Buying your first home is an exciting time. It is likely a goal that you have accomplished over the course of many years. However, as a first-time homebuyer, you may not be aware of the steps you must take to officially close on the property. Let’s discuss four things that all first-time homebuyers should know before closing on their new home.
1. You Don’t Need the Full 20% Down Payment
While it is highly recommended that you provide a 20% down payment on your home, it is not necessary. In Canada, there are minimum down payment requirements that must be met to be approved for a home loan. These include:
If you are buying a home with a purchase price of $500,000 or less, you must provide 5% of the home’s purchase price.
If the home costs between $500,000 to $999,999, you must provide 5% of the first $500,000 and then 10% for the remaining cost over $500,000.
If the home you wish to purchase is more than $1 million, you must provide the full 20% down payment.
2. You Must Provide a Deposit
Many buyers are so focused on the down payment that they forget they must provide a deposit as well. A deposit is a small sum of money that shows the sellers that you are a serious buyer. Plus, this isn’t just extra money you must pay. Rather, the deposit will be included in the down payment of the home. A typical deposit is roughly 5% of the home’s purchase price but that number is negotiable.
3. The Home Inspection is Optional
The home inspection is an important step in the home-buying process. The inspection can help you discover potential problems in the house that could cost you a significant amount of money once you own the property. However, what many first-time buyers do not realize is that the home inspection is optional. If you do not wish to have this report or you do not want to pay the money for the inspection, it is your decision. However, the appraisal, another step in the home-buying process, is something your lender will likely request and arrange to happen.
4. Budget For More Expenses Besides Your Mortgage
When you purchase a home, you will have more expenses than just a monthly mortgage payment. Some of these payments can include taxes, insurance premiums, and utility payments. You also must budget for maintenance and upkeep costs. Many financial experts recommend that you follow the 1% rule. This rule suggests that you budget 1% of the home’s purchase price each year for maintenance and upkeep costs. This means that if you purchase the home for $800,000, you should prepare to pay approximately $8,000 throughout the year.
If you have any questions about the home-buying process or you are a first-time homebuyer, contact Markham real estate agent Martin MacFarlane today. He has the knowledge, experience, and expertise to help you find your dream home in the Markham area.