Lisa Patel
Sales Representative
Royal LePage Signature Services Real Esate Inc.,Brokerage
http://www.summitproperty.ca/ |
1. Determining Home Ownership…..
Buying a home is the most expensive purchase in our lifetime and it requires thought and understanding of what you’re buying, how much it will really cost you and does it make sense financially.
The pros/cons to consider to home buying:
• Financial Security. If housing prices rise, your home can provide you with some financial security due to capital appreciation.
• Stability. Having a place of your own.
• Financial Stress. Coming up with the down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash, and can put considerable stress on your finances.
• Maintenance. Keeping your home in good shape requires time and money.
• Responsibility. You alone are responsible for payments, repairs and maintenance.
• Flexibility. You can decorate or renovate your home to meet your own family's personal tastes and needs.
2. Being financially Ready
So, you’ve decided that homeownership is right for you. Now you need to determine if you are financially ready to buy a house. How much house you can afford and the maximum home price that you should be considering.
It’s important to meet with a mortgage broker or personal banker and get pre-approved. This means that the lender will look at your finances to establish the amount of mortgage you can afford. At that time, the lender will give you a written confirmation or certificate for a fixed interest rate good for a specific period of time.
Some of the things you will need to have with you the first time you meet with a lender are:
• Your personal information, including identification such as your driver's license
• Details on your job, including confirmation of salary in the form of a letter from your employer
• Your sources of income
• Information and details on all bank accounts, loans and other debts
• Proof of financial assets
• Source and amount of down payment and deposit
• Proof of source of funds for the closing costs (these are usually between 1.5% and 4% of the purchase price)
3. Understanding How much will it really cost
Upfront Costs
Plan ahead for costs.
• Mortgage Loan Insurance Premium. If yours is a high-ratio mortgage (less than 20% down payment), your lender may need to get mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
• Appraisal Fee. Some lenders may require an appraisal fee, which would be at your own expense. The cost is usually between $250 and $350 and paid upon service delivered.
• Deposit. This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.
• Down Payment. With mortgage loan insurance from CMHC you can own your home with a minimum down payment of 5%. At least 20% of the purchase price is usually required for a conventional mortgage.
• Estoppel Certificate Fee (does not apply in Quebec). This applies if you are buying a condominium or strata unit and could cost up to $100.
• Home Inspection Fee. It’s recommends that you make a home inspection a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and costs around $500, depending on the inspection.
• Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax). You pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer to see what the current rates are.
• Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on.
• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
• Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.
If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your TDS Total Debt Service Ratio.
Other Costs
Besides up-front costs, there are other expenses to consider:
1. Appliances.
2. Gardening equipment.
3. Snow-clearing equipment.
4. Window treatments.
5. Decorating materials.
6. Hand tools.
7. Dehumidifier.
8. Moving Expenses.
9. Renovations or Repairs.
10. Service connection fees.
11. Condominium Fees.
4. LOCATION, LOCATION, LOCATION
Location, where you see yourself, what makes sense for you and your family. Think about the present and the future.
Things to consider:
• Size requirements. How many bedrooms, space for an office, garage 1 car or 2 car, etc….
• Special features.
• Lifestyles and stages. Planning on building on a family? Do you have teenagers that will move out? Are you close to retirement?
Determine lifestyle think about the next 5-10 years.
• Whether you want to live in a city, a town or in the countryside
• Where you work, how easy it will be to get there and the commuting costs
• Where your children will attend school and how they will get there
• Whether you need a safe walking area or recreational facilities such as a park nearby
• How close you would like to be to family and friends
Choices and styles of Homes:
Single-family Detached
A home containing one dwelling unit, which stands alone and sits on its own lot thereby offering a greater degree of privacy.
Semi-detached
A single-family home that is joined to another one by a common wall. It can offer many of the advantages of a single-family detached home and is usually less expensive to buy and maintain.
Duplex
Two single-family homes located one above the other in a building. Often, the owner lives in one unit and rents the other.
Row House or Townhouse
Many similar single-family homes, side-by-side, separated by common walls. They can be freehold, condominiums, or rental units. They offer less privacy than a single-family detached home but still provide a separate outdoor space. These homes can cost less to buy and maintain — but they can also be large, luxury units.
Stacked Townhouse
Usually consists of two-storey homes stacked one on top of the other in a row of four or more homes. The units may have more than one level. All units have direct access from the outside.
Link or Carriage Home
Houses joined by garages or carports which provide access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family detached homes.
Manufactured Home
A factory-built single-family home that is transported to your chosen location and placed on a foundation. The term manufactured home has replaced the term “mobile home.”
Modular Home
Also a factory-built single-family home constructed in compliance with local building codes. The home is typically shipped to a location in two or more sections and placed on a foundation.
Condominium
A condominium is a form of ownership, not a type of construction. Condominiums can be high-rise residential buildings, townhouse complexes, individual houses and low-rise residential buildings.
5. Professional Services
The Real Estate Agent
No one will play a more important role in helping you find a home than your real estate agent. Your real estate agent's job is to:
• Help you find the ideal home.
• Writing an offer for purchase
• Negotiate on your behalf to help you get the best possible deal.
• Provide you with important information about the community, help you arrange and coordinate a home inspection and essentially save you time, trouble and money.
The Lender or Mortgage Broker
Using your bank or a mortgage professional to find the right lender to get the right of mortgage.
The Lawyer
• You need a lawyer to protect your legal interests, such as ensuring the property you are thinking of buying does not have any building or statutory liens or charges or work or clean-up orders associated with it. He or she will review all contracts before you sign them, especially the Offer (or Agreement) to Purchase. Having a lawyer/notary involved in the process will give you peace of mind and ensure that things go as smoothly as possible.
The Home Inspector
You should consider having any home you are thinking of buying whether its new hoe or resale a good inspector is important and ensure they are knowledgeable and professional.
Every inspection should include a visual assessment of at least the following:
• Foundation
• Doors and windows
• Roof and exterior walls
• Attics
• Plumbing and electrical systems (where visible)
• Heating and air conditioning systems
• Ceilings, walls and floors
• Insulation (where visible)
• Ventilation
• Septic tanks, wells or sewer lines (if inspector is qualified)
• Any other buildings such as a detached garage
• The lot, including drainage away from buildings, slopes and natural vegetation
• Overall opinion of structural integrity of the buildings
• Common areas (in the case of a condominium/strata or co-operative)
7. Closing day!!!!
Get ready to move into your new home.
What happens on closing day:
• Your lender will provide the mortgage money to your lawyer.
• You must provide the balance of the purchase price to your lawyer along with the closing costs.
• Your lawyer pays the vendor, registers the home in your name and gives you the deed and the keys to your new home.
Hiring a Mover
It is now time to hire a mover. Friends or relatives may be able to recommend a professional moving company but don’t forget to ask the mover for references. Get an estimate on mover fees. Or if you are doing it yourself than its important to ensure you have the right moving equipment; boxes, renting a truck, moving vehicles, safely packing items.
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