Home Buying

Monday, Jan. 04 2010 | Posted by: Surina | 2 comments

Your Mortgage

Find out about your mortgage options before you start looking. There's nothing more frustrating than falling in love with a home, only to find out you can’t afford it. Key Money

Pre-qualifying for a mortgage is the best way to find out how much you can afford. Your financial institution will look at your income, expenses and debt to determine how much they will lend you. Combine that amount with the money you have for a down payment, and that’s your budget.

Once you have pre-qualified, consider applying for a pre-approved loan. Then, when you find the home you want to buy, it will speed up the purchasing process. For more information about planning your mortgage, see Organizing Finances.

Want to get an idea of how much you can afford? Try our Mortgage Affordability Calculator for a quick estimate.

Mortgage options
Mortgages are available through a number of financial institutions; your bank is only one option. Shop around for competitive rates and options.

Down Payment

How much will you need for your initial investment in your new home? You'll need a combination of a down payment and closing costs.

The money that you pay up front for a house is the down payment. These payments typically range from 5 to 25% of the total value of the home. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own. deposit pig

While it is possible to buy a home with as little as 5% down, the amount of your down payment will determine whether you will have a conventional mortgage or an insured, high-ratio mortgage.

What's the difference?

Conventional mortgage: Your down payment is at least 25% of the purchase price.
High-ratio mortgage: Your down payment is less than 25% of the purchase price and must be insured by CMHC or GEMI. An insurance premium will apply.

Closing Costs
For high-ratio or insured mortgages, the mortgage provider requires the borrower to demonstrate his or her ability to cover closing costs in the amount of 1.5% of the value of the property. Closing costs can be as high as 3% of the value of the property being purchased and can vary widely depending on:

The property being purchased
Services required
Taxes
Applicable insurances
Whether the home is new or old
Closing dates affecting interest adjustments
The balances of any prepaid expenses

How Much Can You Afford?

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What amount should you establish for your monthly mortgage payments?

House hunting begins at home... with planning. Knowing your affordable price range will bring your house hunting into focus.

How much house you can afford depends on two things: how much you can afford for the monthly mortgage payment, and how much you can invest in the down payment. Monthly payments include the principal and interest on the mortgage loan and property taxes and insurance against fire and other hazards. These four costs are often abbreviated PITI.

The key items are the size of the down payment, the amount of the mortgage and the term – or length – of the loan.

Needs vs. Wants

What features do you want in a home? What features do you need in a home?

Looking for a new home can seem overwhelming at first. There are so many things to think about, so many choices, and often not enough time.

A small investment of time and effort right at the start can pay tremendous dividends. Take the time to organize your thoughts and think seriously about what sort of home you want before you start looking. It will simplify the process, save you time, and help lead you to the right home for you.

womanthinking Make sure that you talk to a REALTOR^® before you start your search to help you get organized, answer your questions, and also to raise important questions to ask yourself, such as:

Where do I want to live? (community/general area)
How much should I expect to spend on purchasing a home?
Are schools a factor?
Do I want an older home or a new one?
What style of home do I prefer? (ranch, colonial, split-level, multi-level, town home, condominium, multi-family, bungalow, other)
How much renovation and remodelling am I willing to do?
Is being close to public transportation important?
Do I have special physical requirements, such as wheel chair access?
Do I have pets to consider?
What sort of lot would I like? (small yard, large yard, fenced, garage, patio/deck, other buildings)
How many bedrooms do I need? How many would I like to have?
How many bathrooms do I need? How many would I like to have?
How big a house do I want? How many rooms? How many square feet?
What features are important? (air conditioning, carpeting, ceramic tile floors, hardwood floors, eat-in kitchen, separate dining room, formal living room, family room, den, library, basement, separate laundry room, fireplace, workshop, other)

Viewing Homes

What should you look for when viewing a home?

You pull up to the curb and there it is – the home of your dreams.

Calm down. Take a deep breath and start again. The hardest thing to do when looking for a home is to remain objective. It is easy to fall in love with a home's appearance, but it's very important to look beyond the window dressing.

Here are some things to consider when looking at a home:

General upkeep
First appearances do count. Is the home dirty and cluttered? Are the lawns uncut? Are the walls chipped and in need of paint? If the owner hasn't bothered to keep the house looking clean and attractive, what problems are lurking below the surface?

Water leaks
Water can do a lot of damage to a home. It rots wood, undermines foundations, and leads to mould and mildew. Reshingling a house, or repairing a cracked foundation to stop water leaks, can be extremely expensive.

It takes an expert eye to find most water leaks (which is why we recommend you have a house inspected before you buy). If you spot stains, bulges and other signs of water damage on ceilings or walls, make special note that there could be a problem.

Appliances and fixtures
Test the lights, faucets, toilets, furnace, air conditioning, and all major appliances that are to be included with the home. Make sure everything is working as it should.

Floors
Floors should be smooth, even, and solid. Soft springy sections, excessive squeaking, and unevenness are all indications that expensive repairs may be needed.

Doors and windows
Check that doors and windows fit snugly and operate smoothly. Look for flaked paint and loose caulking. Check for drafts.

Drainage
Walk around the yard looking for areas where water might collect. Soggy areas near the foundation indicate poor drainage.

Grout and caulking
If the grout and caulking around bathroom and kitchen tiles are loose and crumbling, there is a good chance water is finding its way into the wall or under the floor.
Structure
Structural
Look for deep cracks in the foundations or loose mortar and bricks.

Furnishings
If you are not planning to replace all of your furniture (and not many people are), make sure it will fit into the rooms of the new house. Be sure to bring a measuring tape. Rooms can be deceptive.

Storage space
Make sure your new house has enough storage space for all your belongings. And that means more than just your clothes. Think of all the things that need to find a home – tools, gardening equipment, old toys, sports equipment, and all those wedding presents that are still in their original boxes. Check the size of the closets, the attic, the basement, and the garage. Rule of thumb: there's never enough storage space.

Inspection
You should take a long hard look at a house before you put in an offer to protect yourself from disappointment down the road. But, nothing can replace the expert opinion of a qualified home inspector. Inspectors can spot problems that the average person would never find and they can usually advise you on how much it will cost to make the repairs. A home inspection can help you determine whether or not you are going to make an offer on a house, and if you decide to go ahead, just how much that offer is going to be.

Neighbourhoods

As Canadians, we’re fortunate to have livable cities, neat and attractive subdivisions, and neighbourhoods that are ideal places to live, work and play. When it comes to finding the right community for you, it's not so much a matter of finding a good community as picking the best of many.

Your REALTOR^® has a wealth of knowledge about the communities in their cities and towns. He or she can help you choose the one that is best suited to you and your family. neighbourhood

Here are just some of the things you may want to consider:

Environment
Ask your Realtor about any known environmental issues in the area. Check with neighbours and the local media about air, water, and soil quality. Environmental issues can be detrimental to your health and to property values.

Appearance
Explore the neighbourhood keeping an eye open for signs of neglect, such as overgrown lawns, tired and worn houses, and litter in yards and alleys. No matter how diligent you are at keeping your property in top shape, a run-down neighbourhood will drive your property value down.

Crime rate
Check with the local police department to find out if the home you are considering is in a safe neighbourhood. Police may be able to provide statistics regarding break-ins and other crimes.

Schools
If you have children, education is one of the most important considerations in finding a new home. Are there schools within walking distance or will your children have to take the bus? How do the local schools compare to other schools in the area? If your children need them, are there religious or special training educational facilities nearby?

Talking to neighbours with school-aged children can be helpful. In some areas school boards can provide important information to help you determine the quality of schooling in a particular neighbourhood or community.

Transportation
Convenient public transportation, good access roads, and major highways nearby can mean the difference between a pleasurable and not-so-pleasurable commute to work.

Amenities
Take a look around for all the amenities that you will need: shops, grocery stores, dry cleaners, restaurants, medical and dental offices, parks, and recreational facilities. Having a vibrant community with all the modern conveniences can make life a lot easier.

Property values
Property values are a pretty good indicator of how well a community is perceived. Your Realtor can tell you how property values have changed over the past few years and how they compare to equivalent communities in nearby areas.

Utilities and taxes
Avoid unpleasant surprises by finding out about municipal taxes and utility costs before you decide to purchase. Fees for water, electricity, cable TV, phone, and gas vary greatly by region.

Noise and nuisances
First impressions are not necessarily the most accurate impressions. It is a good idea to come back to the neighbourhood at different times of day and different days of the week. Listen for traffic noise, barking dogs, low-flying airplanes, and any other noises that could indicate problems.

Types of Home Ownership

What type of home ownership is right for you? There are three broad categories of home ownership:

1. Freehold
The owner owns the house and the grounds.

Freehold homes offer the most privacy and freedom of choice of any type of home. Homeowners are free to decorate and renovate as they please. They are also responsible for all the maintenance both indoors and out.

Freehold is the most common type of home ownership.

2. Condominium
The homeowner owns the unit and shares in ownership of common elements. Condominiums are usually apartment buildings, but also include townhouse developments and developments of detached buildings on private roads.

The homeowner is responsible for the interior area of the unit (everything from the plaster in). The condominium association is responsible for the up-keep of the exterior of the building, common interior elements (halls, elevators and parking garages, for example) and the grounds. All condominium owners pay a monthly fee to the condominium association to cover maintenance costs and common utility fees and taxes.

Condominiums often have strict rules regarding noise, use of common areas, and renovations to units. Condominium residents often enjoy less privacy than residents of detached homes.

Condominiums are usually less expensive than freehold houses.

3. Co-operative
Co-operatives (or co-ops) are similar to condominiums but instead of owning your unit, you own a share in the entire building or complex.

Co-op residents pay for maintenance and repairs through monthly fees and are subject to the rules and regulations of the co-op board.

If you decide to sell your shares and move out, the co-op board has the right to reject your prospective buyer.

Purchasing

Once you’ve found the home you’re interested in, it's time to make an offer. Deciding what to offer is one of the most difficult decisions to make. Offer too little and you stand a chance of losing the house (particularly in a seller's market). On the other hand, nobody wants to pay more for something than it's worth.

purchasing Your Realtor can help you enormously by showing you what comparable houses are selling for, helping you assess the condition of the house, and judging the type of competition you may face. Once you have decided on the price you are prepared to offer, the Realtor will draft the offer and explain the details to you.

Your Royal LePage Realtor will communicate the offer, sometimes known as an Offer to Purchase (a legal document specifying the offers terms and conditions) to the seller, or the seller's representative, on your behalf.

The offer can be firm or conditional.

Firm Offer to Purchase: usually preferable to the seller, because it means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.

Conditional Offer to Purchase: means that you have placed one or more conditions on the purchase, such as subject to home inspection, subject to financing, or subject to the sale of the buyer's existing home. The home is not sold until all the conditions have been met.

Making an Offer

When you’re making an offer to buy a home, there are six main elements to consider:

Price
The price you offer reflects your opinion of the value of the house and is determined by the condition of the property and local market factors. You can make any offer you like. It does not have to be the same as the seller's asking price.
Deposit
The deposit shows your good faith and will be applied against the purchase of the home when the sale closes. Your Royal LePage Realtor can advise you on an appropriate amount.
Terms
Include the total price offered and the financing details. You may arrange your own financing or ask to assume the seller's mortgage, especially if it has an attractive interest rate.
Conditions
Conditions are items that must be completed or fulfilled prior to an offer being concluded. These can include subject to home inspection, subject to you obtaining financing, or subject to you selling your existing property.
Inclusions and exclusions
Your offer may be contingent on certain items being either included or excluded in the sale. These might include appliances, fixtures, and decorative items, such as window coverings or mirrors.
Closing or possession date
The closing date is generally the day the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified (except in Manitoba and Quebec). In British Columbia the possession date is legally one to three days after closing.

Negotiating

Once your offer to purchase has been drafted, it will be presented to the seller as soon as possible. The seller can accept your offer, reject it, or make a counter offer.

Acceptance
An accepted offer means the seller has agreed to all the terms and conditions exactly as set forth in your offer to purchase. negotiate

Rejection
A rejected offer means the seller did not agree with any of the terms and conditions set forth in your offer to purchase.

Counter offer
A counter offer means the seller agrees with some of the terms and conditions of your offer, but not all of them.

The seller then makes a counter offer. The counter offer may change the price, the closing date, or add or delete conditions.

Once you have received a counter offer you have two choices. You can accept the new terms and conditions or reject them. If you reject them, you can choose to start the whole process over again.

Closing Day

What happens on closing day?

Closing day is the day you become the official owner of your home.
closing
Typically, you visit your lawyer's office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property, and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs.

Once the mortgage and the deed for the property are officially recorded, you become the official owner of the property and your lawyer will call you to pick up the keys to your new home.

Congratulations! You've just bought a home!

Costs

When you buy a home, you will be asked for a down payment, usually between 5 and 25% of the total price of the property. You might also have a number of other fees and expenses to pay.

Some of the most common expenses are listed below. These expenses may vary, depending on your area:

Expense	Paid
Mortgage application and appraisal fee	At time of application
House inspection (optional)	At time of application
Legal fees	Closing
Legal disbursements	Closing
Deed and/or mortgage registration	Closing
Property survey (sometimes provided by the seller)	Closing
Land Transfer Taxes by province	Closing
Property tax adjustments	Closing
Fuel adjustments	Closing
Mortgage insurance	Closing
Title insurance	Closing

Land Transfer Tax

Purchasers in most large Canadian centres can add Land Transfer Taxes to their list of closing costs. Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, Land Transfer Taxes (or property purchase taxes) are a basic fact of life.

Land Transfer Taxes, levied on properties changing hands, are the responsibility of the purchaser. Depending on where you live, the taxes can range from 0.5% to 2% of the total value of the property.

Many provinces have multi-tiered taxation systems and these can be complicated. If you purchase a property for $260,000 in Ontario, for example, 0.5% is charged on the first $55,000; 1% is charged on $55,000 to $250,000, and 1.5% is charged on $250,000 to $400,000.

Use the Land Transfer Tax Calculator to estimate the land transfer tax for your new property.

Ontario Land Transfer Tax

Up to $55,000 X 0.5% of total property value

From $55,000 to $250,000 X 1% of total property value

From $250,000 to $400,000 X 1.5% of total property value

From $400,000 up X 2% of total property value

Posted in: For Buyers

Comments

Vuptfxfl on Sat Dec 13 2008 at 10:07 am

Thanks!,

cialis eli lilly on Wed Jun 16 2010 at 5:33 pm

So why you do this?

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