Questions by potential first-time home buyers

Marko, What is considered a "low ball" offer?

10% off asking price on something that is reasonably priced.

Thanks, everyone.

So to sum up the points this far into the discussion, someone thinking of making the move from a rental to home ownership for the first time should take the following into consideration:

1) minimum 5% down payment for a primary residence
2) below 20% down payment, CMHC insurance rates apply at 2.75% down to 1.75%
3) up to $25,000 RRSP savings, per person, can be used for down payment without withholding tax
4) self-employed buyers likely to face higher interest rates
5) consider buying the home in one partner's name; the other partner can qualify as a first time buyer on the second home
6) start educating yourself on home ownership and the RE market (this can't be stressed enough)
7) once you're committed to viewing homes, seek out highly recommended, experienced and reputable mortgage brokers and Realtors, and a reputable RE lawyer. Meet with them and ask poignant questions, choose the individuals you feel are most worthy of your business

I must admit steps 1-4 I either didn't know or had heard and read various interpretations of them.

Thanks, everyone.

So to sum up the points this far into the discussion, someone thinking of making the move from a rental to home ownership for the first time should take the following into consideration:

1) minimum 5% down payment for a primary residence
2) below 20% down payment, CMHC insurance rates apply at 2.75% down to 1.75%
3) up to $25,000 RRSP savings, per person, can be used for down payment without withholding tax
4) self-employed buyers likely to face higher interest rates
5) consider buying the home in one partner's name; the other partner can qualify as a first time buyer on the second home
6) start educating yourself on home ownership and the RE market (this can't be stressed enough)
7) once you're committed to viewing homes, seek out highly recommended, experienced and reputable mortgage brokers and Realtors, and a reputable RE lawyer. Meet with them and ask poignant questions, choose the individuals you feel are most worthy of your business

I must admit steps 1-4 I either didn't know or had heard and read various interpretations of them.

- CMHC General Requirements -> http://www.cmhc-schl.../moloin_003.cfm

- Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs for a down payment. Home buyers who have repaid their RRSP may be eligible to use the program a second time. Canada Revenue Agency. www.cra.gc.ca. Search ‘Home Buyers’ Plan’

- BC Property Transfer Tax (PTT) First Time Home
Buyers’ Program - Qualifying first-time buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a home priced up to $425,000. There is a proportional exemption for homes priced up to $450,000.BC Ministry of Small Business and Revenue.

And what's the skinny on the $10k BC bonus for first-timers?

And what's the skinny on the $10k BC bonus for first-timers?

That is for new homes only: http://www.bcbudget...._Fact_Sheet.pdf

For example, there is a REALTOR® from One Percent Realty I recently worked with on a deal. He has been in the business for 9 years, has a broker's licence (not many REALTORS® have this qualification),

Can you explain the advantage of dealing with an agent that has their broker's license?

The $10,000 is a refundable tax credit for first time buyers who purchase new construction, which is subject to the 12% HST. It will cease to exist in the next couple of months as we go back to GST / PST.

http://www.bcbudget...._Fact_Sheet.pdf

Can you explain the advantage of dealing with an agent that has their broker's license?

The broker's course is quite a bit tougher, covers more topics in more detail and requires a written examination including a law component which is marked by a lawyer.

More than anything it shows commitment to the profession, you typically go for your broker's licence is you anticipate opening your own brokerage or acting as managing or associate broker for a firm.

Just another qualification to differentiate yourself as not many REALTORS® have it.

For example, as a first-time buyer, what is the minimum down payment? How much down payment is required to avoid CMHC insurance? Are there perks and benefits for first time buyers? Should common-law couples both sign on as home owners or should only one partner purchase the home which then allows the other partner to purchase the second home as a first-time buyer? And when all is said and done, what are the total fees a first-time buyer pays above and beyond the down payment? Any other important info first-time buyers should be aware of?

While the minimum is 5% I encourage first-time buyers to save 20% if possible to avoid CMHC. I have a very long conversation when I have a buyer putting down 5% to make sure he or she fully understands the risks associated with their purchase. If you buy today at $400,000 with 5% down and you have to sell next year have fun. Commission alone on $400,000 can be $16,000 - there goes all your equity just in commission.

Yes, there are perks, we've discussed them above. The biggest perk is no property transfer tax (PPT) for a first-time buyer. You maximize this perk by buying close to $425,000. If you buy a $200,000 condo you only save $2,000 in PTT and cannot use the exception ever again.

For totally fees there are many calculators out there including this one -> http://www.cmhc-schl.gc.ca/en/co/buho/hostst/wosh_007.cfm?renderforprint=1

I am slowly putting a resource page on my website for buyers but it is not quite complete. I did a quick Google search and found a good one on a Vancouver brokerage website -> http://bluliving.com/buyers#tab=25-grants-and-rebates-available-for-property-buyers-and-owners

And finally what most buyer's don't understand and it is very difficult to explain; your buyer's REALTOR® is NOT FREE. You buy a $500,000 home. Buyer's lawyer takes $500,000 and gives it to the seller's lawyer. Seller's lawyer may take $18,000 out of that $500,000 and may pay each REALTOR® $9,000 in commission (this amount may vary). Where did the money come from in the first place? The buyer.

Things are changing rapidly in terms of real estate services, I feel like I am self-promoting here, but if you are a buyer Google "cash back REALTOR®," and do a bit of research it will be the easiest money you ever save. You can find a few very competent REALTORS® who will cut you a cheque on completion in the thousands. Don't fall for the "I will help you buy a property and you don't have to pay me," because you are paying a huge amount, just indirectly.

Same goes for mortgage brokers or banks, ask for a paid appraisal and or other perks.

Much appreciated, Marko, and thank you. Clearly there's a great deal about the process that I was not aware of and I'm sure what we've touched on here can be considered just the tip of the iceberg. It's easier to see now why some people would rather rent if they don't quite have 20% down payment saved up or cannot commit to staying in the same home for at least several years (i.e. may or may not start a family, etc.).

When we bought our little townhouse as first time buyers (broke ass, beg borrow and steal down payment) we did our homework and had very few surprises. One thing did surprise me - the deposit. We wrote a fairly sizeable cheque at a time when every penny we had was tied up. I think it was in the 5% range.

Matt.

When we bought our little townhouse as first time buyers (broke ass, beg borrow and steal down payment) we did our homework and had very few surprises. One thing did surprise me - the deposit. We wrote a fairly sizeable cheque at a time when every penny we had was tied up. I think it was in the 5% range.

Matt.

In the $200,000-$500,000 you can typically get away with $5,000 deposit. $500,000-$800,000 you are looking at $10,000 deposit; however, completely negotiable.

Regarding the First Time Home Buyers plan and RRSPs. Does anyone know how Spousal RRSPs fit into the picture?

For example, lets say I have $25,000 in an RRSP (which is the most I can withdraw for the HBP) and I regularly contrbitute to this RRSP. If I change and put my contributions this a Spousal RRSP I believe that can be used towards the first house since both spouses can withdraw $25,000.

However I believe there is a restriction on Spousal RRSPs where you have to leave the money in there for 2 years before withdrawing without tax consequences. But perhaps the HBP doesn't count in this situation?

Regarding the First Time Home Buyers plan and RRSPs. Does anyone know how Spousal RRSPs fit into the picture?

For example, lets say I have $25,000 in an RRSP (which is the most I can withdraw for the HBP) and I regularly contrbitute to this RRSP. If I change and put my contributions this a Spousal RRSP I believe that can be used towards the first house since both spouses can withdraw $25,000.

However I believe there is a restriction on Spousal RRSPs where you have to leave the money in there for 2 years before withdrawing without tax consequences. But perhaps the HBP doesn't count in this situation?

Probably better question to ask a finance professional. I don't want to make any guesses.

Regarding the First Time Home Buyers plan and RRSPs. Does anyone know how Spousal RRSPs fit into the picture?

For example, lets say I have $25,000 in an RRSP (which is the most I can withdraw for the HBP) and I regularly contrbitute to this RRSP. If I change and put my contributions this a Spousal RRSP I believe that can be used towards the first house since both spouses can withdraw $25,000.

However I believe there is a restriction on Spousal RRSPs where you have to leave the money in there for 2 years before withdrawing without tax consequences. But perhaps the HBP doesn't count in this situation?

From what I have researched, if it's a spousal RRSP for the Home buyers plan (don't like referring to it as first time home buyers plan since you can re-qualify)
as long as it meets the 90 day RRSP deposit requirements, it will qualify for HBP.

http://turbotax.intu...pousal-rrsp.jsp

http://turbotax.intu...pousal-rrsp.jsp

+1, was top search result when I goggled. it; however, with this kind thing probably still best to ask finance professional to evaluate options.

B.C. government offers down payment loans to first-time homebuyers...

Seems like a pretty straight-forward pre-election vote buying scheme to me.