Buying a home is an exciting milestone, but it can also feel overwhelming. To help, we’ve compiled answers to some of the most frequently asked questions buyers have during the process.
1. How do I know if I’m ready to buy a home?
You’re ready when you have a stable income, a good credit score, savings for a down payment and closing costs, and an understanding of the responsibilities of homeownership. Meeting with a lender for pre-approval can also give you a clearer picture of what you can afford.
2. What’s the first step in the home-buying process?
The first step is getting pre-approved for a mortgage. This helps you determine your budget and shows sellers that you’re a serious buyer. After pre-approval, you can start looking at homes that fit your criteria.
3. How much do I need for a down payment?
In Canada, the minimum down payment depends on the purchase price of the home:
For homes $500,000 or less, the minimum down payment is 5% of the purchase price.
For homes between $500,000 and $999,999, the minimum down payment is 5% on the first $500,000 and 10% on the remaining amount.
For homes $1,000,000 and above, a minimum 20% down payment is required.
If your down payment is less than 20%, you’ll need mortgage loan insurance through CMHC or a private insurer. Your lender can provide more details on your specific situation.
4. What other costs should I prepare for?
Beyond the down payment, expect closing costs (2-5% of the home price), home inspections, moving expenses, and potential repairs or upgrades. It’s wise to have a financial cushion beyond your down payment.
5. How long does the home-buying process take?
It varies, but on average, the process takes 30-60 days from making an offer to closing. Below is a general timeline of the home-buying process:
Get Pre-Approved for a Mortgage – Meet with a lender to determine how much you can afford.
Find a Real Estate Agent – Work with a trusted agent to help you search for homes.
Search for a Home – View listings, visit open houses, and narrow down your options.
Make an Offer – Submit a formal offer based on market value and negotiations.
Enter the Conditional Period – Complete home inspections, financing approval, and other conditions.
Finalize Mortgage Approval – The lender will complete underwriting and approve the loan.
Sign the Purchase Agreement – Work with your lawyer or notary to finalize the legal paperwork.
Prepare for Closing – Arrange for home insurance, utility setup, and down payment transfers.
Closing Day – Funds are transferred, paperwork is signed, and you receive the keys to your new home.
The timeline can be longer if there are delays with financing, inspections, or negotiations.
6. What’s the difference between pre-qualification and pre-approval?
Pre-qualification is an estimate of what you might afford based on self-reported financial details. Pre-approval is more in-depth and involves a lender verifying your credit, income, and assets to determine how much they’ll lend you.
Pre-approval is also helpful when making a strong offer on a home, as it shows sellers that you are a serious buyer with financing in place. In a seller’s market, this is key to winning in multiple offers.
7. Do I really need a real estate agent?
Yes! A buyer’s agent helps you find homes, negotiate the best price, navigate paperwork, and advocate for your best interests. Their commission is typically paid by the seller, so working with an agent costs you nothing.
8. How do I make a strong offer on a home?
A competitive offer includes a fair price based on market value, a strong pre-approval letter, a reasonable earnest money deposit, and as few conditions as possible. Your agent can guide you on making an attractive offer.
9. What happens during a home inspection?
A licensed inspector evaluates the home’s structure, systems, and potential issues. If major problems arise, you can negotiate repairs or a price reduction with the seller. While optional, an inspection is highly recommended.
10. What is the conditional period?
The conditional period is the timeframe in which the buyer can satisfy any conditions outlined in their offer, such as financing approval, home inspection, or appraisal. If conditions are not met, the buyer may have the option to withdraw from the deal without penalties.
11. When do I get the keys to my new home?
You’ll receive the keys at closing, once all paperwork is signed and funds are transferred. Sometimes, possession is delayed if negotiated in the contract, so confirm this with your agent.
12. What should I avoid before closing on my home?
Avoid making large purchases, opening new credit accounts, or changing jobs. These can affect your loan approval. It’s best to keep your financial situation stable until after closing.
13. What do my monthly payments look like?
Your monthly mortgage payment depends on your down payment amount and loan terms. Below is an estimate for a home priced at $399,900 with a 4.99% interest rate.
Your final monthly payment may also include property taxes, homeowners insurance, and possibly private mortgage insurance (PMI) if your down payment is less than 20%.
Final Thoughts
Buying a home is a big decision, but with the right information and a trusted real estate team by your side, the process can be smooth and rewarding. If you have more questions or are ready to start your home search, reach out to me today!
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