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How to Buy a House in Alberta: Preparing Your Finances & Closing On Your Dream Home

Posted by Justin Havre on Thursday, May 2nd, 2024 at 3:48pm.

Buying a Home in Alberta

When considering buying a house in Alberta, the journey can seem daunting. However, it is also an exciting endeavour that leads to a new place to call home. From saving for a down payment to closing on your new home, it is important to understand the nuances of the Alberta real estate market. Whether you're just moving to Alberta or you're a longtime resident ready for homeownership, these tips will make buying a house easier than ever.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Key Takeaways

  • Save at least 20% for a down payment based on the property value.
  • Boost credit score to over 600 for better mortgage options.
  • Consider cities like Calgary and Edmonton for housing and job markets.
  • Work closely with professionals and comply with legal requirements.
  • Conduct a thorough home inspection and be prepared for 3-4% closing costs.

Save For a Down Payment

How to Save for Your Down Payment

When saving for a down payment in Alberta, it is important to consider the minimum percentages required based on the property value. This information will help you set a specific target for your savings goal. You should also determine if you will be using personal savings, gifts, or funds from your tax-free savings account to reach your down payment target. While there are differences between TFSAs, FHSAs, and RRSPs, they're all programs that can help you save.

Aiming to save at least 20% of the property value is advisable to avoid additional costs associated with mortgage default insurance. This higher down payment can also result in lower monthly mortgage payments and less interest paid over the life of the loan. By setting a clear savings goal and considering all available sources of funds, you can work towards achieving your dream of homeownership in Alberta.

CMHC Down Payments

To save for a down payment on a house in Alberta, consider utilizing various sources such as personal savings, investments, RRSPs, gifts, or down payment assistance programs as required by CMHC guidelines.

  • CMHC mandates a minimum 5% down payment for homes valued up to $500,000 in Alberta.
  • For homes valued between $500,000 and $999,999, the down payment percentage increases to 10% on the portion exceeding $500,000.
  • Properties priced at $1 million or more necessitate a minimum 20% down payment in Alberta.

Remember, CMHC mortgage insurance is compulsory for down payments of less than 20% to safeguard lenders in case of default.

Down Payment Assistance Programs in Alberta

Home-buying assistance programs in Alberta offer financial support, making homeownership more attainable for eligible individuals. These programs in Alberta can provide interest-free loans or grants, aiding in saving for a down payment. Eligibility criteria are set by the program, and include income thresholds and other requirements.

Assistance can range from a percentage of the purchase price to a specific dollar amount. The primary goal of these programs is to enhance accessibility and affordability for residents looking to purchase their first home in Alberta. By taking advantage of these programs, you can significantly reduce the financial burden associated with the initial down payment, making your dream of homeownership a reality.

Provincial & Federal down payment programs and savings accounts include:

  • Attainable Homes Calgary: This program offers affordable homeownership opportunities to Calgarians by providing a down payment and selling homes at a below-market value with a commitment to share equity gains upon resale.
  • First Place Home Ownership Program: Designed for first-time buyers in Edmonton, this initiative uses land set aside by the city to build and sell townhomes, offering favourable financing options to make homeownership more accessible.
  • Home Buyers' Plan: The HBP allows first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plans (RRSPs) tax-free to purchase or build a home.
  • First-Time Home Buyers' Tax Credit: This federal credit provides up to $750 in tax relief to first-time homebuyers to help cover the costs associated with purchasing a home.
  • GST/HST New Housing Rebate: This rebate allows individuals to recover a portion of the GST or the federal part of the HST paid for a new or substantially renovated house that is used as their primary place of residence.
  • First Home Savings Account: A tax-advantaged savings account allows Canadians to save up to $40,000 tax-free towards their first home, with contributions being tax-deductible and tax-free withdrawals for home purchases.

Boost Your Credit Over 600

Boosting your credit score over 600 is essential for securing a mortgage in Alberta. A good credit score influences homebuying by providing access to more lenders securing better interest rates. It's crucial to maintain a stable income to cover home expenses and increase your chances of qualifying for a mortgage.

If you're self-employed, having an emergency fund showcases financial stability to lenders. In cases where your credit score is less than ideal, Alberta private mortgage lenders specialize in assisting individuals with poor credit scores to secure a mortgage.

Choose the Best City For You

How to Choose Where to Live in Alberta

When deciding the best city for your new home in Alberta, consider options like Calgary, Edmonton, Chestermere, and Cochrane. Each city offers unique characteristics, from vibrant culture and diverse job opportunities in Calgary to lower living costs in Edmonton. Take time to explore these cities to find the one that aligns best with your lifestyle and preferences.

Calgary

Considered the largest city in Alberta, Calgary offers a wide range of housing options and a thriving economy with abundant job opportunities across various industries. The city's real estate market is dynamic, witnessing fluctuations in prices and inventory.

When buying a house in Calgary, key factors to consider include location, amenities, and future growth prospects. Collaborating with a local real estate agent familiar with the Calgary market can be advantageous for home buyers. Explore the diverse neighbourhoods, proximity to amenities and workplaces, school districts, and overall property values. Calgary's vibrant community and economic opportunities make it a compelling choice for those seeking a blend of urban living and career growth.

Edmonton

Edmonton is the capital city of Alberta and presents a diverse array of neighbourhoods and housing options for prospective buyers. The city offers relatively affordable housing compared to other major Canadian cities. With a strong job market, especially in industries like oil and gas, healthcare, and technology, Edmonton attracts a varied demographic of potential homeowners.

Comparing Edmonton to Calgary is challenging, since they're similarly sized cities in Alberta. To decide which is best for you, explore the different neighbourhoods, amenities, and proximity to work and schools to choose the best fit for your lifestyle. Considering these factors will help you make an informed decision in selecting a property in this bustling city.

Chestermere

If you're looking for a vibrant city with a strong community spirit and diverse housing options, moving to Chestermere could be perfect for you. Located just 15 minutes east of Calgary, Chestermere offers close access to urban amenities and a beautiful lake for recreational activities like boating, fishing, and swimming.

The city has seen significant population growth, making it an attractive location for homebuyers. Chestermere real estate includes a broad range of choices, including single-family homes, townhouses, and condos to suit various preferences. With its welcoming environment, a strong sense of community, and access to schools, parks, and shopping, Chestermere stands out as a desirable city for buying a house.

Cochrane

Nestled in Alberta, Cochrane stands out as a town renowned for its scenic beauty and proximity to Calgary. The Cochrane real estate market offers a variety of housing options, including single-family homes, townhouses, and condos.

Residents enjoy a vibrant community with parks, recreational facilities, and local businesses. Home prices vary based on location, size, and amenities, emphasizing the importance of researching and comparing options. When considering living in Cochrane, factor in aspects like commute to Calgary, school districts, and lifestyle preferences to find the best fit for your needs. Take advantage of the diverse housing choices and community offerings Cochrane presents to make an informed decision for your new home.

Find a Real Estate Agent

How to Choose a Real Estate Agent

To find a real estate agent in Alberta, consider contacting licensed professionals regulated by the Real Estate Council of Alberta (RECA) for expert guidance in navigating the housing market. These agents play a crucial role in helping you understand the market dynamics, whether it's a seller's market with high demand or a buyer's market with more options available.

They provide valuable insights into property values, neighbourhoods, and the overall home-buying process. Real estate agents assist in negotiations, handle paperwork, and ensure a smooth transaction for buyers. By choosing the right agent, you can significantly improve your chances of finding the perfect home in Alberta.

Their expertise and experience in the local market can be instrumental in guiding you through the complexities of purchasing a property, making the process more efficient and less stressful for you.

Make an Offer

When you've found a real estate agent in Alberta to guide you through the housing market, the next step is making an offer on a property by submitting a written document with specific terms and conditions to the seller. This offer usually includes the proposed purchase price, deposit amount, financing details, and any additional conditions you wish to include.

After you submit the offer, the seller has the option to accept, reject, or counter it, which may lead to further negotiations. Once both parties agree on the terms outlined in the offer, it transforms into a legally binding contract, known as the purchase agreement.

To ensure that your interests are protected and that the offer complies with legal requirements, it's crucial to have a real estate agent or lawyer review the document before submitting it to the seller. By taking this step, you can navigate the negotiation process smoothly and securely.

How to Close on a New Home

What's the Process of Closing on a Home?

Closing on a new home involves finalizing the purchase agreement with the seller, ensuring a smooth transfer of ownership. The process typically lasts 30 to 60 days in Alberta.

Before closing, it's advisable to conduct a home inspection to uncover any potential issues that could impact the purchase. Closing costs in Alberta generally range from 3-4% of the purchase price, covering expenses like lawyer fees and taxes.

It's crucial to engage a real estate lawyer during this phase to facilitate a seamless transition of property ownership. Ensure all terms and conditions of the purchase agreement are met, including financing details and any contingencies.

Stay in close communication with your real estate agent and legal representative to address any concerns promptly. By staying organized and diligent throughout the closing process, you can finalize the purchase smoothly and look forward to settling into your new home without any hitches.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Navigating the Home-Buying Process

With these tips in mind, you're ready to begin the home-buying process in Alberta. Remember that saving for a down payment and boosting your credit score is just the tip of the iceberg. There are so many nuances that go into buying a home, especially if it is your first home. Be sure to consult with a real estate agent to help guide you through the process and ensure a smooth transfer of ownership. Your new home awaits!

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