SO....YOU THINK YOU'RE READY TO BUY A HOUSE You're finally ready to take the plunge and purchase your First House. Where do you start? First, speak to your Broker/lender to find out what you can afford and that will give both you and your realtor a starting point. Most realtors will want to be assured that you have been pre-approved. As this will be one of the most expensive purchases you will make in your lifetime take time and do your homework. Have your Broker/Lender clearly define the types of mortgage products offered, as a First Time Home Buyer you are probably on unfamiliar ground so have him/her explain clearly what is meant by Fixed Term, Variable/Adjustable Term and do they offer a combination of both as well as the difference between Open and Closed mortgages. Interest rates are important and will vary according to the mortgage product chosen. A fixed Term will have a higher interest rate but you will know exactly what your payments will be, depending on the term you have chosen, however, a Variable/Adjustable interest rate may appeal because of the lower rate but it will come with some risk depending on the volatility of the financial markets. The onus will be on you to follow the rate closely should you select this product. The good thing about this product is the fact that you can select to switch to a fixed rate later on should you decide to do so especially if rates appear to be on the rise.  What you need to know about the length of the amortization of your mortage is, the shorter the amortization period the higher the payment. Don't be too concerned about taking a longer amortization term as there are many ways you can reduce your amortization your own way. You can schedule your payments a number of ways, monthly, weekly, bi-weekly and accelerated. You can also pay down your mortgage quicker by making extra payments on principal each year or by taking advantage of an annual prepayment offered by many lending institutions to mortagees which can be 20% of the outstanding balance. This can impact greatly on the mortgage interest paid by you over the life of the mortgage. The most important thing for you to do is to select a payment with which you are most comforatble.  You should also enquire if you have a portable mortgage. If for some unforeseen occurrence such as a transfer etc. necessitate the need to sell, you are able to port (carry) your mortgage advantageous rate to your new home. Another thing you will need to know is what prepayment penalties await you should you sell your home before the term has expired, this of course would be subject to whether you have selected an Open or Closed Mortgage.  In some instances a down payment may not be required, this is where a Cash Back Program offered by Lenders comes into effect. Many financial institutions offer 1.5%-4.5% Cash Back incentives, which may be used for a down payment or to aid in closing costs. First Time Home Buyers are not always aware that there are several other costs involved in the purchase of a house other than the down payment. There are legal fees, property tax fees, water and sewerage, application and inspection fees as well as the purchase of property insurance, mortgage insurance and title insurance. If you have less than 20% down payment you will be required to pay Canada Mortgage and Housing Corp. or Genworth Canada a housing insurance premium. Also, if you are purchasing a home that has an oil fired furnace you may be required to top up the oil tank prior to closing or pay for what fuel remains in the tank. The same would apply for a wood burning/gas furnace or fireplace. Last, but certainly not least ask lots of questions and if you are not familiar with the terms being used by your Broker/Lender ask him/her to explain exactly what he/she means. They're in the mortgage business and sometimes forget that their bank Speak is unfamiliar to you. Most Brokers/Lenders would be only too happy to do so and will provide you with lots of printed information. Remember financial institutions are not all the same and they all want your business. The final decision is now in your hands with some new found knowledge you can move foward with confidence in the purchase of your new home.