AM I READY TO BUY?
You can find out by asking yourself some questions:
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Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
- Do I have a good record of paying my bills?
- Do I have few outstanding long-term debts, like car payments?
- Do I have money saved to pay legal fees and a down payment?
- Do I have the ability to pay a mortgage every month, plus additional costs?
TALK TO A MORTGAGE SPECIALIST
If you answer "yes" to the questions above, you may be ready to buy your own home. I would suggest that before you go any further, you call your bank and ask for an appointment with a Mortgage Specialist. He/she will answer all of your financial questions and help you determine which financing terms and options are right for you.
Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home.
It would be a good idea to talk to several banks and compare interest rates etc.
**It would be a good idea to talk with several banks and compare their rates and options. It is often possible to negotiate a lower rate than you may be first offered. This makes some people feel uncomfortable but remember that even a small difference in your mortgage rate can mean thousands of dollars in interest over the period of your mortgage.
COSTS TO CONSIDER
** Some of these costs can vary. Please confirm prices by calling your lawyer, mortgage broker etc.
Down Payment: 5% or more is required as a down payment. A 10% down payment may be required depending on the Buyers employment, income and credit history. More than 20% down, no insurance premium is required.
Lawyer Fees: $800 - $1200 (Call several lawyers and compare quotes)
Disbursements: When your lawyer closes the purchase he/she will have to pay a variety of fees for you such as registering the deed and mortgage, building and tax certificates. This will vary by the home but will likely be $600-800.
Property Tax Adjustment: You may be required to have cash on hand to repay the vendors for taxes they have paid in advance depending on possession date and how the vendors pay their taxes. A good rule of thumb is to have enough money on hand to pay six months of taxes.
Land Transfer Tax: .5% for first $55,000 and then 1% from $55,000 to $250,000 of purchase price and 1.5% of any balance. i.e. $170,000 home would be $1425.
Title Insurance/Survey: If the house you are interested in does not have an up-to-date survey you may ask the seller to provide you with one or you may decide to get one yourself for $700-$1000. Some people choose to purchase title insurance rather than pay for a survey. This price varies but is a one-time payment of around $300.
CMHC: If your down payment is less than 25% of the purchase price of the home, the mortgage will require insurance from CMHC. This fee is usually added to the mortgage but ranges from .5% of the mortgage value to 3.75% depending on the size of the down payment. Talk to your mortgage specialist for more details.
Deposit: When making an offer it is necessary to make a small deposit to show your good faith. It will be deducted from the purchase price of the property when the deal closes but will be cashed when the offer is accepted and held in a trust account at the real estate office until the closing date. The amount varies depending on the price of the house but is usually about $1000.
Home Insurance: You will have to arrange insurance on the property before possession. The annual rate for a basic policy varies but runs approximately $400-$700. (Call several insurance companies and compare quotes).
Home Inspection: Before you buy a property, it is a good idea to have it inspected by a qualified professional property inspector. The home inspection takes 2-3 hours to complete and you will be provided with a very detailed report. This charge will vary but is about $300 - $400.
Service Charges: You'll be charged a fee to hook up new services and utilities, such as your telephone and cable.
Condominium Purchase: There are some special costs involved with a condominium purchase. For example, you will want a Status Certificate, which includes all important documents concerning the financial affairs of the condominium corporation, as well as the by-laws and the rules that owners are required to abide by. The Status certificate costs $100 plus photocopying. Also, a condominium owner pays a monthly maintenance fee to the condominium corporation. This fee will be apportioned between the seller and the buyer as of the date of closing.
Rural/Recreational Properties: There are a number of issues that must be looked into by buyers of rural/recreational properties. They include water quality and quantity, the condition of the septic system, road access, and availability and cost of municipal services (e.g. garbage collection, schools, bussing, road maintenance). All such issues need to be investigated fully at the time of purchase. Some of these investigations will cost money. For example, you may be required to pay a fee for the water quality and quantity tests. Also, if you wish to have a professional assessment of the condition of the septic system, there will be a fee.
UNDERSTANDING MARKET CONDITIONS
The real estate market is always changing. It helps to understand how market conditions can affect your position as a buyer. We are currently experiencing a Seller's Market.
Buyer's Market:The supply of homes on the market exceeds demand. High inventory of homes. Few buyers compared to availability. Homes on the market longer. Prices tend to drop. More time to look for a home. More negotiating leverage.
Seller's Market:The number of buyers wanting homes exceeds the supply or number of homes on the market. Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually increase. May have to pay more. Make decisions quickly. Conditional offers may be rejected.
Balanced Market: The number of homes on the market is equal to the demand or number of buyers. Demand equals supply. Sellers accept reasonable offers. Homes sell within an acceptable time period. Prices generally stable. More relaxed atmosphere. Reasonable number of homes to choose from.
HOW TO MAKE AN OFFER
When it comes time to make an offer, I can provide current market information and will assist you in drafting your offer. This can be done any time including evenings and weekends.
Whenever possible, I will present and explain the offer in person to the seller, or the seller's representative, on your behalf. Sometimes there may be more than one offer on a property coming in at the same time. I can guide you through this process.
WORKING WITH ME AS YOUR REAL ESTATE AGENT
I am happy to answer all of your real estate questions and will be available anytime you need me. I can be reached by cell phone at 519-270-7177.
I am an expert at the entire home purchasing process and can advise you of your legal and financial options as well as recommend lawyers, home inspectors and mortgage specialists. I can give you information on local real estate values, taxes, utility costs, services and amenities. I am an experienced negotiator and will draft and present your offers and explain any counter offers.
I do not earn an hourly wage. I am paid a commission (usually by the seller) when I sell a house. For this reason, it is important for you to decide which real estate agent you will be working with fairly early on in the purchasing process. You may want to spend some time with me to determine whether or not you like working with me but it is then important to make a decision and stick with one agent. That way the agent that works hard for you will be paid for their time.
Feel free to attend open houses hosted by other agents but when you walk in tell them that you are already working with another agent. If you decide you want to make an offer, please give me a call and I will put one together immediately.
If you see a sign or an advertisement by another agent and you would like to know more about it or have a look at the house, give me a call and I will get answers to all of your questions about the listing and/or set up an appointment to see it. I am able to get information about and show you any houses listed on the MLS.
If you see a house listed privately but would still like to work with me as your agent, give me the details and I will see if I am able to negotiate a commission from the seller. In the case of a private sale where the seller is not willing to pay a commission, another alternative is for you to pay me a pre-arranged fee for acting on your behalf.
I hope this answers some of your questions. If I have missed anything, please do not hesitate to ask!
Please contact me if I can help you buy or sell a house!!
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Articles
Preparing to Buy
Step 1: Is Homeownership Right for You?
Step 2: Are You Financially Ready?
Step 3: Which Home is Right for You?
Step 4: The Buying Process
Step 5: Now That You're a Homeowner
Words to Know When Buying a Home
User-Friendly Checklists and Worksheets
Afordable Housing Programs in Ontario
Your Realtor Can Help
Moving with Kids
Moving with Pets
TD Mortgage Rates
Calculator and Tools
Learn About Mortgage Pre-Approval
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