Posted Monday, September 30th, 2019 | 260 views
When you’re on the hunt for houses for sale, you’re going to have a lot of questions, especially if you’re a first-time home buyer. So I’ve decided to put together the top 10 frequently asked questions I get from my customers and answer them for you.
The answers to these FAQs will help you get ahead of the curve and become better equipped when buying your first home. So let’s get started!
Today in Canada it is required that you have at least a 5% downpayment on the house you’re buying. For instance if you are considering buying a home that is $400,000, you should have at least $20,000 to put down on it. You also need to consider your lawyer fees, and closing costs which in this example could up the cost to approximately $25,000 to $30,000.
It depends. Buying a house when you have bad credit is quite difficult, and if you have time to spare before buying your house, try to rebuild your credit because it can help. One way you may be able to buy a house while having low credit is by using a low credit mortgage lender, but you will definitely have to have at least a 5% (or more) down payment, and be ready to pay a higher interest rate. Your best bet is to wait a while, build your credit, save more for a down payment, and buy a less expensive home.
The short answer is no. Some private lenders which have higher interest rates may lend to you if you owe taxes but it depends on how much, and how much other debt you’re carrying. Generally speaking your realtor will ask that you are up to date on your taxes because it makes the home buying experience less difficult. You also do have a better chance at getting approved for a loan if the lender can see you’re taking a proactive approach to dealing and getting rid of your tax debts.
Absolutely. In Canada, foreigners interested in buying a house will have no hinderances. They do however, have to be a Canadian resident for at least one year, but do not need to be a Canadian citizen. There are no restrictions to foreign home buyers, but in some cases they are required to have a larger down payment than Canadian citizens require.
Generally it is required that you put 5% of cost of the home down as a downpayment, but there are situations where you can get a loan for the 5% downpayment, or seek approval for a line of credit to cover the 5% downpayment too. Another way is to borrow the deposit from a friend or family member.
The short answer is yes. A recent study by JLR, indicated that in 2015 15% of home buyers did not require financing to purchase their new house. Depending on who you ask, there are some drawbacks to putting all your money into a new home, but that depends on how much money you have left over for cases of emergency. It’s a safe bet to weigh all your options, and speak with a realtor and your financial advisor before making a decision.
There are a few basic costs and some hidden costs you’ll have to consider and be ready for when buying your house. Rather than list them all here, I suggest you visit the following link which lays out all the costs for you and helps you become aware of some of the costs you may not have expected like moving costs, home inspection costs, and the appraisal fees.
Yes. Here is a link on the Canada website which conveys all the tax credits new home buyers can obtain when purchasing a home.
If you past eviction has been reported on your credit report it could affect your ability to get a loan. An eviction that has not been reported will not affect your ability to buy a house. If you’ve broken your lease, you may have a difficult time getting a loan, especially if you already have bad credit. Your best bet is to clear your past debts as much as you reasonably can and get that mark off of your credit report.
Yes. It is much easier to buy a second home if you have enough equity in your first home. If your credit is good and if your debt to income ratio is low, you’re in a good position to take out a second mortgage by using the equity from your first house. Some of the reasons people use the equity in their existing home to buy a second one are for things like buying a summer cottage, setting up a rental-income home, or actually buying and flipping a home to make some extra revenue.
I hope I was able to answer some of your questions about buying a home for the first time, but feel free to get in touch with me if your question hasn’t been answered.