YOU'RE BUYING A HOME!
A Sales Representative's Function
Determine the Buyer's criteria.
Assess potential properties for suitability; previewing them whenever possible.
Provide information on the property and surrounding area.
Search comparable properties currently listed or recently sold to determine fair market value.
Negotiate a price and terms for the purchase.
Connect the Buyer with supporting industry professionals (i.e.: lawyers, mortgage brokers, home inspectors, contractors, etc.)
Arrange any further inspections or appointments as necessary (i.e.: contractor quotes, home inspection, etc.)
Assist the Buyer with any needs leading up to and after the sale to ensure that their expectations are met.
Provide details of your property needs (price point, location, criteria, etc.)
Provide financial information.
Communicate your likes and dislikes on each property viewed to better determine your needs.
Commit to the salesperson.
Respect and perform the terms of the purchase agreement.
Working together as a team, with a professional REALTOR® you respect, should achieve the objectives you seek - the right home for you.
Establishing a Market Value
Market value is based on what others have been prepared to pay for a similar property, under the same market conditions after reasonable marketing exposure. Market value is a fair price for both buyer and seller. It is what is called an "arms length" deal, and that means that there were no influences other than the market influencing the deal. You may of course pay more than established market value if your desire for the property warrants it. Conversely, you should not expect to pay less than established market value unless the property is being sold under duress.
Qualifying For Your Mortgage
Once you've made up your mind to buy a home, the first question that comes to mind is, "How much can I afford?" The financial aspects of buying a home do not need to be confusing. We can arrange to have you pre-qualified for a loan before you start shopping. Most lending institutions will only allow approximately 30% of a person's income to support a mortgage. They will usually not allow more than approximately 40% of income to support a mortgage together with other debts. The amount of money you qualify for, plus the amount of cash you can put down, will equal the amount you can afford to spend on a home.
Determine What You Can Afford!
If you're thinking of buying a home, or transferring or refinancing your existing mortgage, you're going to like this handy mortgage calculator. Use it to help you determine:
How much you can afford to spend on a home purchase.
What your mortgage amount and payments will be and compare different ways of paying your mortgage off faster.
Whether you can transfer or refinance your mortgage.
What you can afford for home improvements or cash take-out on your home.
The Mortgage Process: Get pre-approved for your mortgage.
A pre-approval is a written commitment that you will get a mortgage for a set amount of money, at a specific rate of interest that is guaranteed for 60 to 120 days, depending on the financial organization you choose. The commitment is made subject to a financial assessment and property appraisal. The service is free and without obligation.
Why is it a good idea to get a pre-approved mortgage?
A pre-approved mortgage gives you an edge. Before you even go house hunting, you will know the size of your mortgage, the interest rate, and the size of your monthly mortgage payments. With your financing already mapped out, you can concentrate on finding the right home in your price range.
Although a pre-approval may still require that the home be appraised by the lender, a pre-approved mortgage will put you in a stronger bargaining position when you make an Offer to Purchase. We as your REALTORS® can assure the Seller that you are serious.
Making an Offer to Purchase
When you find the home that's right for you, your next step is to make an Offer to Purchase the home from the current owner. The owner can accept your offer, make changes to the offer and present you with a counter-offer, or reject the offer.
The Offer to Purchase
The Offer to Purchase is a legally binding agreement between you and the person selling the house. It sets out:
The seller's name.
The address and legal description of the property.
The price you are prepared to pay for the home.
The items you expect to be included in the purchase price.
The amount of your cash deposit.
Your financing arrangements, such as your mortgage.
The Closing date.
Specific terms or conditions that must be met as part of the purchase.
A time limit for meeting these conditions.
Ensure that your REALTOR® fully explains the Offer. Remember, it becomes a legally binding agreement the moment it is accepted. If you decide to cancel an offer that has already been accepted, you could lose your deposit and the person selling the home could sue you for damages. If the Seller does not accept your offer, your deposit will be returned in full and without deduction.
When your offer is accepted
Your offer has been accepted. Good. You're now in the home stretch - finalizing the details of your mortgage and closing the purchase of your new home. Call your assigned Mortgage Specialist. Your Mortgage Specialist will need to receive the following documents and information:
A copy of the real estate listing.
A copy of the accepted Agreement of Purchase and Sale.
Information on the source of your down payment.
A letter from your employer verifying your place of employment and income, or T4s and Notice of Assessment, or T1 General Tax Return and Notice of Assessment.
Income verification if you are self-employed.
If self-employed, 3 years of Financial Statements and 3 years of Notice of Assessments, or 3 years of T1 General Tax Returns and 3 years of Notice of Assessments.
Closing the Purchase
Closing day is the day you become the official owner of your home. However, the closing process usually takes a few days.
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 your mortgage and the deed for the property are officially recorded, you become the official owner of the property.
The total cost of buying a home involves not only the purchase price of the property, but also other costs that arise on closing the transaction. These expenses, incurred by the buyer, are necessary to complete the purchase but are outside of the purchase price for the property. According to the CMHC and Genworth Financial, you need to have between 2 - 2.5% of the purchase price for closing costs in addition to the down payment.
Fees, the types of services provided, and procedures required in the closing process will vary by provincial jurisdiction. Below is an example of these costs. They will vary depending on your situation.
Adjustments for realty taxes, fuel, utility bills and other charges that the seller has prepaid. The buyer will credit the seller with their proportional share.
Legal expenses/disbursements. The expenses are those involved in drafting the title deed, preparing the mortgage and conducting various searches. The disbursements are the out-of-pocket costs incurred during this process, such as supplies and searches.
Mortgage expenses including interest on assumed mortgages (calculated as part of the adjustments), any arranging costs, and registration of a new mortgage in the Land Registry or Land Titles Office.
House insurance for fire and other hazards, typically including liability coverage.
Cost of survey, zoning memorandum, tax certificate and other related matters based on provincial requirements.
HST: Most purchases of new housing requires the payment of HST on the purchase price, although a partial rebate is available. Most purchases of resale homes do not require the payment of HST, however, confirmation of this fact should be obtained. As a guideline, HST is payable on properties other than resale residential property, subject to certain exceptions. HST is also payable on lawyer's fees and most disbursements.
Land Transfer Tax. Most provinces charge this tax, although first-time buyers may be entitled to a refund.
Personal expenses, e.g., moving costs and purchase of household goods.
All Buyers should be aware of these extra costs before finding themselves legally bound to an agreement/contract and possibly find themselves unable to fulfill the financial terms. Various costs apply when selling a home, however, the Seller has the proceeds of the sale from which to pay them.
Be aware! Although you are pre-approved, your Lender can revisit your financial standing prior to closing day. So do not make any major purchases!
Buying a Home
For over 65 years, CMHC has helped millions of Canadians meet their housing needs. CMHC provides mortgage loan insurance that enables you to buy a home sooner with a minimum down payment of 5%. And CMHC is there with you every step of the way — with information before, during and after your home purchase.
Mortgage Loan Insurance
Buying a home is exciting — but it can also be challenging. With so many details to consider, how can you be confident you’re making the right decisions?
Canada Mortgage and Housing Corporation (CMHC) is there to help. CMHC offer you peace of mind, working with you to demystify all aspects of home buying to help you enjoy an informed and assured home buying and homeownership experience.
Maintaining a Home
For most Canadians, their home is their most important investment. It's where your family spends a lot of time, so keeping it healthy, well-tended and safe is important. A regular schedule of seasonal maintenance and repairs can help you protect your investment by putting a stop to the most common and costly problems before they occur.
Renovating a Home
Planning is the key to a successful renovation. To help you plan your renovation project, CMHC has information and easy-to-understand tips that can help you assess your requirements and learn the key questions before you get started.
Programs and Financial Assistance
Visit the CMHC website to obtain more information about the programs and financial assistance available:
Title Insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? Whether Title Insurance is right for you is something you should discuss with your lawyer, as it depends on the circumstances of your transaction.
Title is the legal term for ownership of property. Buyers want "good and marketable" title to a property - good title means title appropriate for the buyer's purposes; marketable title means title the buyer can convey to someone else. Prior to closing, public records are "searched" to determine the previous ownership of the property, as well as prior dealings related to it. The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects property that is free of such claims. For example, the Seller's mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.
Sometimes problems (or defects) regarding title are not discovered before closing, or are not remedied beforehand. Such defects can make the property less marketable when the Buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. Title Insurance is a cost-effective protection that shields homebuyers from many of the major risks that can affect the ownership and/or future marketability of title to a property.
A Title Insurance policy protects residential or commercial property owners and their lenders against losses related to the property's title or ownership: it protects against title defects or unknown claims on the property that can affect ownership rights. Title Insurance moves the risk associated with title from the Buyer, homeowner or lender, to the title insurer.
Title Insurance is typically purchased by homebuyers for a one-time fee at the time of closing; however it can also be purchased by existing homeowners (existing homeowner policies differ from those obtained at closing). Residential Title Insurance coverage usually lasts as long as the insured owns the property and coverage often extends to heirs, spouses (in the case of divorce), or to children (when property is transferred at a nominal cost).
Title Insurance can help ensure that a closing is not delayed due to defects in title. And, if an issue relating to title arises with respect to a risk covered under the policy, the Title Insurance covers the legal fees and expenses associated with defending the insured's title and pays in the event of loss.
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 tax) are a basic fact of life. These taxes, levied on properties that are changing hands, are the responsibility of the purchaser. Depending on where you live, taxes can range from 0.05% - 2% of the
total value of the property.
Many provinces have multi-tiered taxation systems that can prove complicated.
Land Transfer Tax formula in the Province of Ontario:
Up to $55,000 X .5 %
From $55,000 to $250,000 X 1 %
From $250,000 to $400,000 X 1.5 %
From $400,000 up X 2 %
As an example, if you purchase a property for $260,000, 0.5% is charged on the first $55,000 = $275.00, 1% is charged on the difference between $55,000 and $250,000 = $1950.00, while the final $10,000 difference falls in the $250,000 - $400,000 range and is taxed at 1.5% = $150.00. Your total tax bill? $2375.00.