10 Questions you need answered when buying your first home.

1. How do I start my search for a new home?

Begin by sitting down with an experienced Realtor. A Realtor can work with you to determine the type of house that best fits your lifestyle, needs and wants. The Realtor will know styles of homes, neighborhoods and help you determine the price range in which you can begin your home search.

2. How much you can afford to pay for a house?

Speak with a mortgage specialist who can determine how much you can afford. If you want to get an idea on your own of how much you can afford check out this worksheet. (link off the word worksheet to my How much of a home can I afford page.

3. Why should I be pre-qualified for a mortgage before I start looking at homes?

It is important that your mortgage broker or financial institution complete a thorough pre-approval of your mortgage to give you an accurate purchase price and so that you know your payments. This will involve filling out an application, supplying employment information and obtaining a full credit check. Never accept a verbal approval based on a conversation. By taking this step first you avoid the disappointment of looking at homes which are not within your price range and finding out later that you can not afford them.

4. Can my Realtor show me houses not for sale by their company?

The Multiple Listing System (MLS) is a means that the Calgary Real Estate Board uses to post the listings of all Realtors from all companies. Your Realtor, as your representative, has access to all these listings and therefore can show you all listings on the MLS system.

5. When I decide on my first home what do I do next?

Your Realtor will work with you to determine a fair purchase price for the home. Your Realtor will have access to information such as recent sales in the neighbourhood, as well as determining the current market conditions. Together you can decide on what price you will offer for the property. Often the owners will counter offer the initial offer and you will negotiate the price, terms and conditions of your offer. Your Realtor will be at your side to assist you in obtaining the property and protecting your interest in the transaction.

6. How much of a deposit do I need to hold the property and why is this necessary?

A deposit is an assurance to the seller that you are serious about purchasing their property. The deposit money is the seller's comfort that you will not back out of the deal and it allows the seller to have confidence to go and buy another home. The amount of the deposit varies depending on the purchase price of the property and the length of time until possession. Typically a small deposit is acceptable when there are still conditions to the offer, but once the conditions have been removed a larger deposit will be required. Initial deposits can be as small as $1,000. Once all the conditions are removed from the offer a typical deposit can run from 5% to 10% of the purchase price. You will need to make arrangements before writing the offer to have these funds available.

7. Can I use funds in my RRSP to purchase my first home?

The government allows buyers to use money from their RRSP to purchase their first home. You can remove up to $20,000 to put towards the purchase of your first home. This money must be put back into your RRSP over the next 15 years with a minimum of 1/15 each year or it will become taxable income in that year. For more details on this program contact the financial institution in which you're RRSP is kept.

8. Why do I need a lawyer to complete my transaction?

A lawyer is required to complete the transfer of title into your name. The title is a registered document in the land titles office that determines who owns each parcel of land. The lawyer ensures that you title is clear of any charges or issues before he registers you as the new owner. The lawyer also helps to ensure that you are accepting a property that conforms to the city bylaws. Your lawyer will ensure you obtain a real property report on the property and ensure that you are aware of all items that may affect you. In the end the lawyer is there to protect you legally.

9. Can a Realtor help me with new homes as well as resale homes?

Yes a Realtor can be very valuable when purchasing a new home. Often the builders are willing to work with a realtor and often willing to pay the Realtor's fees. A realtor can assist you with their experience in knowing what is important for future resale. They can help you decide on everything from lots to basement development. The Realtor can also help you with your negotiations. It is important however that you allow the Realtor to introduce you to the builder as many builders are unwilling to pay the Realtor if they are brought in later in the process.

10. How does a Realtor get paid for assisting me in finding my new home?

In most cases the buyer is not required to pay a commission to a Realtor. The Realtor's commissions are paid by the Sellers of the property. The sellers pay a commission to the listing Realtor who in turn pays a portion of these commissions to the buyers Realtor. You may however decide to work with a buyer's agent who may charge you a fee to purchase your home. Ask your Realtor about both of these arrangements