Calgary Herald - March 26, 2005

A home-buying strategy is crucial, particularly for people taking their initial plunge into ownership, says a mortgage specialist.

"There are still many first-time buyers who don't know everything that's involved in purchasing a home," says Trish Hart, mortgage agent for Invis Financial. "There's lot for them to learn -- important points that can help them, especially in a market as competitive as Calgary's."

To help potential homebuyers be better informed, Hart has a checklist to lead them through the process. She says homework is an important element in considering a home purchase:

- Know what you can afford. A pre-approved mortgage helps determine the price range of homes you should be looking for and provides a maximum mortgage you can afford.

- Lock a mortgage rate in before starting out. Most lenders lock in a rate for 120 days when pre-approving. Remember to renew the 120-day period if rates fall during that time.
"Lots of first-timers still don't know about mortgage pre-approval, or the fact posted rates can be negotiated," says Hart.

- Know the financing options. Many lenders offer mortgages that feature a five-per-cent downpayment option -- which means buyers have to take out a 95-per-cent mortgage.
Remember that any mortgage taken out for 75 per cent or more of a home's purchase price must be insured by mortgage insurance agencies such as Canada Mortgage and Housing Corp. or Genworth Financial.

- Be specific about lifestyle needs. Consider more than just the house when shopping around. Make sure the neighbourhood has the amenities you want or need.

- Place conditions on the offer to purchase. Such conditions include providing the flexibility of withdrawing an offer if you are unable to obtain financing, or if a home inspection reveals structural problems. "It's just a way for prospective buyers to protect themselves," says Hart.

- Appraisals and inspections -- you need them both.
An appraisal determines the worth of the property by estimating the value of land and building.
A home inspection checks the adequacy and condition of the home and its major systems.
"Get an inspection -- it's worth the time and money," says Hart, adding that buyers can make it a condition of purchase that the seller pays for the inspection.

- Arm for a possible bidding war. More than 10 per cent of homes sold last year had multiple offers on them, estimates the Calgary Real Estate Board.
It's easy to get caught up in the bidding atmosphere, so establish a maximum price you are prepared to offer.

- When buying a home, it pays to know about the closing costs included in finalizing the sale and transfer of ownership.
These costs, including land transfer tax, legal fees, appraisal fees, and title insurance, can represent up to three per cent of the purchase price.

- You can use an RRSP to purchase your home. If you are a first-time buyer, the Home Buyers Plan allows you to borrow up to $20,000 from each RRSP you have to buy or build a home -- and it's tax-free.

Because condos are more affordable, most first-time buyers purchase them, but there are important aspects that people considering this type of home should consider, says Hart. "It is an absolute must that condominium association documents are available and get them reviewed by a condominium professional," she says.

"As well, ensure there is a reserve fund in place to cover expenses the association might incur if the building needs repairs."

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