The ATB home buying guide · A lawyer’s role in your home buying journey Your to-do list Moving:...

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The ATB home buying guide

Transcript of The ATB home buying guide · A lawyer’s role in your home buying journey Your to-do list Moving:...

The ATB home buying guide

Contents

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Find your dream home—should you buy a condo or a house? The pros and cons of buying a house vs. a condo The pros and cons of buying new vs. buying a resale 16 things to pay attention to when buying a resale Find your perfect neighbourhood

How much can you afford to spend? How much can you qualify for?

Deciding on the type of mortgage that’s right for youVariable vs. Fixed-rate mortgages The importance of pre-qualification and pre-approval Banks vs. brokers: Where should you get your mortgage from? Benefits of mortgage insurance and life insurance Saving for a mortgage down payment

Choosing the right builder Realtors—finding the right fit A lawyer’s role in your home buying journey

Your to-do list

Moving: Costs and OptionsTurning your house into a home: budgeting for furniture

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Welcome to the ATB Home Buying Guide

Buying a home is not only exciting, but it is one of the biggest and most financially significant decisions most of us will make in our lifetime. The journey is filled with a range of emotions and long-term decision making, leading up that dream-come-true moment of becoming a homeowner.

That’s why we created this guide—for you. We’ll walk you through the home buying process all the way from getting started, to decorating. So no matter where you are in your home buying journey, you can feel confident and informed.

Your friends at ATB

Let’s get started: 7 signs you’re ready to buy a home3

1. Laying the Groundwork5

2. Establishing your budget15

4. Building your team25

3. Getting a mortgage17

6. Making your new house your home31

5. How to close the deal and take possession of your new home 29

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Contents

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Find your dream home—should you buy a condo or a house? The pros and cons of buying a house vs. a condo The pros and cons of buying new vs. buying a resale 16 things to pay attention to when buying a resale Find your perfect neighbourhood

How much can you afford to spend? How much can you qualify for?

Deciding on the type of mortgage that’s right for youVariable vs. Fixed-rate mortgages The importance of pre-qualification and pre-approval Banks vs. brokers: Where should you get your mortgage from? Benefits of mortgage insurance and life insurance Saving for a mortgage down payment

Choosing the right builder Realtors—finding the right fit A lawyer’s role in your home buying journey

Your to-do list

Moving: Costs and OptionsTurning your house into a home: budgeting for furniture

5789

13

Welcome to the ATB Home Buying Guide

Buying a home is not only exciting, but it is one of the biggest and most financially significant decisions most of us will make in our lifetime. The journey is filled with a range of emotions and long-term decision making, leading up that dream-come-true moment of becoming a homeowner.

That’s why we created this guide—for you. We’ll walk you through the home buying process all the way from getting started, to decorating. So no matter where you are in your home buying journey, you can feel confident and informed.

Your friends at ATB

Let’s get started: 7 signs you’re ready to buy a home3

1. Laying the Groundwork5

2. Establishing your budget15

4. Building your team25

3. Getting a mortgage17

6. Making your new house your home31

5. How to close the deal and take possession of your new home 29

1516

171819202324

252728

29

3133

1

Buying a home is an exciting prospect and a decision that will affect you for the long term...but is it the right time to take this big step? Here are seven signs that you might be ready to take the plunge:

7 signs you’re ready to buy a home

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If you’ve been nodding your head while reading through these points (or internally screaming “YES!” with giddy excitement), it sounds like you’re ready to buy a home! The home buying process might seem daunting at first, but there are plenty of resources and experts to help you on your way—starting with ATB’s Home Buying Guide! This Guide is packed with tips, tricks and worksheets to take you through each stage of buying a home, from choosing a location to financing a mortgage to budgeting for furniture. You’ve already taken the first step by deciding that you’re ready to buy.

Congratulations! You’re officially on the path to becoming a homeowner!

You have a specific city or location where you would like to stay for the long term.

The place where you’re living right now won’t support you for the long term. You may need more space, access to different amenities, or a change of environment to nurture your family, live comfortably and pursue your goals.

You are in a comfortable financial position with a manageable amount of debt and are happy with your current level of contribution to your retirement savings.

If you were to experience an unexpected career shake-up, you are confident that you would still be able to make mortgage payments and cover other house-related expenses without putting yourself into further debt.

Considering that the cost of renting a house or a larger apartment is comparable to the cost of making monthly mortgage payments, you feel that it makes more sense for you to start investing in property rather than paying rent.

You are prepared to deal with the additional costs and commitments of being a homeowner. These additional commitments may include property taxes, maintenance and repairs, shoveling snow, etc.

You have an idea of what your future looks like and how your lifestyle is likely to change over the next 10-15 years.

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Let’s get started:

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Buying a home is an exciting prospect and a decision that will affect you for the long term...but is it the right time to take this big step? Here are seven signs that you might be ready to take the plunge:

7 signs you’re ready to buy a home

4

If you’ve been nodding your head while reading through these points (or internally screaming “YES!” with giddy excitement), it sounds like you’re ready to buy a home! The home buying process might seem daunting at first, but there are plenty of resources and experts to help you on your way—starting with ATB’s Home Buying Guide! This Guide is packed with tips, tricks and worksheets to take you through each stage of buying a home, from choosing a location to financing a mortgage to budgeting for furniture. You’ve already taken the first step by deciding that you’re ready to buy.

Congratulations! You’re officially on the path to becoming a homeowner!

You have a specific city or location where you would like to stay for the long term.

The place where you’re living right now won’t support you for the long term. You may need more space, access to different amenities, or a change of environment to nurture your family, live comfortably and pursue your goals.

You are in a comfortable financial position with a manageable amount of debt and are happy with your current level of contribution to your retirement savings.

If you were to experience an unexpected career shake-up, you are confident that you would still be able to make mortgage payments and cover other house-related expenses without putting yourself into further debt.

Considering that the cost of renting a house or a larger apartment is comparable to the cost of making monthly mortgage payments, you feel that it makes more sense for you to start investing in property rather than paying rent.

You are prepared to deal with the additional costs and commitments of being a homeowner. These additional commitments may include property taxes, maintenance and repairs, shoveling snow, etc.

You have an idea of what your future looks like and how your lifestyle is likely to change over the next 10-15 years.

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Let’s get started:

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Laying the Groundwork

Find your dream home—should you buy a condo or a house?

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1Do you want to live in the city, suburbs, a small community, or a rural area?

Suburbs, a small community, or a rural areaCity

Do you spend more time at home or away from home?

At home Away

Do you want to build a new home or purchase a resale?

Build Resale

Do you want a designated space for guests?

Yes No

Is it important to you to live in a neighbourhood with other young families? (The Find Your Perfect Neighbourhood Worksheet can help you prioritize what you need in a neighbourhood).

YesNo

Do you plan to own pets?

No

Do you own many cars or any vehicles that require special parking considerations? (Such as an RV or a boat trailer).

YesNo

Does owning and maintaining a yard and/or garden appeal to you?

Yes NoIs it important to you to live in an environmentally friendly home that may include solar panels or energy saving appliances?

No

Are you comfortable paying condo fees and dealing with a condo board.No

Yes

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Yes

Yes

Condo

House

Condo

Condo

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Laying the Groundwork

Find your dream home—should you buy a condo or a house?

6

1Do you want to live in the city, suburbs, a small community, or a rural area?

Suburbs, a small community, or a rural areaCity

Do you spend more time at home or away from home?

At home Away

Do you want to build a new home or purchase a resale?

Build Resale

Do you want a designated space for guests?

Yes No

Is it important to you to live in a neighbourhood with other young families? (The Find Your Perfect Neighbourhood Worksheet can help you prioritize what you need in a neighbourhood).

YesNo

Do you plan to own pets?

No

Do you own many cars or any vehicles that require special parking considerations? (Such as an RV or a boat trailer).

YesNo

Does owning and maintaining a yard and/or garden appeal to you?

Yes NoIs it important to you to live in an environmentally friendly home that may include solar panels or energy saving appliances?

No

Are you comfortable paying condo fees and dealing with a condo board.No

Yes

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Yes

Yes

Condo

House

Condo

Condo

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The pros and cons of buying a house vs. a condo

House

Pros Cons

• Detached houses and the land they sit on tend to appreciate in value over time.

• You are able to change and renovate a house as dramatically as you’d like.

• A yard provides personal space to enjoy the outdoors and grow a garden during the summer months.

• Houses allow you more flexibility to have pets.

• Houses often have more parking space on the property than you might be given in a condo parkade.

• Maintaining a yard may mean spending time, energy and money on lawn mowing, tree trimming, landscaping, etc. And you’ll have to shovel the snow off the sidewalks and driveway during the winter.

• Insurance on a house is often more expensive than on a condo.

Pros Cons

• Yard work and snow clearing on the property is taken care of by the condo board.

• Condo fees usually include some utilities and can be considerably less than the costs associated with owning a detached house.

• Condo fees are predictable, typically only changing on an annual basis, rather than fluctuating month-to-month like house expenses do.

• Insurance on a condo is more like renter’s insurance: less-expensive insurance on contents rather than the structure itself.

• Condos often have party rooms, workout rooms, swimming pools—sometimes even guest rooms.

• Any major renovations to your condo must be approved by the condo board first.

• The resale value of a condo often starts to decline after the ten-year mark.

• Condo facilities (party rooms, gyms, swimming pools) are public to all condo residents and may not offer the level of privacy you desire.

• Some condo buildings are adult-only and some don’t allow pets.

• Condos may limit the amount of parking space available to you, and often cannot accommodate large recreational vehicles.

Additional Info:The closing costs of buying a condo (including inspection, legal fees and land transfer taxes) are comparable to the closing costs of buying a house.

The pros and cons of buying new vs. buying a resale

Pros Cons

• The luxury of simply turning the key and walking in—no need for renovations, maintenance or repairs up-front.

• New homes come with warranties. As of February 1, 2014, every new home in Alberta is protected under warranty by one of seven government-approved warranty providers. Coverage extends for 1-10 years.

• New homes are subject to more stringent and comprehensive building codes, and thus may be safer and more energy-efficient.

• Buying a new house comes with the opportunity to personalize your home, from paint and countertop colours to green technology like solar panels and energy-efficient hot water heaters.

• There’s a smaller chance of being involved in a bidding war for a new house than for a resale.

• GST and HST apply to the price of a new home.

• Unless you’re buying an infill build, a brand-new home will likely be in a brand-new neighbourhood, often in a suburb with undeveloped character and culture.

• New homes are often built with cheaper materials and may not last as long.

• Buying a new home before it’s actually built comes with the potential for delays that can cause stress around the move-in date.

Pros Cons

• GST and HST are not applied to the price of pre-owned homes.

• Resale homes are often located in established neighbourhoods with developed character and culture.

• Older homes are often built with solid wood, copper pipes, a more substantial foundation, etc., and tend to last longer as a result.

• You may have to pay for renovations, maintenance, or repairs on the home to personalize it to your lifestyle.

• Older homes were often built under older, less comprehensive building codes, and thus may be less energy-efficient.

• There’s a higher chance of being involved in a bidding war for a resale than for a new house.

House Buying New

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Condo

Buying a resale

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The pros and cons of buying a house vs. a condo

House

Pros Cons

• Detached houses and the land they sit on tend to appreciate in value over time.

• You are able to change and renovate a house as dramatically as you’d like.

• A yard provides personal space to enjoy the outdoors and grow a garden during the summer months.

• Houses allow you more flexibility to have pets.

• Houses often have more parking space on the property than you might be given in a condo parkade.

• Maintaining a yard may mean spending time, energy and money on lawn mowing, tree trimming, landscaping, etc. And you’ll have to shovel the snow off the sidewalks and driveway during the winter.

• Insurance on a house is often more expensive than on a condo.

Pros Cons

• Yard work and snow clearing on the property is taken care of by the condo board.

• Condo fees usually include some utilities and can be considerably less than the costs associated with owning a detached house.

• Condo fees are predictable, typically only changing on an annual basis, rather than fluctuating month-to-month like house expenses do.

• Insurance on a condo is more like renter’s insurance: less-expensive insurance on contents rather than the structure itself.

• Condos often have party rooms, workout rooms, swimming pools—sometimes even guest rooms.

• Any major renovations to your condo must be approved by the condo board first.

• The resale value of a condo often starts to decline after the ten-year mark.

• Condo facilities (party rooms, gyms, swimming pools) are public to all condo residents and may not offer the level of privacy you desire.

• Some condo buildings are adult-only and some don’t allow pets.

• Condos may limit the amount of parking space available to you, and often cannot accommodate large recreational vehicles.

Additional Info:The closing costs of buying a condo (including inspection, legal fees and land transfer taxes) are comparable to the closing costs of buying a house.

The pros and cons of buying new vs. buying a resale

Pros Cons

• The luxury of simply turning the key and walking in—no need for renovations, maintenance or repairs up-front.

• New homes come with warranties. As of February 1, 2014, every new home in Alberta is protected under warranty by one of seven government-approved warranty providers. Coverage extends for 1-10 years.

• New homes are subject to more stringent and comprehensive building codes, and thus may be safer and more energy-efficient.

• Buying a new house comes with the opportunity to personalize your home, from paint and countertop colours to green technology like solar panels and energy-efficient hot water heaters.

• There’s a smaller chance of being involved in a bidding war for a new house than for a resale.

• GST and HST apply to the price of a new home.

• Unless you’re buying an infill build, a brand-new home will likely be in a brand-new neighbourhood, often in a suburb with undeveloped character and culture.

• New homes are often built with cheaper materials and may not last as long.

• Buying a new home before it’s actually built comes with the potential for delays that can cause stress around the move-in date.

Pros Cons

• GST and HST are not applied to the price of pre-owned homes.

• Resale homes are often located in established neighbourhoods with developed character and culture.

• Older homes are often built with solid wood, copper pipes, a more substantial foundation, etc., and tend to last longer as a result.

• You may have to pay for renovations, maintenance, or repairs on the home to personalize it to your lifestyle.

• Older homes were often built under older, less comprehensive building codes, and thus may be less energy-efficient.

• There’s a higher chance of being involved in a bidding war for a resale than for a new house.

House Buying New

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Condo

Buying a resale

16 things to pay attention to when buying a resaleAs a first time home buyer looking to purchase a resale, you’ll want to ensure that you’re investing in a functional home that won’t plague you with issues or expensive repairs in the years ahead. This checklist highlights 16 areas to pay attention to when shopping for a resale home. (Your realtor can help you answer all of these questions.)

How to complete this checklist:

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The Roof 1 2 3 4 5

Are the shingles curling or peeling?

How are the eavestroughs?

If you’re stuck in the middle of one of our Albertan winters, look at the snow covering. Is it even? (Melted patches could indicate an insulation problem.)

The Lot 1 2 3 4 5

Does the house sit level on the lot?

How does the land slope? Does it indicate a drainage problem, or just potential difficulty mowing the lawn?

What does the pavement look like? A badly cracked, heaving driveway or parking pad could indicate shifting that might also affect the house’s foundation.

The Yard 1 2 3 4 5

Does the yard include overgrown or sickly trees?

Is there a moulding hot tub or rotting deck that will need to be removed?

What’s under the snow? (Gravel? Astroturf? Grass?)

House and Neighbourhood History 1 2 3 4 5

Does the area experience regular flooding?

Have there been water main issues?

Are there plans for nearby development or road building?

Inside the House 1 2 3 4 5

Are there any funny smells? (If the house you’re walking into looks great but smells of cigarette smoke, animal waste, or sewage, you may be looking at replacing car-pet, repairing a damaged sewage system, or repainting walls before you can move in.)

House Temperature 1 2 3 4 5

Does the house have air conditioning?

Has the furnace been regularly maintained and is it in good repair?

Checklists Notes Score

Score: 1 = Not acceptable, in need of major repairs, 5 = Very acceptable, no repairs or replacements needed

Work through the checklist and take note of how each of the 16 areas meets your personal standards.

Evaluate each area by scoring it on a scale of 1 to 5 (1 meaning the conditions are not acceptable to you and will require major repairs or replacements, 5 meaning the conditions are very acceptable and will likely not need repairs or replacements.)

When you’ve evaluated each area, take the sum of all area scores at the bottom of the checklist.

Repeat this process for each resale home you investigate. Compare your notes and each home’s total score to determine which house is the right one for you!

Step 1

Step 2

Step 3

Step 4

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16 things to pay attention to when buying a resaleAs a first time home buyer looking to purchase a resale, you’ll want to ensure that you’re investing in a functional home that won’t plague you with issues or expensive repairs in the years ahead. This checklist highlights 16 areas to pay attention to when shopping for a resale home. (Your realtor can help you answer all of these questions.)

How to complete this checklist:

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The Roof 1 2 3 4 5

Are the shingles curling or peeling?

How are the eavestroughs?

If you’re stuck in the middle of one of our Albertan winters, look at the snow covering. Is it even? (Melted patches could indicate an insulation problem.)

The Lot 1 2 3 4 5

Does the house sit level on the lot?

How does the land slope? Does it indicate a drainage problem, or just potential difficulty mowing the lawn?

What does the pavement look like? A badly cracked, heaving driveway or parking pad could indicate shifting that might also affect the house’s foundation.

The Yard 1 2 3 4 5

Does the yard include overgrown or sickly trees?

Is there a moulding hot tub or rotting deck that will need to be removed?

What’s under the snow? (Gravel? Astroturf? Grass?)

House and Neighbourhood History 1 2 3 4 5

Does the area experience regular flooding?

Have there been water main issues?

Are there plans for nearby development or road building?

Inside the House 1 2 3 4 5

Are there any funny smells? (If the house you’re walking into looks great but smells of cigarette smoke, animal waste, or sewage, you may be looking at replacing car-pet, repairing a damaged sewage system, or repainting walls before you can move in.)

House Temperature 1 2 3 4 5

Does the house have air conditioning?

Has the furnace been regularly maintained and is it in good repair?

Checklists Notes Score

Score: 1 = Not acceptable, in need of major repairs, 5 = Very acceptable, no repairs or replacements needed

Work through the checklist and take note of how each of the 16 areas meets your personal standards.

Evaluate each area by scoring it on a scale of 1 to 5 (1 meaning the conditions are not acceptable to you and will require major repairs or replacements, 5 meaning the conditions are very acceptable and will likely not need repairs or replacements.)

When you’ve evaluated each area, take the sum of all area scores at the bottom of the checklist.

Repeat this process for each resale home you investigate. Compare your notes and each home’s total score to determine which house is the right one for you!

Step 1

Step 2

Step 3

Step 4

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The Foundation Walls 1 2 3 4 5

Are they badly cracked?

Does the basement floor slope at all?

The Main Floor 1 2 3 4 5

Are there cracks near the bay windows or the corners where an extension joins the rest of the house?

Are there cracks where a protruding feature could be sagging or pulling away?

Windows 1 2 3 4 5

• How old are they? (Older windows can cause a humidity problem in the house; they’re also often a big source of heat loss.)

• Are they steamed up or covered in condensation?

• Are wooden window sills cracked or soft?

Energy Saving Features 1 2 3 4 5

• Is the house equipped with energy-saving features such as new insulation, a tankless hot water heater or solar panels?

Utilities 1 2 3 4 5

• What is the combined cost of average monthly heat-ing, water and electricity bills?

• How big is the hot water heater? Can it handle a three-shower morning rush?

Appliances 1 2 3 4 5

• How old are the appliances? (Older appliances aren’t always a problem, but you should check how they’ve been maintained, and ask specific questions about their performance. Some older appliances may not be as efficient or eco-friendly as newer ones.)

• Does the oven heat evenly?

• Can the washing machine take a full load of laundry?

• Will the sellers will be removing any appliances or fixtures to take with them?

Water 1 2 3 4 5

• How does the water taste? (Off-tasting water may indicate degraded pipes, either in the house itself or in the local water mains.)

Download Worksheet Download Worksheet

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The Attic, Water Pipes and Heating Ducts 1 2 3 4 5

• Are they well-insulated?

• Are there signs of leakage or mold?

Other Considerations 1 2 3 4 5

• How much storage space is there?

• Are there enough power outlets?

• Which direction do the windows in the main rooms face?

• Are there enough rooms? Too many?

• Where are the internet, cable and phone hookups?

• Will your furniture fit the space?

• Does the floor plan fit your lifestyle?

The Most Important Question 1 2 3 4 5

• Can you live here?

Total Score (Sum of all of the above scores)

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Download a fillable PDF that will make the calculations for you!

The Foundation Walls 1 2 3 4 5

Are they badly cracked?

Does the basement floor slope at all?

The Main Floor 1 2 3 4 5

Are there cracks near the bay windows or the corners where an extension joins the rest of the house?

Are there cracks where a protruding feature could be sagging or pulling away?

Windows 1 2 3 4 5

• How old are they? (Older windows can cause a humidity problem in the house; they’re also often a big source of heat loss.)

• Are they steamed up or covered in condensation?

• Are wooden window sills cracked or soft?

Energy Saving Features 1 2 3 4 5

• Is the house equipped with energy-saving features such as new insulation, a tankless hot water heater or solar panels?

Utilities 1 2 3 4 5

• What is the combined cost of average monthly heat-ing, water and electricity bills?

• How big is the hot water heater? Can it handle a three-shower morning rush?

Appliances 1 2 3 4 5

• How old are the appliances? (Older appliances aren’t always a problem, but you should check how they’ve been maintained, and ask specific questions about their performance. Some older appliances may not be as efficient or eco-friendly as newer ones.)

• Does the oven heat evenly?

• Can the washing machine take a full load of laundry?

• Will the sellers will be removing any appliances or fixtures to take with them?

Water 1 2 3 4 5

• How does the water taste? (Off-tasting water may indicate degraded pipes, either in the house itself or in the local water mains.)

Download Worksheet Download Worksheet

12

The Attic, Water Pipes and Heating Ducts 1 2 3 4 5

• Are they well-insulated?

• Are there signs of leakage or mold?

Other Considerations 1 2 3 4 5

• How much storage space is there?

• Are there enough power outlets?

• Which direction do the windows in the main rooms face?

• Are there enough rooms? Too many?

• Where are the internet, cable and phone hookups?

• Will your furniture fit the space?

• Does the floor plan fit your lifestyle?

The Most Important Question 1 2 3 4 5

• Can you live here?

Total Score (Sum of all of the above scores)

11

Download a fillable PDF that will make the calculations for you!

Find your perfect neighbourhoodBefore you commit to buying a home, get to know your neighbourhood!

How to complete the worksheet:

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School Ex: French immersion elementary school

Ex: elementary school

Parking

Pharmacy

Gas station

Fitness studio

Recreational facilities

Proximity from work (commute)

Proximity from family and friends

Access to public transit

Neighbourhood demographics (young families, retired seniors, college students)

Parks and public spaces

Shopping centres

Financial institution

Hospital/medical centre

Veterinarian

Wants Needs Neighbourhood 1 Neighbourhood 2

Read through the list of items in the far left column. Add any additional neighbourhood needs you may have in one of the blank spaces provided at the bottom of the worksheet.

Jot down your ideal situation for each item in the Wants column. Be as specific as possible.

Of your specific wants, what do you need at a basic level? Write your answer in the Needs column.

Choose a couple of neighbourhoods that you think you might like to live in. What can these neighbourhoods offer in terms of the amenities listed in the far left column? Record your findings for each neighbourhood under its respective Neighbourhood column.

Compare your neighbourhood findings to your listed wants and needs. How do they measure up?

Choose your perfect neighbourhood based on which option best meets your needs and wants. If neighbourhood 1 and 2 don’t look like they’re going to fit the bill, consider investigating a few more neighbourhoods.

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

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Find your perfect neighbourhoodBefore you commit to buying a home, get to know your neighbourhood!

How to complete the worksheet:

14

School Ex: French immersion elementary school

Ex: elementary school

Parking

Pharmacy

Gas station

Fitness studio

Recreational facilities

Proximity from work (commute)

Proximity from family and friends

Access to public transit

Neighbourhood demographics (young families, retired seniors, college students)

Parks and public spaces

Shopping centres

Financial institution

Hospital/medical centre

Veterinarian

Wants Needs Neighbourhood 1 Neighbourhood 2

Read through the list of items in the far left column. Add any additional neighbourhood needs you may have in one of the blank spaces provided at the bottom of the worksheet.

Jot down your ideal situation for each item in the Wants column. Be as specific as possible.

Of your specific wants, what do you need at a basic level? Write your answer in the Needs column.

Choose a couple of neighbourhoods that you think you might like to live in. What can these neighbourhoods offer in terms of the amenities listed in the far left column? Record your findings for each neighbourhood under its respective Neighbourhood column.

Compare your neighbourhood findings to your listed wants and needs. How do they measure up?

Choose your perfect neighbourhood based on which option best meets your needs and wants. If neighbourhood 1 and 2 don’t look like they’re going to fit the bill, consider investigating a few more neighbourhoods.

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

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How much can you afford to spend?

How much can you qualify for?In general, your credit score and the size of your down payment affects the interest rate a mortgage provider will offer you. If you have a low credit score (under 700 on a scale between 300 and 900), you may have to make a large down payment to qualify for a mortgage.

The mortgage you qualify for is based on:

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This budget represents how much you can afford to spend every month to cover mortgage payments, property taxes, home maintenance, condo fees (if they apply) and home insurance.

Basic monthly budgeting tool

Establishing your budget

Car payments $

Insurance (car, home, etc) $

Savings (RRSP, TFSA, etc) $

Childcare $

Necessities (Gas, transportation, groceries, etc) $

Entertainment (Movies, eating out, concerts, etc) $

Misc (Loan, interest or credit card charges, other expenses) $

Download Worksheet Download Worksheet

Your ability to afford monthly mortgage payments.

The level of faith in your credit that a mortgage provider has based on your credit score, which in turn affects the interest rate that provider is willing to offer you.

The size of your down payment, which is directly related to the size of the loan you’ll be taking out on the remaining portion of the property’s sale price.

You should be able to make all of your monthly debt payments, including mortgage payments, using less than 40 per cent of your total monthly income. (This calculation is sometimes called the debt-to-income ratio or debt service ratio.)

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Total expenses per month $

Average income per month (after tax) - Total monthly expenses = Monthly budget for home-related expenses.

!

Download a fillable PDF that will make the calculations for you!

Average income per month (after tax) $

How much can you afford to spend?

How much can you qualify for?In general, your credit score and the size of your down payment affects the interest rate a mortgage provider will offer you. If you have a low credit score (under 700 on a scale between 300 and 900), you may have to make a large down payment to qualify for a mortgage.

The mortgage you qualify for is based on:

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2

This budget represents how much you can afford to spend every month to cover mortgage payments, property taxes, home maintenance, condo fees (if they apply) and home insurance.

Basic monthly budgeting tool

Establishing your budget

Car payments $

Insurance (car, home, etc) $

Savings (RRSP, TFSA, etc) $

Childcare $

Necessities (Gas, transportation, groceries, etc) $

Entertainment (Movies, eating out, concerts, etc) $

Misc (Loan, interest or credit card charges, other expenses) $

Download Worksheet Download Worksheet

Your ability to afford monthly mortgage payments.

The level of faith in your credit that a mortgage provider has based on your credit score, which in turn affects the interest rate that provider is willing to offer you.

The size of your down payment, which is directly related to the size of the loan you’ll be taking out on the remaining portion of the property’s sale price.

You should be able to make all of your monthly debt payments, including mortgage payments, using less than 40 per cent of your total monthly income. (This calculation is sometimes called the debt-to-income ratio or debt service ratio.)

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Total expenses per month $

Average income per month (after tax) - Total monthly expenses = Monthly budget for home-related expenses.

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Download a fillable PDF that will make the calculations for you!

Average income per month (after tax) $

Deciding on the type of mortgage that’s right for youThere’s more to a mortgage than the maximum amount of money you can qualify to borrow. It’s also important to examine the trade-off between a larger down payment with a smaller mortgage, and the opportunity to buy a home with a smaller down payment even though that may mean a larger mortgage.

The amortization period (the length of time over which you expect you pay off your mortgage) typically ranges from 15-30 years. This is broken up into terms, which are typically 5-10 years. Your term contract specifies your mortgage provider, interest rate and payment options. These options might include your ability to make extra lump-sum payments, pay off the entire mortgage or increase your regular payments.

At the end of your term, you can choose to either renew your mortgage under the same conditions but at a new interest rate based on the current market, renegotiate your mortgage with the same provider or move your mortgage to a different provider. It’s important to learn about possible fees for early payment or for switching mortgage providers before you sign a contract.

Variable vs. Fixed-rate mortgagesVariable and fixed-rate mortgages are the two primary types of mortgages in Canada. Each has its advantages, but deciding which will work best for you can be tricky. Here are some key differences to keep in mind.

Variable vs. fixed rate

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3

Getting a mortgage

Variable

• Interest on a variable-rate mortgage fluctuates with the Bank of Canada’s prime lending rate.

• Monthly payments on variable-rate mortgages remain steady over the course of your term. What varies is the percentage of your payment that goes toward the principal of the loan, versus the percentage that goes toward interest.

• Variable-rate mortgages are usually cheaper over the long run.

• If you have a variable-rate mortgage and the market is making you nervous, some variable-rate mortgages allow you to lock back in to a fixed rate with no penalty.

• The primary disadvantage of a variable rate mortgage is the risk of your mortgage payments increasing.

Down payment of less than 20 per cent (Insured mortgage)

• Insured mortgages require you to buy mortgage default insurance, which protects the mortgage provider who is providing a loan without the security of a substantial down payment.

• Possibly a longer amortization period up to a maximum of 25 years.

Down payment of 20 per cent or more:

• Does not require mortgage default insurance, which is why it is called an uninsured or “conventional” mortgage.

Fixed rate

• Fixed-rate mortgages guarantee a fixed interest rate for the length of your term. The way your monthly payment is divided between interest and principal stays the same.

• A fixed-rate mortgage allows you to protect yourself from payment increases in the unlikely event that interest rates skyrocket so high that your monthly payment is no longer sufficient to cover your interest charges.

• The primary disadvantage of a fixed-rate mortgage is the higher overall cost you’re likely to pay in the long run.

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Deciding on the type of mortgage that’s right for youThere’s more to a mortgage than the maximum amount of money you can qualify to borrow. It’s also important to examine the trade-off between a larger down payment with a smaller mortgage, and the opportunity to buy a home with a smaller down payment even though that may mean a larger mortgage.

The amortization period (the length of time over which you expect you pay off your mortgage) typically ranges from 15-30 years. This is broken up into terms, which are typically 5-10 years. Your term contract specifies your mortgage provider, interest rate and payment options. These options might include your ability to make extra lump-sum payments, pay off the entire mortgage or increase your regular payments.

At the end of your term, you can choose to either renew your mortgage under the same conditions but at a new interest rate based on the current market, renegotiate your mortgage with the same provider or move your mortgage to a different provider. It’s important to learn about possible fees for early payment or for switching mortgage providers before you sign a contract.

Variable vs. Fixed-rate mortgagesVariable and fixed-rate mortgages are the two primary types of mortgages in Canada. Each has its advantages, but deciding which will work best for you can be tricky. Here are some key differences to keep in mind.

Variable vs. fixed rate

18

3

Getting a mortgage

Variable

• Interest on a variable-rate mortgage fluctuates with the Bank of Canada’s prime lending rate.

• Monthly payments on variable-rate mortgages remain steady over the course of your term. What varies is the percentage of your payment that goes toward the principal of the loan, versus the percentage that goes toward interest.

• Variable-rate mortgages are usually cheaper over the long run.

• If you have a variable-rate mortgage and the market is making you nervous, some variable-rate mortgages allow you to lock back in to a fixed rate with no penalty.

• The primary disadvantage of a variable rate mortgage is the risk of your mortgage payments increasing.

Down payment of less than 20 per cent (Insured mortgage)

• Insured mortgages require you to buy mortgage default insurance, which protects the mortgage provider who is providing a loan without the security of a substantial down payment.

• Possibly a longer amortization period up to a maximum of 25 years.

Down payment of 20 per cent or more:

• Does not require mortgage default insurance, which is why it is called an uninsured or “conventional” mortgage.

Fixed rate

• Fixed-rate mortgages guarantee a fixed interest rate for the length of your term. The way your monthly payment is divided between interest and principal stays the same.

• A fixed-rate mortgage allows you to protect yourself from payment increases in the unlikely event that interest rates skyrocket so high that your monthly payment is no longer sufficient to cover your interest charges.

• The primary disadvantage of a fixed-rate mortgage is the higher overall cost you’re likely to pay in the long run.

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Bank

• The difference with banks is their interest in your complete financial picture—and their interest in managing your accounts, loans and investments beyond your mortgage.

• While some banks may offer their existing customers a better rate as a kind of trade-off for their loyal business, it’s also worth approaching a new bank when you’re shopping for a mortgage, since they might offer you a better rate as an incentive to move your banking over.

• Banks compete aggressively with each other on mortgage rates--but often their rates seem to trend the same way.

• When looking at the rates an individual bank is advertising, keep in mind that even when banks post their “real” rates, there is usually room for minor negotiation. Yes, you can (and should) negotiate with your bank.

The importance of pre-qualification and pre-approval Banks vs. brokers: Where should you get your mortgage from?When you’re ready for a mortgage, it’s a good idea to look at all your options. You can get a mortgage from your bank, a financial institution you don’t currently do your banking with, or a mortgage broker. Shop around, learn the benefits of each and make the decision that’s right for you and your family.

It’s a good idea to make appointments with several different banks and mortgage brokers and compare the interest rates and term options each one can offer you.

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Mortgage broker

• Most mortgage providers advertise interest rates (called “posted rates”) that are much higher than the lowest rates they are willing to offer their customers. The expectation is that you (the customer) will negotiate for these lower rates.

• One major advantage of a mortgage broker is their familiarity with a large pool of different mortgages and mortgage providers. Brokers can request “pricing discretion,” which means they can negotiate on your behalf.

• Because all brokers work on commission, they are paid by the mortgage provider a certain percentage of your, the customer’s, mortgage amount. It’s worth asking your broker directly if they will earn a higher commission by locking you into a higher interest rate, or a less-flexible mortgage contract.

• A mortgage broker, though they may know about your mortgage needs, typically does not have a holistic overview of your financial plan.

Prepare for your meetings with banks and mortgage brokers by first asking yourself a few questions to determine what type of mortgage is best for you. Whether or not you know the answers, mortgage providers can help you navigate the complexities and find the answers you’re looking for.

Pre-approval isn’t an all-out guarantee that a mortgage provider will actually fund your loan, but it’s as close to an all-out guarantee as you’ll get. It’s a smart move to get pre-approved before you start seriously shopping to buy a home.

Really, all pre-approval means is that a mortgage provider does some of the initial background checking in advance and commits to giveing you a particular interest rate if you’re fully approved for a mortgage within 90 days.

Pre-qualification is the first step to pre-approval. It helps you and your mortgage provider determine approximately how much you’ll be able to borrow and how much you’ll need for a down payment and closing costs.

The mortgage provider will not review your credit report or verify your financial information when going through the Pre-qualification process. Rather, they will estimate how much you might eventually be approved for based on an overview of your finances, including your income, assets and debts.

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Bank

• The difference with banks is their interest in your complete financial picture—and their interest in managing your accounts, loans and investments beyond your mortgage.

• While some banks may offer their existing customers a better rate as a kind of trade-off for their loyal business, it’s also worth approaching a new bank when you’re shopping for a mortgage, since they might offer you a better rate as an incentive to move your banking over.

• Banks compete aggressively with each other on mortgage rates--but often their rates seem to trend the same way.

• When looking at the rates an individual bank is advertising, keep in mind that even when banks post their “real” rates, there is usually room for minor negotiation. Yes, you can (and should) negotiate with your bank.

The importance of pre-qualification and pre-approval Banks vs. brokers: Where should you get your mortgage from?When you’re ready for a mortgage, it’s a good idea to look at all your options. You can get a mortgage from your bank, a financial institution you don’t currently do your banking with, or a mortgage broker. Shop around, learn the benefits of each and make the decision that’s right for you and your family.

It’s a good idea to make appointments with several different banks and mortgage brokers and compare the interest rates and term options each one can offer you.

20

Mortgage broker

• Most mortgage providers advertise interest rates (called “posted rates”) that are much higher than the lowest rates they are willing to offer their customers. The expectation is that you (the customer) will negotiate for these lower rates.

• One major advantage of a mortgage broker is their familiarity with a large pool of different mortgages and mortgage providers. Brokers can request “pricing discretion,” which means they can negotiate on your behalf.

• Because all brokers work on commission, they are paid by the mortgage provider a certain percentage of your, the customer’s, mortgage amount. It’s worth asking your broker directly if they will earn a higher commission by locking you into a higher interest rate, or a less-flexible mortgage contract.

• A mortgage broker, though they may know about your mortgage needs, typically does not have a holistic overview of your financial plan.

Prepare for your meetings with banks and mortgage brokers by first asking yourself a few questions to determine what type of mortgage is best for you. Whether or not you know the answers, mortgage providers can help you navigate the complexities and find the answers you’re looking for.

Pre-approval isn’t an all-out guarantee that a mortgage provider will actually fund your loan, but it’s as close to an all-out guarantee as you’ll get. It’s a smart move to get pre-approved before you start seriously shopping to buy a home.

Really, all pre-approval means is that a mortgage provider does some of the initial background checking in advance and commits to giveing you a particular interest rate if you’re fully approved for a mortgage within 90 days.

Pre-qualification is the first step to pre-approval. It helps you and your mortgage provider determine approximately how much you’ll be able to borrow and how much you’ll need for a down payment and closing costs.

The mortgage provider will not review your credit report or verify your financial information when going through the Pre-qualification process. Rather, they will estimate how much you might eventually be approved for based on an overview of your finances, including your income, assets and debts.

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Questions to ask your mortgage provider (Print and bring these questions with you)

What do I need to know about this mortgage beyond the interest rate? (Because low interest rates often come with restrictions, it’s important to compare mortgage agreements themselves, not just the flashy numbers attached to them.)

What will the length of the term be?

What will the amortization period be? (The longer you are obliged to take to pay off your mort-gage, the more affordable it will seem in the short term, but the more interest you’ll end up paying over the long term.)

Can I make lump-sum payments or increase the size of my regular payments? How frequently? How large can my payments be?

What are the penalties or fees for early payment or for switching to another mortgage provider?

Can I “port” (transfer) my mortgage if I decide to sell one house and and buy another one?

If I’m looking at a fixed-rate mortgage, can I “blend and extend” it if base interest rates fall or if the available new interest rates are much higher when our term is up for renewal? (This means combining your term’s contractual fixed interest rate with the current market interest rate and extending the term at the blended rate. It’s also sometimes possible to blend and extend a mort-gage you are porting to a new property.) What is the fee for doing this?

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Questions to ask yourself (Print and bring these questions with you)

Do you need an insured mortgage (that is, a mortgage with a down payment of less than 20 per cent)?

How large of a down payment are you prepared to put down?

How long would you like to take to pay off your mortgage?

Do you want the option to increase your payments and make lump-sum payments within the period of your term?

Are you more interested in a variable or a fixed-rate mortgage?

If you’re looking at a variable-rate mortgage, do you want the option to lock in to a fixed rate if the market takes a worrying turn?

Do you want the option to port your mortgage to a new property if you decide to sell and buy again, ten or fifteen years down the road?

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Questions to ask your mortgage provider (Print and bring these questions with you)

What do I need to know about this mortgage beyond the interest rate? (Because low interest rates often come with restrictions, it’s important to compare mortgage agreements themselves, not just the flashy numbers attached to them.)

What will the length of the term be?

What will the amortization period be? (The longer you are obliged to take to pay off your mort-gage, the more affordable it will seem in the short term, but the more interest you’ll end up paying over the long term.)

Can I make lump-sum payments or increase the size of my regular payments? How frequently? How large can my payments be?

What are the penalties or fees for early payment or for switching to another mortgage provider?

Can I “port” (transfer) my mortgage if I decide to sell one house and and buy another one?

If I’m looking at a fixed-rate mortgage, can I “blend and extend” it if base interest rates fall or if the available new interest rates are much higher when our term is up for renewal? (This means combining your term’s contractual fixed interest rate with the current market interest rate and extending the term at the blended rate. It’s also sometimes possible to blend and extend a mort-gage you are porting to a new property.) What is the fee for doing this?

22

Questions to ask yourself (Print and bring these questions with you)

Do you need an insured mortgage (that is, a mortgage with a down payment of less than 20 per cent)?

How large of a down payment are you prepared to put down?

How long would you like to take to pay off your mortgage?

Do you want the option to increase your payments and make lump-sum payments within the period of your term?

Are you more interested in a variable or a fixed-rate mortgage?

If you’re looking at a variable-rate mortgage, do you want the option to lock in to a fixed rate if the market takes a worrying turn?

Do you want the option to port your mortgage to a new property if you decide to sell and buy again, ten or fifteen years down the road?

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Coverage through term Life Insurance

• Life insurance through a term policy is based on you and your medical health only.

• You can select the amount of coverage payout.

• Changing employer or financial provider will not affect your policy.

• You can select a separate Disability policy to pay you a monthly income if you’re unable to work due to a disability. You have choices in the amount, waiting period and length of time it will be paid. Cost will be dependent on your choices.

• A life insurance payout (benefit) remains constant—it doesn’t decrease over the term of your policy.

• Life insurance is negotiated for a specific term and must be renegotiated at the end of that term.

• Life insurance can protect anything you want. Your mortgage, other debts, your final tax bill, your children’s education and care, income replacement and more.

Benefits of mortgage insurance and life insurance6 quick tips to save up for a down payment

Here are some basic rules of thumb:

Saving for a mortgage down payment

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Mortgage Creditor Insurance

• Mortgage creditor insurance doesn’t typically require a medical exam. If you have no health issues you can be auto approved immediately.

• You can select disability insurance as well which can be beneficial in making your payments for a few years if you’re unable to work due to a disability.

• A life insurance payout (benefit) goes directly to the bank to pay off your mortgage, leaving other insurance policies to be used by your family as needed.

• The premiums (payments) on most mortgage creditor insurance policies will renew and reset upon every mortgage renewal date, As long as you staywith the same mortgage provider your creditorinsurance will remain in place.

• Your premiums may increase based on your age, however they will be updated using the lower mortgage amount that is remaining and you won’t need to renew or re-qualify.

• If you refinance your mortgage with a higher amount you will need to re-qualify.

• Mortgage creditor insurance can be a good stop-gap solution. It is possible to get mortgage creditor insurance when you first buy a house, and then cancel it later if you decide you would prefer a separate policy that is not linked to your mortgage (such as a term life insurance policy).

A down payment of less than 20 per cent requires you to buy mortgage default insurance—this is called an insured mortgage.

A down payment of 20 per cent or more does not require mortgage default insurance—this is called an uninsured or “conventional” mortgage.

Many homeowners choose a fixed-rate mortgage to avoid the risk of an increased interest rate, however variable-rate mortgages are typically cheaper over the long run.

Pre-approval isn’t an all-out guarantee that a mortgage provider will fund your loan, but it’s as close to getting an all-out guarantee as you can get.

It’s a good idea to make an appointment with several banks and mortgage brokers to compare the interest rates and term options each one can offer you.

If you are a first time home buyer, you can use the Government of Canada’s Home Buyers’ Plan (HBP) and withdraw up to $25,000 from your RRSP, tax-free.

6 Prioritize your spending Pare down your material goods

Earn extra income Pay off your credit card debts first

Use the Government of Canada’s Home Buyers’ Plan (HBP) and withdraw up to $25,000 from your RRSP, tax-free.

Use a TFSA

1 2

3 4

5 6

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Mortgage Creditor Insurance

Coverage through term Life Insurance

Coverage through term Life Insurance

• Life insurance through a term policy is based on you and your medical health only.

• You can select the amount of coverage payout.

• Changing employer or financial provider will not affect your policy.

• You can select a separate Disability policy to pay you a monthly income if you’re unable to work due to a disability. You have choices in the amount, waiting period and length of time it will be paid. Cost will be dependent on your choices.

• A life insurance payout (benefit) remains constant—it doesn’t decrease over the term of your policy.

• Life insurance is negotiated for a specific term and must be renegotiated at the end of that term.

• Life insurance can protect anything you want. Your mortgage, other debts, your final tax bill, your children’s education and care, income replacement and more.

Benefits of mortgage insurance and life insurance6 quick tips to save up for a down payment

Here are some basic rules of thumb:

Saving for a mortgage down payment

24

Mortgage Creditor Insurance

• Mortgage creditor insurance doesn’t typically require a medical exam. If you have no health issues you can be auto approved immediately.

• You can select disability insurance as well which can be beneficial in making your payments for a few years if you’re unable to work due to a disability.

• A life insurance payout (benefit) goes directly to the bank to pay off your mortgage, leaving other insurance policies to be used by your family as needed.

• The premiums (payments) on most mortgage creditor insurance policies will renew and reset upon every mortgage renewal date, As long as you staywith the same mortgage provider your creditorinsurance will remain in place.

• Your premiums may increase based on your age, however they will be updated using the lower mortgage amount that is remaining and you won’t need to renew or re-qualify.

• If you refinance your mortgage with a higher amount you will need to re-qualify.

• Mortgage creditor insurance can be a good stop-gap solution. It is possible to get mortgage creditor insurance when you first buy a house, and then cancel it later if you decide you would prefer a separate policy that is not linked to your mortgage (such as a term life insurance policy).

A down payment of less than 20 per cent requires you to buy mortgage default insurance—this is called an insured mortgage.

A down payment of 20 per cent or more does not require mortgage default insurance—this is called an uninsured or “conventional” mortgage.

Many homeowners choose a fixed-rate mortgage to avoid the risk of an increased interest rate, however variable-rate mortgages are typically cheaper over the long run.

Pre-approval isn’t an all-out guarantee that a mortgage provider will fund your loan, but it’s as close to getting an all-out guarantee as you can get.

It’s a good idea to make an appointment with several banks and mortgage brokers to compare the interest rates and term options each one can offer you.

If you are a first time home buyer, you can use the Government of Canada’s Home Buyers’ Plan (HBP) and withdraw up to $25,000 from your RRSP, tax-free.

6 Prioritize your spending Pare down your material goods

Earn extra income Pay off your credit card debts first

Use the Government of Canada’s Home Buyers’ Plan (HBP) and withdraw up to $25,000 from your RRSP, tax-free.

Use a TFSA

1 2

3 4

5 6

23

Mortgage Creditor Insurance

Coverage through term Life Insurance

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Choosing the right builderIf you’ve chosen to build a new home, or you’re still considering all your options, here are a few important points to consider and question to ask.

What to look for in a home building company

4

Building your team

Questions to ask a home builder (Print and bring these questions with you)

How long has your company been in the business? How many houses has your company built?

Is your company a member of the Canadian Home Builders Association? (CHBA members have to abide by a Code of Ethics.)

If we build with your company, can we visit the worksite?

What customization options does your company offer?

Which of the seven approved companies in Alberta provides the warranty on your company’s houses?

What does your company’s after-sale service include?

What community developments (amenities, schools, recreation facilities, etc.) are planned or existing in the neighbourhoods where your company is currently selling new homes? Are these neighbourhoods walkable? What is public transit like?

May we tour one or more of your company’s model homes?

It’s best to go with a builder who makes home construction their primary business, not just something they do on the side.

Keep track of your customer service experience—are they being up-front about costs, timelines and other logistics? Are they interested in your needs—location, price, total area, storage space, yard size, number of bedrooms and bathrooms, accessibility?

Showhome offices are often directly adjacent to a number of other building companies’ offices. It’s a good idea to visit them all, ask lots of questions, tour the model homes, and make your decision based on everything you’ve seen, as well as any other research you’ve done. You don’t want a builder who makes you feel pressured to sign right away.

Check the building company’s online reviews to get an idea of overall customer satisfaction with the builder.

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Choosing the right builderIf you’ve chosen to build a new home, or you’re still considering all your options, here are a few important points to consider and question to ask.

What to look for in a home building company

4

Building your team

Questions to ask a home builder (Print and bring these questions with you)

How long has your company been in the business? How many houses has your company built?

Is your company a member of the Canadian Home Builders Association? (CHBA members have to abide by a Code of Ethics.)

If we build with your company, can we visit the worksite?

What customization options does your company offer?

Which of the seven approved companies in Alberta provides the warranty on your company’s houses?

What does your company’s after-sale service include?

What community developments (amenities, schools, recreation facilities, etc.) are planned or existing in the neighbourhoods where your company is currently selling new homes? Are these neighbourhoods walkable? What is public transit like?

May we tour one or more of your company’s model homes?

It’s best to go with a builder who makes home construction their primary business, not just something they do on the side.

Keep track of your customer service experience—are they being up-front about costs, timelines and other logistics? Are they interested in your needs—location, price, total area, storage space, yard size, number of bedrooms and bathrooms, accessibility?

Showhome offices are often directly adjacent to a number of other building companies’ offices. It’s a good idea to visit them all, ask lots of questions, tour the model homes, and make your decision based on everything you’ve seen, as well as any other research you’ve done. You don’t want a builder who makes you feel pressured to sign right away.

Check the building company’s online reviews to get an idea of overall customer satisfaction with the builder.

25

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Realtors—Finding the right fit FAQs—Frequently Asked Questions

A lawyer’s role in your home buying journey

• Yes. Unlike in some other provinces, where a notary is sufficient legal authority to oversee property transfers, in Alberta it’s mandatory to work with a lawyer when buying a home.

• In the most basic terms, a lawyer ensures the transfer of land from buyer to seller is legally enforce-able and binding. It’s the lawyer who takes on some of the risk you might otherwise assume.

• It’s a lawyer’s job to protect both the buyer and the seller from the time the offer is made until the time the deal is done.

• After the home inspection is passed, the lawyer initiates the two-week process for registering the transfer of land from the seller to buyer.

• One of the documents the lawyer will send you is called a Statement of Adjustments. This document summarizes (among other things) the total property tax owed for the year, the percentage of the property tax that the seller is responsible for and the percentage of the property tax you, the buyer, are responsible for in the year of the sale. Generally, the percentage of the property tax the buyer is responsible for is added to the sale price of the house and paid to the seller.

• The lawyer also facilitates the transfer of your down payment to the seller.

• Most real estate lawyers are happy to sit down with a potential client and discuss any questions before they actually launch into the legal process.

• You can expect to pay both your lawyer’s fee and your lawyer’s disbursements (costs a lawyer can’t avoid) such as courier fees, office administration fees, title insurance, and land title and mortgage registration. A lawyer’s fee might range from $600 and $1200, plus GST, while the disbursement costs might come to $400 or $500. All in all, you should be budgeting between $1500-$1700 for a lawyer’s services.

Who pays the realtor fee?Q

AThe home buyer doesn’t pay the realtor’s fee—the seller does. More specifically, both the selling and buying realtors’ fees are included in the sale price of the house and come out of the sum the seller receives.

What if my realtor is also working for the seller?Q

AIt’s wise to make sure a realtor you’re working with as a buyer isn’t also the realtor charged with selling a property you’re looking at. The incentive that realtor has to claim a double fee as both buying and selling realtor can become a conflict of interest.

How will I know which realtor is right for me?Q

AFinding the right realtor comes down to personality. Make sure you like the realtor you hire; make sure you get along. After all, for a few weeks, a home buyer and a realtor spend a lot of time together, looking at properties, talking on the phone, texting, etc.

Regardless of whether you’re working with a well-known realtor or someone relatively unknown, make sure they respect you, your budget and your lifestyle. A realtor isn’t there to bully you into buying a house that isn’t going to meet your needs.

Check a realtor’s reputation through online reviews. Most realtors are also active and accessible on social media.

Ask your friends or mortgage specialist— they may have worked with a great realtor they can recommend to you.

What happens once I find the right realtor for me?Q

AOnce you’ve found the right fit, you’ll sign a contract committing to working together. Basically, this contract represents your agreement to buy a house with this realtor as opposed to any other realtor.

Some realtors will also have clients sign an “exclusive buyer brokerage agreement form”. Be aware though, if you sign it, you will need to pay the realtor the named fee even if you decide to buy privately or through a different realtor.

What’s the main advantage to working with a realtor?Q

A Experience, expertise and insider knowledge.

How can a realtor help me?Q

APart of a realtor’s job is to help a home buyer understand the housing market—both the big picture (say, the Canadian market), and the little picture (say, the recent trends on one particular block of one street in an Edmonton neighbourhood)

In addition to their personal experience buying and selling houses, realtors have access to a database of all realtor-facilitated sales in Canada. A buyer working with a realtor can get specific information about the recent history of sales, property values and more in a given area.

Realtors also often have access to a whole team of lawyers and other professionals who are either employed by their firm, or whom they have a strong working relationship with.

Do I need a Lawyer?

What role does the lawyer play in the process of buying a home?

Can I meet with a lawyer before choosing to work with them?

How much does a lawyer typically cost when buying a home?

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A lawyer’s role in your home buying journey

• Yes. Unlike in some other provinces, where a notary is sufficient legal authority to oversee property transfers, in Alberta it’s mandatory to work with a lawyer when buying a home.

• In the most basic terms, a lawyer ensures the transfer of land from seller to buyer is legally enforce-able and binding. It’s the lawyer who takes on some of the risk you might otherwise assume.

• It’s a lawyer’s job to protect both the buyer and the seller from the time the offer is made until the time the deal is done.

• After the home inspection is passed, the lawyer initiates the two-week process for registering the transfer of land from the seller to buyer.

• One of the documents the lawyer will send you is called a Statement of Adjustments. This document summarizes (among other things) the total property tax owed for the year, the percentage of the property tax that the seller is responsible for and the percentage of the property tax you, the buyer, are responsible for in the year of the sale. Generally, the percentage of the property tax the buyer is responsible for is added to the sale price of the house and paid to the seller.

• The lawyer also facilitates the transfer of your down payment to the seller.

• Most real estate lawyers are happy to sit down with a potential client and discuss any questions before they actually launch into the legal process.

• You can expect to pay both your lawyer’s fee and your lawyer’s disbursements (costs a lawyer can’t avoid) such as courier fees, office administration fees, title insurance, and land title and mortgage registration. A lawyer’s fee might range from $600 and $1200, plus GST, while the disbursement costs might come to $400 or $500. All in all, you should be budgeting between $1500-$1700 for a lawyer’s services.

Do I need a Lawyer?

What role does the lawyer play in the process of buying a home?

Can I meet with a lawyer before choosing to work with them?

How much does a lawyer typically cost when buying a home?

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5

How to close the deal and take possession of your new homeIf everything goes smoothly, it usually takes about one month from the time a buyer makes an offer to the time they take possession and can move into their new home. Here’s what needs to happen within that time.

Your to-do list Make a conditional or unconditional offer

Conditional offer

• Most offers are conditional offers pending home inspection and final approval of the buyer’s mortgage. Other conditions may also be applied.

• With a conditional offer, if any of the stated conditions can’t be met, the buyer gets their full deposit back.

• Some real estate contracts will also have a 48-hour clause to remove all conditions if another offer is received. This is seen mainly when the offer is subject to the sale of the buyer’s existing house.

Unconditional offer

• Unconditional offers are both rare and risky. With an unconditional offer, if anything happens to compromise the deal before it closes, the buyer loses their deposit.

Retain a Lawyer

• It’s a lawyer’s job to protect both the buyer and the seller from the time the offer is made until the time the deal is done.

• Read more about why you need a lawyer and what role they play in the home buying process on page 28

Obtain final mortgage approval (conventional or insured)

• This takes about two weeks.

• If you have an insured mortgage, the insurance provider, as well as the bank, will have to provide approval.

• The approval process should be complete before any documents go to your lawyer.

Transfer the deposit

• The standard practice of transferring a deposit at the time a buyer makes an offer is basically a way to show the seller that you’re serious, and that you have access to your down payment money.

• When the seller accepts your offer, the seller is not legally allowed to sell the house to anyone else within the condition period.

• The deposit is not transferred to the seller directly. It goes to the real estate listing brokerage where it will be held until conditions are met. At that point, the whole sum of your deposit becomes part of your down payment and will appear on the lawyers disbursements when the mortgage funds.

Receive final approval, send documents to the lawyer

• After all conditions are removed from the purchase contract (inspection, financing, etc.) a waiver of conditions is provided to the buyer who gives this to their mortgage provider.

• The mortgage provider then completes the mortgage and sends mortgage documents to the lawyer.

• When the lawyer receives the documents, they’ll have you, the buyer, sign them, starting the two-week process of registering the transfer of land title. Once the transfer of land has been registered with Alberta Land Titles, you’ll be able to take possession and move in.

Purchase title insurance through lawyer

• Title insurance protects you from any legal issues that you are unaware of before you take possession of the house. For example, if it turns out the seller doesn’t legally own the house you’re buying (and therefore doesn’t have the authority to transfer ownership to you), title insurance protects you from assuming that liability. (Other legal issues might include renovations that the seller completed without appropriate permits in place, an illegal basement suite, etc.)

• As the name ‘title insurance’ suggests, this kind of coverage protects your claim to the title of the house you buy if anyone challenges that claim based on an issue that is rightfully the seller’s responsibility.

Get a home inspection

• A home inspection makes sure you, as a potential buyer, aren’t in for any surprises regarding the condition of the house.

Get a property appraisal

• Your mortgage provider will advise and order an appraisal if required.

• In the case of a conventional mortgage provided through a bank, the bank usually pays the appraisal fee up-front, then may or may not add the amount of the appraisal fee into a customer’s other closing costs. If a buyer has an insured mortgage through a bank, the mortgage insurer will pay the appraisal fee. A buyer who has gone through a mortgage broker will have to pay the fee at the time of inspection.

• An appraisal fee for a property in an urban centre is usually around $250; in rural areas it’s likely to be closer to $450.

Transfer remainder of down payment to the seller and take possession

• Typically the seller will not allow you to move in until the funds have been received, but one of the provisions of title insurance should allow you to move in on the agreed-upon possession date, even if there is a delay in land registration.

29

30

5

How to close the deal and take possession of your new homeIf everything goes smoothly, it usually takes about one month from the time a buyer makes an offer to the time they take possession and can move into their new home. Here’s what needs to happen within that time.

Your to-do list Make a conditional or unconditional offer

Conditional offer

• Most offers are conditional offers pending home inspection and final approval of the buyer’s mortgage. Other conditions may also be applied.

• With a conditional offer, if any of the stated conditions can’t be met, the buyer gets their full deposit back.

• Some real estate contracts will also have a 48-hour clause to remove all conditions if another offer is received. This is seen mainly when the offer is subject to the sale of the buyer’s existing house.

Unconditional offer

• Unconditional offers are both rare and risky. With an unconditional offer, if anything happens to compromise the deal before it closes, the buyer loses their deposit.

Retain a Lawyer

• It’s a lawyer’s job to protect both the buyer and the seller from the time the offer is made until the time the deal is done.

• Read more about why you need a lawyer and what role they play in the home buying process on page 28

Obtain final mortgage approval (conventional or insured)

• This takes about two weeks.

• If you have an insured mortgage, the insurance provider, as well as the bank, will have to provide approval.

• The approval process should be complete before any documents go to your lawyer.

Transfer the deposit

• The standard practice of transferring a deposit at the time a buyer makes an offer is basically a way to show the seller that you’re serious, and that you have access to your down payment money.

• When the seller accepts your offer, the seller is not legally allowed to sell the house to anyone else within the condition period.

• The deposit is not transferred to the seller directly. It goes to the real estate listing brokerage where it will be held until conditions are met. At that point, the whole sum of your deposit becomes part of your down payment and will appear on the lawyers disbursements when the mortgage funds.

Receive final approval, send documents to the lawyer

• After all conditions are removed from the purchase contract (inspection, financing, etc.) a waiver of conditions is provided to the buyer who gives this to their mortgage provider.

• The mortgage provider then completes the mortgage and sends mortgage documents to the lawyer.

• When the lawyer receives the documents, they’ll have you, the buyer, sign them, starting the two-week process of registering the transfer of land title. Once the transfer of land has been registered with Alberta Land Titles, you’ll be able to take possession and move in.

Purchase title insurance through lawyer

• Title insurance protects you from any legal issues that you are unaware of before you take possession of the house. For example, if it turns out the seller doesn’t legally own the house you’re buying (and therefore doesn’t have the authority to transfer ownership to you), title insurance protects you from assuming that liability. (Other legal issues might include renovations that the seller completed without appropriate permits in place, an illegal basement suite, etc.)

• As the name ‘title insurance’ suggests, this kind of coverage protects your claim to the title of the house you buy if anyone challenges that claim based on an issue that is rightfully the seller’s responsibility.

Get a home inspection

• A home inspection makes sure you, as a potential buyer, aren’t in for any surprises regarding the condition of the house.

Get a property appraisal

• Your mortgage provider will advise and order an appraisal if required.

• In the case of a conventional mortgage provided through a bank, the bank usually pays the appraisal fee up-front, then may or may not add the amount of the appraisal fee into a customer’s other closing costs. If a buyer has an insured mortgage through a bank, the mortgage insurer will pay the appraisal fee. A buyer who has gone through a mortgage broker will have to pay the fee at the time of inspection.

• An appraisal fee for a property in an urban centre is usually around $250; in rural areas it’s likely to be closer to $450.

Transfer remainder of down payment to the seller and take possession

• Typically the seller will not allow you to move in until the funds have been received, but one of the provisions of title insurance should allow you to move in on the agreed-upon possession date, even if there is a delay in land registration.

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6

Making your new house your home

Now that you’ve officially taken possession of your new home, you’ll need to decide how you’re going to move out of your old home and into your new one—and there are a number of processes and costs to consider.

Moving: Costs and options

While moving costs may seem small compared to the purchase of a new home, it’s important to include these significant costs in your budget. This worksheet will help you compare moving costs and options to determine a balance that works for you.

While moving costs may seem small compared to the purchase of a new home, it’s important to include these significant costs in your budget. This worksheet will help you compare moving costs and options to determine a balance that works for you.

More costly options Cost saving options

Professional movers $ Pizza and beer for friends and family

$

Professional cleaners $ Cleaning supplies $

Service fees $ Service fees $

Mail forwarding $ Contacting important services to change your address yourself

$

Extra month’s rent $ Plan ahead and include buffer time to avoid paying an extra month’s rent

$

The cost of taking time off work

$ Plan ahead and include buffer time to avoid tak-ing time off work

$

Total $ Total $

32

• A simple and affordable option is to rent a moving trailer, call up a few friends and promise them the traditional meal of pizza and beer in exchange for their help.

• There is typically a fee associated with having services like internet and cable set up.

• Forwarding your mail with Canada Post (excluding parcels) to your new address for four or 12 months ranges from $55-$85.

• You’ll need to do a deep clean of your previous residence before you can start enjoying your new home. While washing walls, cleaning the oven and shampooing the carpets isn’t most people’s idea of a fun time; help from friends, family members or a professional cleaning service can lighten the load.

• The process of moving in to a new home is not a clean process. A professional cleaner can help make it feel new again.

• If you’re moving out of a rental, it’s often a good idea to pay an extra month’s rent. Even if you plan to be fully moved out during that month, you’ll have some extra time to move those last items and do a final cleaning.

• Moving can take a substantial amount of time and effort, especially if you opt for the do-it-yourself approach. You may need to take some time off work to settle into your new place, which means you may have to forgo income by giving up shifts or purchasing extra vacation days.

Moving your furniture and other belongings Moving your furniture and other belongings

Cleaning Extra month’s rent

The cost of taking time off work

Download Worksheet Download Worksheet

31

Download a fillable PDF that will make the calculations for you!

More costly options Cost saving options

6

Making your new house your home

Now that you’ve officially taken possession of your new home, you’ll need to decide how you’re going to move out of your old home and into your new one—and there are a number of processes and costs to consider.

Moving: Costs and options

While moving costs may seem small compared to the purchase of a new home, it’s important to include these significant costs in your budget. This worksheet will help you compare moving costs and options to determine a balance that works for you.

While moving costs may seem small compared to the purchase of a new home, it’s important to include these significant costs in your budget. This worksheet will help you compare moving costs and options to determine a balance that works for you.

More costly options Cost saving options

Professional movers $ Pizza and beer for friends and family

$

Professional cleaners $ Cleaning supplies $

Service fees $ Service fees $

Mail forwarding $ Contacting important services to change your address yourself

$

Extra month’s rent $ Plan ahead and include buffer time to avoid paying an extra month’s rent

$

The cost of taking time off work

$ Plan ahead and include buffer time to avoid tak-ing time off work

$

Total $ Total $

32

• A simple and affordable option is to rent a moving trailer, call up a few friends and promise them the traditional meal of pizza and beer in exchange for their help.

• There is typically a fee associated with having services like internet and cable set up.

• Forwarding your mail with Canada Post (excluding parcels) to your new address for four or 12 months ranges from $55-$85.

• You’ll need to do a deep clean of your previous residence before you can start enjoying your new home. While washing walls, cleaning the oven and shampooing the carpets isn’t most people’s idea of a fun time; help from friends, family members or a professional cleaning service can lighten the load.

• The process of moving in to a new home is not a clean process. A professional cleaner can help make it feel new again.

• If you’re moving out of a rental, it’s often a good idea to pay an extra month’s rent. Even if you plan to be fully moved out during that month, you’ll have some extra time to move those last items and do a final cleaning.

• Moving can take a substantial amount of time and effort, especially if you opt for the do-it-yourself approach. You may need to take some time off work to settle into your new place, which means you may have to forgo income by giving up shifts or purchasing extra vacation days.

Moving your furniture and other belongings Moving your furniture and other belongings

Cleaning Extra month’s rent

The cost of taking time off work

Download Worksheet Download Worksheet

31

Download a fillable PDF that will make the calculations for you!

More costly options Cost saving options

Turning your house into a home: Budgeting for furniture

Here are 5 tips to keep in mind when decorating your home and building your budget:

Furniture budget WorksheetDownload a fillable PDF that will make the calculations for you!

Download Worksheet Download Worksheet

Note your furniture budget at the top of the worksheet. When deciding on this number, consider how much you’re comfortable spending and the amount of new furniture you need. It might mean deciding to stick with the bare essentials like blinds and a couch right now.

Read through the list of items and record the number of each item you need in the Amount needed column.

Explore your options! When you find an item that you like, record the store name and price in the columns provided.

After you’ve compared your options, record the price under the Total cost column. Re-member to also record any delivery or set up costs.

Calculate the sum of all your furniture prices at the bottom of the Total cost column. Review your choices as needed to ensure you stay within your budget.

How to complete this checklist:

Step 1

Step 2

Step 3

Step 4

Step 5

A house isn’t much of a home if you’re living in a set of empty spaces separated by walls, so you’ll want to make sure you don’t buy a house that’s too big to fill. The total cost of furnish-ing your new home will depend on what furniture you already own and what your lifestyle needs are. If you’re not comfortable spending a lot on new furniture and decorating, look into purchasing second-hand furniture online. Many retail stores also offer returned, or slightly damaged furniture at a discounted price.

Whether you’re moving old furniture or buying new, make sure it will fit in the space before you commit to purchasing and/or moving it. This will likely involve a tedious process of pulling out a measuring tape and writing down every possible dimension of your new home, but it will save you the pain of returning or replacing furniture that doesn’t fit.

All you have to do is ask! Knowing what appliances are included in the purchase of your new home will help you accurately construct your budget.

Furnishing a house is exciting, but try not to make impulse buys or sudden decisions. Take the time to do your research and evaluate each of your options before you commit to a purchase. This will save you both money and buyer’s remorse. (The worksheet below can help you do this!)

Not sure where to start choosing a sofa or picking out a paint color that you won’t regret? Don’t worry, help is out there! Hiring a decorator will come at an additional cost, but they can help you through every step of the process from planning, to purchasing, to setting it up and putting it all together. If you’re looking for a less costly option, there are lots of free resources available online.

1. Don’t buy a house you can’t fill1

1. Check if the furniture will fit before you commit 2

1. Find out what furniture and appliances are included in the purchase of your new home 3

1. Investigate and compare your options 4

1. Ask for advice if you need it5

3433

Turning your house into a home: Budgeting for furniture

Here are 5 tips to keep in mind when decorating your home and building your budget:

Furniture budget WorksheetDownload a fillable PDF that will make the calculations for you!

Download Worksheet Download Worksheet

Note your furniture budget at the top of the worksheet. When deciding on this number, consider how much you’re comfortable spending and the amount of new furniture you need. It might mean deciding to stick with the bare essentials like blinds and a couch right now.

Read through the list of items and record the number of each item you need in the Amount needed column.

Explore your options! When you find an item that you like, record the store name and price in the columns provided.

After you’ve compared your options, record the price under the Total cost column. Re-member to also record any delivery or set up costs.

Calculate the sum of all your furniture prices at the bottom of the Total cost column. Review your choices as needed to ensure you stay within your budget.

How to complete this checklist:

Step 1

Step 2

Step 3

Step 4

Step 5

A house isn’t much of a home if you’re living in a set of empty spaces separated by walls, so you’ll want to make sure you don’t buy a house that’s too big to fill. The total cost of furnish-ing your new home will depend on what furniture you already own and what your lifestyle needs are. If you’re not comfortable spending a lot on new furniture and decorating, look into purchasing second-hand furniture online. Many retail stores also offer returned, or slightly damaged furniture at a discounted price.

Whether you’re moving old furniture or buying new, make sure it will fit in the space before you commit to purchasing and/or moving it. This will likely involve a tedious process of pulling out a measuring tape and writing down every possible dimension of your new home, but it will save you the pain of returning or replacing furniture that doesn’t fit.

All you have to do is ask! Knowing what appliances are included in the purchase of your new home will help you accurately construct your budget.

Furnishing a house is exciting, but try not to make impulse buys or sudden decisions. Take the time to do your research and evaluate each of your options before you commit to a purchase. This will save you both money and buyer’s remorse. (The worksheet below can help you do this!)

Not sure where to start choosing a sofa or picking out a paint color that you won’t regret? Don’t worry, help is out there! Hiring a decorator will come at an additional cost, but they can help you through every step of the process from planning, to purchasing, to setting it up and putting it all together. If you’re looking for a less costly option, there are lots of free resources available online.

1. Don’t buy a house you can’t fill1

1. Check if the furniture will fit before you commit 2

1. Find out what furniture and appliances are included in the purchase of your new home 3

1. Investigate and compare your options 4

1. Ask for advice if you need it5

3433