mortgage process once you’ve found your dream home.
Once you have assessed your financial situation and obtained a pre-approval, it’s important to consider the various mortgage options available to first-time homebuyers. Consider factors such as fixed versus variable interest rates, amortization periods, and the minimum down payment required. Familiarize yourself with the terminology and consult with a mortgage professional or financial planner to make an informed decision.
Assembling a Skilled Home-Buying Team
Collaborating with experienced professionals can ease the home-buying process and ensure you have the support and expertise necessary to navigate this new territory successfully. Key members of your home-buying team may include:
Real Estate Agent
A qualified real estate agent brings knowledge of the local market, experience in negotiating purchase transactions, and guidance throughout the home-buying process. Engage an agent who specializes in working with first-time homebuyers and demonstrates a commitment to understanding your needs and preferences.
Home Inspector
A thorough home inspection is vital to ensure the property you’re considering is in satisfactory condition and to avoid potential expenses associated with repairs or renovations. Choose a reputable and qualified home inspector to provide an unbiased assessment of the property’s overall state.
Real Estate Lawyer
A real estate lawyer can help you navigate the complexities of property contracts and legal documents involved in the home-buying process. They will review and ensure the accuracy of all legal documentation, protect your interests, and facilitate a seamless transfer of property ownership.
If you don’t have professionals you can trust or work with just yet, Statera Financial Planners has a list of reliable professionals (mortgage brokers, real estate agents, lawyers, etc.) you can contact. We do not accept referral fees from them—these are trusted professionals with the right experience.
Identifying the Right Property and Location
When searching for your first home, carefully consider your current and future needs, as well as your lifestyle preferences. Determine factors such as the desired number of bedrooms and bathrooms, property type (e.g., detached house, townhouse, or condominium), and essential amenities. Be prepared to compromise on some features, as it’s unlikely you’ll find a perfect match that meets all your criteria.
Research potential neighbourhoods thoroughly, considering factors such as schools, public transportation, recreational facilities, and access to essential services like grocery stores, healthcare providers, and pharmacies. Evaluate the growth and development prospects of the area, as these can impact both your quality of life and the future value of your property.
Understanding Government Programs and Incentives for First-Time Home Buyers
Canadian first-time homebuyers can benefit from numerous government programs and incentives designed to ease the financial burden of entering the housing market. Familiarize yourself with the following programs and consider how they may benefit you:
Home Buyers’ Plan (HBP)
The HBP allows eligible first-time homebuyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) tax-free for a down payment. Reimbursement of these funds must be completed within 15 years to avoid tax consequences (As of the 2024 budget, HBPs accessed between January 1, 2022 and December 31, 2025 are extended to 18 years as well as extending when those repayments must begin (from 2) to 5 years after the funds were withdrawn).
First-Time Home Buyers’ Tax Credit (HBTC)
The HBTC is a non-refundable tax credit meant to help cover a portion of the closing costs associated with purchasing a property. It can provide a credit of up to $750, offsetting costs such as legal fees and land transfer taxes.
First Home Savings Account (FHSA)
The FHSA allows a first time homebuyer to save up to $8,000 per calendar year, to a maximum of $40,000 that can be withdrawn tax-free to use towards a down payment. Unlike the HBP, repayments are not required into this account type.
By leveraging these government programs and incentives, first-time homebuyers can alleviate some of the financial strains associated with entering the housing market and secure a more affordable and comfortable path to homeownership.
Embrace Homeownership with Confidence and Support
Purchasing your first home is an incredible milestone – one that requires careful financial planning, informed decision-making, and expert guidance. By evaluating your finances, understanding mortgage options, assembling a skilled team of professionals, considering property and location factors, and leveraging government programs, you are well-equipped to embrace homeownership with confidence.
At Statera Financial Planners, we are dedicated to helping you make educated decisions and create a solid foundation for your financial future. With our expert guidance, you can navigate the complexities of the home-buying process and achieve a seamless transition into homeownership.
Contact us today to discover how we can support your journey and help you unlock the keys to your dream home.
As financial planners, we do not provide specific tax and legal advice. You should always consult your accountant and/or lawyer where necessary. Because of the many ways a strategy may be impacted when segmented, we prefer to communicate collectively with your external professionals to ensure that all recommendations and action plans are in the overall best interest of you, with your professionals working with common goals in mind.
You are never obligated to act on our recommendations of products, services, or advice.
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