The Buying Process

So….. you’re thinking that the time has come to experience home ownership and you’re ready to get ‘into the market’. Congratulations, you have made a very good decision! Historically, real estate has been a very good investment…..if done right. There are several things to consider when buying a home and below you will find a lot of useful information to help you get started. One of the most important considerations is determining if you will use a Realtor, and if so, which Realtor that will be!  Should you choose to work with our team you have our commitment of exceptional care and attention; a commitment to you that far outdoes our competition! Our team of highly-trained real estate professionals and support personnel are here to help you from start to finish!

Home ownership, is it right for you?

Buying a home is a huge financial commitment, not to mention the emotional side of such a commitment. The first step is to make sure that you are mentally prepared to take on not only the responsibility after the deal has closed and you own, but also the ups and downs that can occur during the buying process. Most importantly, make decisions based on knowledge. There are myriad of professionals out there that can help you make informed decisions and you should avail yourself to their expertise whenever you are in doubt.

Remember, once you have purchased your dream home there are a lot of responsibilities that comes along with it like maintenance, time and energy, financial commitments, to name a few. Be sure you are ready!

Are You Financially Ready?

In order to buy your new home you will likely need to get some additional financing by way of a mortgage. How much of a mortgage you qualify for is an important first step, as this amount will dictate the price range for you new house which will in turn dictate, to some degree, location, size, age etc.

The first things you will need to compute is your net worth, current monthly expenses and what your current monthly debt payments are. Your net worth is the amount left over once you’ve subtracted your total liabilities from your total assets. It will also give you a snapshot of your current financial situation and show you how much you can afford to put as a down payment.

You will need this information when you go and talk with the bank or a mortgage broker.

Also keep in mind that there will be additional closing, or upfront costs associated with your real estate purchase.

• Mortgage Loan Insurance Premium. If yours is a high-ratio mortgage (less than 20% down payment), your lender may need 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. Your mortgage lender may require that the property be appraised. The cost is usually between $250 and $350.
• 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.
• 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.
• Home Inspection Fee. A home inspection is a report on the condition of the home and generally costs around $400, depending on the complexities of the inspection.
• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. Property insurance must be in place on closing day.
• Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan.
• Water Tests. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
• Septic tank. If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase.
• Legal Fees and Disbursements. Must be paid upon closing.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.

What Home Fits Your Needs?

As mentioned earlier, once you have your budget sorted, now it is time to find the house that fits your needs and is within your budget constraints. Things to consider are:

• Size requirements. Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?
• Special features. Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs? Do you want special features to save energy, enhance indoor air quality and reduce environmental impact?
• Lifestyles and stages. Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement? Will you need a home that can accommodate different stages of life?

It is a wise person who looks out 5 to 10 years and buys a home that they can ‘grow into’ over that time period. The last thing most people want to do is start packing up to move in 2 years because the home they bought isn’t meeting their needs as time passes. Remember the budget, if you can’t afford it now, you probably won’t be able to in two years as you struggle to keep up with the payments and struggling to keep up will not make for an enjoyable home ownership experience!

The First 3 Rules of Real Estate – Location, Location, Location!

It’s repeated three times for emphasis, and so you will remember the phrase. It’s the number one, two and three rule in real estate, and it’s often the most overlooked rule. Buying a home in the wrong location is just simply, a bad idea! No matter what you do to the house, and how much money you spend, it will still be where it is, it’s attached to the land (which you also own!). When deciding on location here are the rules, use this information wisely!

Good locations Are:

• Within Top-Rated School Districts
• Close to Outdoor Recreation and Nature
• Homes with a View
• Near Entertainment and Shopping
• In Economically Stable Neighborhoods
• Near Public Transportation, Health Care and Jobs
• In the Center of the Block.

Bad locations, by their general nature, can often be easier to pinpoint:

Bad Locations Are:

• Next to Commercial / Industrial
• Near Railroad Tracks, Freeways or Under Flight Paths
• In Crime Ridden Neighborhoods
• Economically Depressed Run Down Areas
• Close to Hazards

Professionals – Who Ya Gonna Call?

Purchasing a home is probably the biggest investment you will ever make. Make decisions based on knowledge. There are myriad of professionals out there that can help you make informed decisions and you should avail yourself to their expertise whenever you are in doubt.

Here’s who to call:

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.
• Write an Offer of 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

If you haven’t already gone through the mortgage pre-qualification process, you will need to find a good lender to assist you during the purchasing process and for as long as you have your mortgage.

The Lawyer/Notary

You need a lawyer (or a notary) 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 it is a resale home or a brand new home — inspected by a knowledgeable and professional inspector.

The Insurance Broker

An insurance broker can help you with your insurance needs, including property insurance and mortgage life insurance. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so premiums may vary depending on its value.

The Appraiser

Having an independent appraisal done on a property before you make an offer is a good idea. It will tell you what the property is worth and help ensure that you are not paying too much. Your lender can also ask for a recognized appraisal in order to complete a mortgage loan.

Other services you may need;

• Surveyor
• Septic Inspector
• Water Inspector
• Municipal authorities (zoning and land use regulations)

Making an Offer to Purchase

So you and your REALTOR® have found the perfect home and it is time to make an offer. Your REALTOR® will sit down and discuss the Agreement of Purchase and Sale contract and the Terms and Conditions contained therein.

Any offer or agreement will typically include:

• Your legal name, the name of the vendor and the legal civic address of the property.
• The purchase price offered.
• The chattels that will be included in the purchase price (for example, window coverings, appliances). Whatever items in or around the home that you think are included in the sale should be specifically stated in your offer.
• The amount of deposit.
• The closing day (date you take possession of the home) — usually 30 to 60 days from the date of agreement. It can also be 90 days or longer. Generally, an Offer to Purchase obliges the purchaser to take possession of the house and property on a certain date. As of the closing date, the purchaser is responsible for taxes, utilities, repairs and maintenance.
• Request for a current land survey of the property.
• Length of time that the offer is open for acceptance. When you make an offer to purchase the Seller has a period of time (this can range from a few hours to a few days) to either accept, reject or counter your offer to purchase. If the time for acceptance passes with no repsonse, then the offer you’ve made is null and void.
• Any other conditions that go with the offer, including property inspection and approval of mortgage financing.

The process of making an offer, receiving a counter-offer and then revising it again is not uncommon. The whole process can seem like a roller coaster ride — exciting, but stressful. It’s all part of reaching a common ground of acceptable terms for you and the vendor (a win-win).

Adjustment, Completion and Possession Dates

Adjustment, Completion dates are the dates that the lawyers move the money in exchange for the registration of title in your name. Basically, you pay your money and in return you get a title for the property registered in your name and you own it! Sounds simple and usually it is! You will have to attend at your lawyer’s office to review and sign documents.

Possession day is the day when you finally achieve your goal — you get the keys, take legal possession and finally get to call the house your home!