_ìóáåö=vçìê=cáêëí= eçãé=áå=`~å~ç~ What Newcomers Need to Kow
^=mi^`b=ql=`^ii=eljbk=^=mi^`b=lc=vlro=ltkk You ve made Caada your ew home ad ow you re lookig for a place of your ow. Buyig a house is a excitig experiece that ca be both rewardig ad challegig. As Caada s atioal housig agecy, Caada Mortgage ad Housig Corporatio (CMHC) has bee helpig Caadias icludig ew Caadias like you access a wide choice of quality, affordable homes for over 65 years. We ve desiged this guide to make homebuyig decisios easier for you by providig the iformatio you eed. WHAT CAN YOU AFFORD? Before you begi shoppig for a home, it s importat to kow how much you ca afford to sped o homeowership. You will wat to pla ahead for the various expeses related to homeowership. I additio to purchasig the home, other mai expeses will iclude heatig, property taxes, home maiteace ad reovatio as required. Leders ad mortgage brokers are homebuyig fiacial specialists who ca work with you to establish how much you ca afford. For more o this, refer to Gettig Pre-approved Before Shoppig i the Fiacig Your Home sectio of this guide. If you wat to do some calculatios o your ow, simple calculators ad worksheets are available o the Web to help you determie your maximum home price ad related mothly paymets. Visit www.cmhc.ca ad type mortgage calculator or fiacially ready i the search box. Caada Mortgage ad Housig Corporatio 1
qüé=oáöüí=üçãé=ñçê=óçì Before you start shoppig, kow what you re lookig for i a home. Cosider what you wat ow, ad what you might wat i the future. Size requiremets: Do you eed several bedrooms, more tha oe bathroom, or a garage? Special features: Do you wat air coditioig, storage or hobby space, a fireplace or a swimmig pool? Do you have family members with special eeds? Lifestyles ad stages: Do you pla to have childre? Do you have teeagers who will be movig away soo? Are you close to retiremet? REAL ESTATE AGENTS CAN HELP Uless they re lookig for a brad ew home (see the A Brad New Home sectio o page 3), most homebuyers will rely o a real estate aget to help them with the home selectio ad purchase process. Real estate agets will liste to your eeds, show you suitable homes to visit, ad egotiate o your behalf to help you get the best possible deal. They ca also provide you with previous sale prices of comparable homes ad iformatio about eighbourhoods, as well as arrage the home ispectio. Real estate agets are typically paid through a commissio from the seller of the home. Settig: Do you wat to live i a city, the suburbs or a rural eviromet? Work: Are you willig to take o a log commute every morig? School: Where will your childre go to school ad how will they get there? Hobbies: Do you eed a eighbourhood where you ca walk? Take the kids to a park or idoor recreatio facilities? Family ad frieds: How importat is it to live close to them? Cultural: Do you wat to be close to a place of worship or cultural commuity cetres? Get more iformatio from CMHC. CMHC offers worksheets ad checklists to help you out. Simply visit www.cmhc.ca ad type home hutig or home feature i the search box. Caada Mortgage ad Housig Corporatio (CMHC) is the Govermet of Caada s atioal housig agecy. We help Caadias access affordable ad suitable housig. CMHC is your trusted source of iformatio ad advice o housig i Caada. 2 Caada Mortgage ad Housig Corporatio
FINDING A REAL ESTATE AGENT Ask your leder or mortgage broker, frieds ad family if they ca recommed a real estate aget. Look at real estate sigs for ames of real estate agets i your preferred eighbourhood ad write them dow. You may also wat to visit the Multiple Listig Service (MLS ) website at www.mls.ca. It lists real estate agets ad thousads of properties for sale across Caada. A BRAND NEW HOME If a brad ew home, oe that has ever bee occupied before, is what you re lookig for, you have two choices: purchase a residece i a ew developmet or cotract a builder to costruct oe to your specific eeds. FINDING A BUILDER Check phoe listigs, visit model homes i ew developmets, ad ask frieds, family ad colleagues. Ask for refereces ad talk to other customers. Visit other housig developmets that the compay has built. Check with the New Home Warraty program i the area. Ask builders or cotractors if they are members of a local homebuilders associatio or ask for a provicial licece umber. Make sure to specify exactly what s icluded i the price of your home ad what is extra for example, paved driveway, trees, fireplace. Get more iformatio from CMHC. Simply visit www.cmhc.ca ad type selectig a ew home builder i the search box. DO YOUR RESEARCH It is importat to lear as much as possible about the home that you wat to buy. It is also importat to research the people ad orgaizatios that are helpig you buy your home, icludig your: real estate aget, leder (the bak, trust compay, credit uio or other fiacial istitutio that provides your home loa), mortgage broker, lawyer or otary, or home ispector. Ask for their refereces. Call the people who have doe busiess with them before. Ask about their qualificatios; are they a member of a professioal associatio? Ask how they ca help you with your special eeds as a ew Caadia. Do they speak your first laguage? Remember, the more iformatio you have, the better prepared you will be. Caada Mortgage ad Housig Corporatio 3
TIPS FOR FINDING A HOME Tell frieds, family ad work colleagues that you re lookig for a house. You might hear about homes that are o the market. Check the ew homes sectio i daily ews - papers or look for real estate magazies available at ewsstads, coveiece stores ad other retail outlets. Check out real estate websites, such as www.mls.ca, for iformatio ad photos o a wide rage of properties. Drive aroud a eighbourhood that iterests you ad look for For Sale sigs or visit ew developmets (areas where ew homes are beig built). TYPES OF HOMES Caadia homes come i a variety of shapes, sizes ad costs. Codomiium Codomiiums (also called codos ) are a type of owership rather tha a type of home. Most commoly, codos exist i multi-uit buildigs. These buildigs might cosist of oly a hadful of uits or they could be high-rise towers. The idea is that you ow the codo uit, but ot the rest of the buildig or the lad. You pay mothly fees to a codo corporatio that hadles maiteace ad repairs as required. Codomiiums are attractive to first-time homebuyers because they are usually oe of the less expesive optios. Get more iformatio from CMHC. Simply visit www.cmhc.ca ad type codomiium buyer s guide i the search box. Towhouse A towhouse is a home attached side by side to a series of other homes. Each uit has its ow outside etrace but shares a commo wall. Semi-detached Semi-detached homes have separate lad ad separate etraces but share a commo wall ad sometimes commo parkig. Owers are resposible for their side of the property. Sigle/Detached A sigle/detached home is free-stadig. You ow the lad ad the home. Because you are resposible for all related costs yourself, it teds to be the most expesive type of housig. The beefit is that you have more space ad more cotrol. Duplex/Triplex A duplex/triplex looks like a sigle home but has bee recofigured ito multiple uits. Oe idividual typically ows the property ad the additioal uits are reted out. May buyers see this as a opportuity to ear immediate icome from the house they ow. 4 Caada Mortgage ad Housig Corporatio
j^hfkd=qeb=lccbo So you ve foud the home that fits your budget, your lifestyle ad your family. Now it s time to make it official by makig a Offer to Purchase. If you re usig the services of a real estate aget, he or she will help you prepare the Offer to Purchase. If ot, you may wat to prepare this documet with the help of a lawyer (or a otary i Quebec). Either way, it s appropriate to egage the services of a lawyer or otary to research the title (property owership) ad prepare all fial documetatio. You ll also eed legal assistace for a property trasfer if your Offer to Purchase is accepted. Expect to egotiate. The process of makig a offer, receivig a couter-offer ad the revisig it agai util it is accepted is ot ucommo. The whole process ca seem like a roller-coaster ride, excitig, but it ca be stressful. It s all part of makig the deal work best for you ad the seller. Your Offer to Purchase is likely to iclude: The purchase price offered. The amout of the deposit. Extra items such as widow coverigs, refrigerator, stove, washer ad dryer that you might wat to egotiate ito the purchase price (also called chattels). The closig day (date you take possessio of the home) usually 30 to 60 days from the date of agreemet. A request for a curret lad survey of the property. The date whe the offer becomes ull ad void. Ay other coditios that go with the offer, icludig approval of mortgage fiacig ad a home ispectio. For more o this, see the Home Ispectio sectio of this guide. cfk^k`fkd=vlro=eljb= Most homebuyers rely o leders (baks, credit uios, caisses populaires, pesio fuds ad isurace compaies) to led them moey to fiace the purchase of their home. This loa, called a mortgage, is repaid by you through regular paymets over a period of time, typically 25 years (see Amortizatio Period o page 7). Leders will charge iterest to led you this moey. Iterest is the cost of borrowig moey. It will be added to your regular paymets. As a ewcomer to Caada, it may be difficult to fiace the purchase of a home because you may ot have a established credit history. See the Credit History sectio of this guide for alterative ways to show that you are able to maage credit i Caada. GETTING PRE-APPROVED BEFORE SHOPPING It s a good idea to sit dow with your leder or mortgage broker to discuss your eeds ad get mortgage pre-approval. Pre-approval meas that your leder commits to givig you a mortgage up to a specified amout, at certai terms ad coditios, icludig the iterest rate. This commitmet will be valid for a specific period, usually up to 90 days. Preapproval does t lock you ito the mortgage. You are still free to pursue other arragemets. That way, you kow exactly how much you ca sped o your ew home. If you are buyig a home usig CMHC Mortgage Loa Isurace, you will eed to get your home loa from a approved leder. For a complete list of baks, trust compaies, credit uios, ad other fiacial istitutios approved to give loas isured by CMHC, visit www.cmhc.ca ad type approved leders i the search box. Caada Mortgage ad Housig Corporatio 5
MORTGAGE BROKERS Mortgage brokers do t actually led you the moey; they provide you with mortgage advice, help you choose a leder, ad work o your behalf to secure you the best mortgage terms ad coditios. Whe lookig for a mortgage broker, visit www.caamp.org to fid out if the broker is a member of the Caadia Associatio of Accredited Mortgage Professioals ad is a Accredited Mortgage Professioal (AMP). You ca fid a mortgage broker by visitig the websites of the followig provicial associatios: www.mbabc.ca (British Columbia), www.amba.ca (Alberta) ad www.imba.ca (Otario). If you re usig a real estate aget, he or she may also be able to recommed a mortgage broker. DOWN PAYMENT AND MORTGAGE LOAN INSURANCE The amout of your mortgage will be determied by the price of the home mius a iitial cash paymet (called the dow paymet) made up frot. If the dow paymet is less tha 20% of the value of your ew home, your leder will probably require Mortgage Loa Isurace. I additio to a lower dow paymet, Mortgage Loa Isurace will help you access iterest rates that you otherwise would t have bee able to egotiate. The cost for Mortgage Loa Isurace, called a premium, is usually offset by the savigs you get from lower iterest rates. CMHC is Caada s leadig mortgage loa isurer. We have helped ewcomers with permaet residet status become homeowers with a miimum dow paymet of 5% regardless of how log they have bee i Caada. Nopermaet residets ca also purchase a home with a miimum dow paymet of 10% of the value of the home. Ask your leder about features ad associated premiums related to CMHC s Mortgage Loa Isurace or simply visit www.cmhc.ca ad type mortgage loa isurace i the search box. Mortgage Loa Isurace is ot the same as mortgage life isurace, which pays off your mortgage i full if you or your spouse dies. CREDIT SCORE AND HISTORY Credit ad work history are very importat whe tryig to obtai a mortgage. Ufortuately, as a ewcomer to Caada, you may ot have a credit history that is accessible to Caadia leders. If you wat to buy a home, it is importat to begi buildig a ew credit history as early as possible. Talk with your bak. They will be able to help you get a credit card ad pla to build a credit history that will help you buy your home. Here are some tips that will help you show that you are able to repay a mortgage: 1. Ope a bak accout ad use it regularly. 2. Cosistetly pay your bills o time, icludig ret, utilities, cable, ad isurace premiums. 3. Apply for small loas from your bak to begi provig that you ca pay o time. 4. Apply for a credit card. 5. Try to remai with the same employer for a exteded period of time. Get more iformatio. For a fee, you ca obtai your credit score ad report. Visit the website of oe of the followig credit reportig agecies to fid out how to obtai your credit report: Equifax: http://myservices.equifax.ca/cdn40_prdlist TrasUio: www.trasuio.ca SOURCES OF CREDIT HISTORY FOR MORTGAGE LOAN INSURANCE CMHC will cosider factors other tha a traditioal credit history whe processig the applicatio for Mortgage Loa Isurace from your leder. For example, CMHC will cosider the paymet of ret or room ad board for a 12-moth period, plus proof of oe additioal paymet (for example, a utility or cable bill) or documeted regular savigs for a 12-moth period. If this is ot available, CMHC will cosider paymet of ay three bills for 12 moths. These could iclude: utilities, cable, childcare, isurace premiums, or documeted regular savigs. CMHC will also cosider factors that show you are able to repay debt, such as a history of dealig with your bak. 6 Caada Mortgage ad Housig Corporatio
MAKE YOUR MORTGAGE WORK FOR YOU Your leder or broker will offer you several choices to help fid you the mortgage that best matches your eeds. Here are some of the most commo. Amortizatio Period Amortizatio refers to the legth of time you choose to pay off your mortgage. Mortgages typically come i 25 year amortizatio periods. However, they ca be as short as 15 years. Usually, the loger the amortizatio, the smaller the mothly paymets. However, the loger the amortizatio, the higher the iterest costs. Total iterest costs ca be reduced by makig additioal (lump sum) paymets whe possible. Paymet Schedule You have the optio of repayig your mortgage every moth, twice a moth, every two weeks or every week. You ca also choose to accelerate your paymets. This usually meas oe extra mothly paymet per year. Iterest Rate Type You will have to choose betwee fixed, variable or protected (or capped) variable. A fixed rate will ot chage for the term of the mortgage. This type carries a slightly higher rate but provides the peace of mid associated with kowig that iterest costs will remai the same. With a variable rate, the iterest rate you pay will fluctuate with the rate of the market. Usually, this will ot modify the overall amout of your mortgage paymet, but rather chage the portio of your mothly paymet that goes towards iterest costs or payig your mortgage (pricipal repaymet). If iterest rates go dow, you ed up repayig your mortgage faster. If they go up, more of the paymet will go towards the iterest ad less towards repayig the mortgage. This optio meas you may have to be prepared to accept some risk ad ucertaity. A protected (or capped) variable rate is a mortgage with a variable iterest rate that has a maximum rate determied i advace. Eve if the market rate goes above the determied maximum rate, you will oly have to pay up to that maximum. Mortgage Term The term of a mortgage is the legth of time for which optios are chose ad agreed upo, such as the iterest rate. It ca be as little as six moths or as log as five years or more. Whe the term is up, you have the ability to reegotiate your mortgage at the iterest rate of that time ad choose the same or differet optios. Ope or Closed Mortgage A ope mortgage allows you to pay off your mortgage i part or i full at ay time without ay pealties. You may also choose, at ay time, to reegotiate the mortgage. This optio provides more flexibility but comes with a higher iterest rate. A ope mortgage ca be a good choice if you pla to sell your home i the ear future or to make large additioal paymets. A closed mortgage usually carries a lower iterest rate but does t offer the flexibility of a ope mortgage. However, most leders allow homeowers to make additioal paymets of a determied maximum amout without pealty. Typically, most people will select a closed mortgage. Caada Mortgage ad Housig Corporatio 7
`ilpfkd=a^v This is the day that you get your keys ad start to settle ito your ew life as a homeower. Typically, you will meet i the lawyer/otary s office to sig fial documets. The real estate aget(s) ad/or the seller of the home may be preset. Your lawyer or otary will esure that moey is trasferred to the seller, alog with ay additioal moey the seller has prepaid o the home, such as heatig expeses or property taxes. Usually, you pay the lawyer or otary at this time. Make sure to iclude i your iitial home purchase budget all costs associated with closig the sale. These costs, which iclude lawyer or otary fees ad lad trasfer taxes, may be from 1.5% to 4% of the home s sellig price. CMHC wishes you great success with your ew home. We will be there to help you alog the way. We have iformatio to help you pla your move ad other iformatio that Caadia homeowers trust to maitai, reovate or adapt their homes. eljb=fkpmb`qflk Your offer has bee accepted ad your fiacig is i place! As metioed i the Makig the Offer sectio of this guide, it s wise to make your purchase coditioal o the home passig a professioal home ispectio. For a fee ($300 ad up), a ispector will make a detailed ispectio of the property. Whe you receive the home ispectio report, you ad your real estate aget will have to discuss how required repairs, if ay, may affect the sale price that was agreed upo. Get more iformatio from CMHC. Simply visit www.cmhc.ca ad type hirig a home ispector i the search box. Do t hesitate to call CMHC at 1-800-668-2642 for more iformatio o homeowership, icludig the homebuyig worksheets ad checklists i prited format, or visit our website at www.cmhc.ca. CMHC. Everythig you eed to ope ew doors. 8 Caada Mortgage ad Housig Corporatio
This guide is provided for geeral iformatio purpose oly. Ay reliace or actio take based o the iformatio provided is the sole resposibility of the user. Readers are advised to cosult appropriate professioal resources to determie what is suitable i their particular case. CMHC assumes o resposibility for ay cosequeces arisig from use of the iformatio provided i this guide. 2012 Caada Mortgage ad Housig Corporatio.
10-07-12 www.cmhc.ca/ewcomers