Frequently Asked Questions
You may be filled with questions about what goes into buying a home or understanding terminology you may have heard from friends and family that have gone through the process. Below are some of the more common questions I hear.
What are the costs associated with buying a home?
- Mortgage Insurance Premium – Applicable if you require a high-ratio mortgage (putting a down payment less than 20%) The lender may add the cost into your mortgage or ask for it to be paid in full upon closing
- Deposit – Your offer must include a deposit amount that is held in trust for the sellers. This amount will be considered part of your down payment.
- Down Payment – For a conventional mortgage you will require 20% of the purchase price to put down on the property. To purchase a home with less than 20%, an insured mortgage is required. Although there are “no down payment” options out there, most lenders require a minimum of 5% of the purchase price.
- Home inspection fee – If you have made your offer conditional to home inspection you will be responsible to cover the cost of that service (usually ranging from $400-$600). If you require inspections for a Well or Septic System those are additional services that are an additional cost.
- Property Insurance – Insurance will be required by your lender and proof of insurance must be provided to your lawyer prior to closing.
- Legal fees and Disbursements – Many lawyers have a flat rate for this service. At the lawyers they will also handle and bill you for Estoppel Certificate fees, Land Registration fees, and any adjustments required for pre-paid property taxes.
- Title insurance – If you choose to purchase title insurance it is a onetime fee that protects you for the entire duration that you own your home, from many of the risks associated with maintaining title.
Who pays the Realtor’s Commission
The standard practice is for the commission to be paid by the seller for both the buyers and the sellers agents.
How much can I afford to spend on my New Home?
I strongly recommend you get preapproved by a professional before you start looking at properties. If you need a referral, I am happy to point you to some great professionals! There are many factors that affect your approval amount; Your income; Your Credit history; your debt; the amount of cash you have available for your down payment and closing costs.
If I buy a car or take out a loan will it affect my ability to get a mortgage?
Yes. Do not make any new financial commitments without discussing them with your lender. They can have a big impact on your ability to be approved for a mortgage.
What other professionals might I need to utilize when buying a home?
You may need to hire the services of the following professionals. If you require, I can provide you with some contact info. Home inspector, Lawyer, Mortgage Specialists
What is an RPR?
A Real Property Report (RPR) is a Surveyors report that shows the current state of improvements on the land. As per the standard purchase contract for Alberta it is required for the seller to provide an RPR to the buyer. If you have added a structure or fence to your property since you bought you may require an update to your Real Property Report.
Can I use my RRSP for a down payment?
If you are a first time home buyer you may utilize the RRSP Home Buyers Plan to withdraw up to $20,000 per person, tax-free. The funds must be in the RRSP for 90 days or more before being withdrawn. The funds need to be repaid to the RRSP Beginning 60 days after the end of the second full calendar year following the withdrawal by means of equal annual payments over a 15 year period or sooner. If 1/15th is not repaid each year, the unpaid amount is added to that years income and subject to tax.
What is a restrictive covenant?
Restrictions put in place by the developer of land that restrict how the owner uses the land, size of house, landscaping, etc.
What is an easement?
An Easement gives an individual or corporation the right to the limited use of another’s land. An example is the limited right of way to utilities that are necessary for utility services such as water lines.
What is an encumbrance?
An encumbrance is a liability or claim against or limitation on real property. Encumbrances include liens, deed restrictions, easements, encroachments and licenses.