FIRST TIME BUYERS

As a first time buyer, you're likely to have many questions about selecting, financing and buying your first home. How do we start looking for a home? How much money will we require to purchase the home? How much will the mortgage payments be each month and can we afford it? How does the home buying process work and what can we expect along the way? These are just a few of the questions you're bound to have at the beginning of your exciting journey to buying your very first home! We can provide the answers to your questions and walk you through the entire process, from viewing potential homes to making an offer to setting up mortgage financing. Although buying your first home can be overwhelming, you can be confident that your RE/MAX Sales Associate will be available to help you every step of the way. RE/MAX can make buying your first home simple and straightforward, eliminating any confusion and doubt and allowing you the opportunity to enjoy your first home, worry-free. Just a 5% Down Payment? The following is an excerpt from the Canada Mortgage and Housing Corporation website under the topic of "Mortgage Loan Insurance": Get into your home sooner. Mortgage Loan Insurance helps you do it. Put as little as 5% down. When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it. Having mortgage loan insurance means that if you, the borrower; default on your mortgage, the lender is paid back by the insurer - CMHC or a private company1. With the risk of losing their money removed, lenders have the confidence to make mortgage loans of up to 95% of the purchase price of the home (subject to price ceilings). That means your down payment can be as little as 5% of the house price. With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home. What does mortgage loan insurance cost? There are two components: an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00 and mortgage loan insurance premiums range from 0.5%-3.75% of the amount of your loan (additional charges may apply), depending on the size of the loan and the value of your home. The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments, or paid off in a lump sum at the time of purchase to save interest charges on the premium itself. Where can mortgage loan insurance be obtained? See your lender, who can obtain mortgage loan insurance from CMHC or private insurer. CMHC will insure mortgages of up to 95% of the home's purchase price or the market value of the property, whichever is less. (Restrictions may apply. Contact your local lender.) Both new and resale homes are eligible. Here are some of the criteria that must be met: The home must be in Canada and must be your principal residence. Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can't be more than 32% of your gross household income (GDS ratio). Your total debt load can't be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. For details, please contact CMHC or your local lender. Right now, 3 million Canadians own homes with insured mortgages. Ruth and Sidney lived in a rented home for seven years. When the landlord decided to sell the home, he offered the couple the first opportunity to buy it. While his price was fair, Ruth and Sidney didn't have a 25% down payment saved, so they couldn't qualify for a conventional mortgage. While looking for other options, they found they could be eligible for mortgage loan insurance that would allow them to buy with as little as 5% down. It should be noted that the protection provided to the lender by the insurer does not relieve the borrower(s) of the obligations under his/her mortgage contract.   TYPICAL EXPENSES   There are many costs that homebuyers incur, especially upon purchasing your first home that you should expect to pay. Some of the expenses related to buying a home are one-time costs, while others are continuing costs. Your largest cost at the beginning is your down payment. As a first time buyer, this would likely represent only 5 - 10% of the purchase price. However, you should be prepared to pay for additional costs, such as: • Legal Fees & Disbursements • GST and PST (if applicable) • Property or Land Transfer Tax • Adjustments (reimbursed to the vendor) • Interest • Property Taxes • Utility Payments • Strata or Condominium Fees • Estoppel certificate fee • Survey Fee • Home Inspection Fee • Water quality and quantity certificate • Appraisal Fee • Mortgage broker's fee (if applicable) • Mortgage Loan Insurance Premium (if only 5% down) • Mortgage Loan Insurance Application Fee (if only 5% down) • Moving Expenses • Renovations and repairs • Furniture, paint, carpeting, window coverings, etc. • Service and Utility Hook-up Fees • Property/Condominium Insurance • Mortgage Application Fee • Deed and/or Mortgage Registration Fee Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include: • Mortgage Payment • Water and/or Sewer Payments • Electricity and Gas Services • Cable and Telephone Services • Property Taxes • Strata or Condo Fees • Repair/maintenance Expenses • Homeowner's Insurance

First-Time Home Buyers’ Tax

Credit

Budget 2009 proposes to introduce a new non-refundable tax credit based on an amount

of $5,000 for first-time home buyers who acquire a qualifying home after January 27, 2009

(i.e. the closing is after that date). The credit for a taxation year will be calculated by reference

to the lowest personal income tax rate for the year and is claimable for the taxation

year in which the home is acquired.

An individual will be considered a first-time home buyer if neither the individual nor the

individual’s spouse or common-law partner owned and lived in another home in the calendar

year of the home purchase or in any of the four preceding calendar years. A qualifying

home is one that is currently eligible for the Home Buyers’ Plan that the individual or individual’s

spouse or common-law partner intends to occupy as the principal place of residence

not later than one year after its acquisition.

Budget 2009 also proposes that the credit be available for certain acquisitions of a home

by or for the benefit of an individual who is eligible for the disability tax credit (DTC). In

particular, the credit will be available in respect of a home acquired after January 27, 2009

(i.e. the closing is after that date) by an individual who is eligible for the DTC, or by an individual

for the benefit of a related individual who is DTC-eligible, if the home is acquired

to enable the DTC-eligible individual to live in a more accessible dwelling or in an environment

better suited to the personal needs and care of that person.

For the purpose of this credit, a "DTC–eligible" individual is an individual in respect of

whom an amount is deductible under the DTC for the taxation year in which the agreement

to acquire the home is entered into, or would be deductible if costs for an attendant or

care in a nursing home were not claimed for Medical Expense Tax Credit purposes by or on

behalf of that person. Where the home is acquired by or for the benefit of a DTC-eligible

individual, the home must be intended to be the principal place of residence of that individual

no later than one year after its acquisition.

The credit may be claimed by the individual who acquires the home or by that individual’s

spouse or common-law partner. For the purpose of this credit, a home is considered to be

acquired by an individual only if the individual’s interest in the home is registered in accordance

with the applicable land registration system.

Any unused portion of an individual’s First-Time Home Buyers’ Tax Credit may be claimed

by the individual’s spouse or common-law partner. Where more than one individual is entitled

to the First-Time Home Buyers’ Tax Credit (for example, where two individuals jointly

buy a home), the total amount of the credits claimable for the year by those individuals

shall not exceed the maximum amount of the credit that would be claimable for the year

by any one of those individuals.

News release

Canada's Government introduces financial

help for first-time home buyers

Ottawa, Ontario, February 2, 2009... The Honourable Jean-Pierre Blackburn, Minister

of National Revenue and Minister John Baird, Canada's Minister of Infrastructure,

Transportation and Communities and Member of Parliament for Ottawa West -

Nepean, highlighted key initiatives from Budget 2009: Canada's Economic Action

Plan that will benefit first-time home buyers.

Canada's Economic Action Plan supports the Canadian home construction and real

estate industries, with a First-Time Home Buyers' tax credit that will provide up to

$750 in tax relief to first-time home buyers; and an increase in the amount that

they can withdraw from an RRSP to purchase a home from $20,000 to $25,000.

“Buying a home for the first time is a milestone event for many Canadians and is

often the single largest purchase that one can make,” said Minister Blackburn. “The

proposals announced in Canada's Economic Action Plan will not just help first home

buyers in the purchase of their first home. It will also help stimulate the housing

sector through increase in demand for labour, building materials and other goods.”

“Young families and others looking to buy a home for the first time deserve a

break, and our government has delivered,” said Minister Baird. “When people are

buying homes, tradespeople are being put to work, businesses that make and sell

building products get a boost, and the real estate industry continues to employ

people too.”

“The federal government has found a way to introduce economic stimulus and

housing initiatives for specific groups, and for Canadians who want to buy their first

home,” said Calvin Lindberg, President of the Canadian Real Estate Association

(CREA).

"This is great news for first-time homebuyers who comprise a sizable portion of our

customer base. And with the new home market experiencing a slowdown in recent

months,” said Robert Greenberg, Executive Vice President of Minto Developments

Inc. “These types of incentives are certainly welcomed by the housing industry.

When you think of how many components go into the building of a new home, a

strong housing market is good for the overall economy, not just for builders."