(NC)—Buying your first home is an exciting new experience. Attending Open Houses, putting in an offer to buy and decorating your new home to suit your style is all part of the excitement. All the decisions that need to be made can also make you feel nervous. Here are a few tips that can help out the anxious first-time homebuyer.

How much can I afford?

There are two things to consider when determining how much home you can afford. How much do you have for your downpayment? What amount can you afford as a monthly payment while still enjoying life? . To help you answer these questions, you can either call your financial institution, visit their website or go to your branch and talk to your personal banker.

To shop for a home with confidence, you can obtain a pre-approval certificate from your Financial Institution. This document will tell you how much of a mortgage you can afford.

How Much Do I Need for my Downpayment?

You can buy a home for as little as 5% of the purchase price. However, any mortgage with a downpayment of less that 25% has to be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC). The amount of your downpayment will determine whether you need to insure your mortgage or not.

• Conventional Mortgage – a mortgage where you have at least 25% of the purchase price
  

• High-Ratio Mortgage – a mortgage where you have less than 25% of the purchase price
  

Your insurance premium will depend on the amount you are borrowing and on the percentage of your downpayment amount. Premiums usually vary between 1.25% and 3.75%.

How Can I Save for a Downpayment

There are a few different methods that can be used when saving for your downpayment

• Setting money aside each month just as if you had to make a monthly payment
  

• Opening a RRSP investment account. If you are a first-time homebuyer you and your spouse can use up to $20,000 each towards your dowpayment without tax implications as long as you repay the amount within 15 years.
  

• A cash gift from a parent or relative. ("gift" means its non-repayable)
  

Should I Be Aware of Any

Your mortgage will cover off the purchase price of your home, however there are other costs associated with buying a home. These are called hidden or closing costs and can usually amount to 1.5% to 3.5% of the total cost of your home. Here are a few examples of the hidden costs of home ownership and the costs associated with each.

Appraisal fee $150 – $200

Home inspection fee $300

Property survey $750 – $1,000

Land transfer tax $2,000

Legal fees $1,300 – 2,500

Sales tax 7%

Title insurance $250

Home Insurance $450/year

Also, don't forget to consider general expenses such as moving and home decorating costs.

Do you dream about owning your own home? CIBC has now made it easier for those entering the new world of home ownership. They have formed a partnership with Canadian Mortgage and Housing Corporation (CMHC) to provide valuable and informative services for the first-time homebuyer. For more information about finding out how much you can afford, setting up an RRSP, or simply reviewing your mortgage options, contact your CIBC personal banker or call 1 800 465-CIBC (2422).

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