Buying

Getting Started:

The first question you're bound to ask is, "How much can I afford?" and that depends on a number of factors;

Your selected location. Is your mind set on a specific area? Downtown? The suburbs? Or even a rural setting?

Your preferred type of home. Detached, semi, duplex, high-rise, linked, townhouse, new, or resale? There are a variety of home styles you will want to explore.

Your income. After all, it's not just the mortgage you have to take into account. There are property taxes, utilities, and in some cases condo or strata fees. As a general rule of thumb, your monthly home-carrying cost should not exceed 30-35% of your income.

Market conditions. Is it a buyer's, seller's or balanced market?

There are also additional costs to keep in mind. It's a good idea to work out exactly what you want and what you can afford before you begin the search. Be specific! After all, you don't want to suddenly come to realization that your dream house have come with a nightmare of bills and expenses. Stick to looking at houses in your price range. The more you've thought it out, the better your agent can meet your needs.

A part of deciding just what you can afford can be accomplished by meeting with you bank or a mortgage broker and negotiating a pre-approved mortgage. There are many types of mortgages and many different terms. Research all of your options. This ensures that there are no surprises once you're ready to make an offer.

Once you've figured out your monthly expenses and what you can afford, you can start your search. It could happen that the first home you see is the one you want, or you might look at home after home with none of them catching your interest. Rest assured, the home you're looking for is out there, and when you find it, you're ready to make an offer. If your offer is accepted, the next steps are closing the sale and moving into your new home.

Purchasing a home is easy once you put your places into action.

Your Buyer Team and Their Roles:

Agents
A real estate agent is a professional who can save you time and trouble.  And possibly even a lot of money.  You see, real estate agents have the home buying experience most people lack.  They know all of the steps and they are good negotiators who will work on your behalf.

An agent will:

• Fine-tune your wants/needs list
• Get special computer access to listing information
• Screen houses so as not to waste your time
• Arrange appointments
• Offer helpful advice about the neighbourhood

Introduce you to trusted contacts who should be on your team, such as mortgage brokers, lawyers, and home inspectors.  Above all, find a real estate agent who is a professional in the type of home you're looking for.  A country home professional may not be the urban market specialist you need.  And when speaking with your agent, be and clear as possible about your needs.

Contractors
If you've decided to do some renovations on your home to make it more sellable, it's time to look for a credible contractor.  Before anyone begins work on your home, it is important to do your homework.

1.    Ask for Referrals

• Your architect will make recommendations
• Your agent will offer some suggestions
• Contact friends or neighbours who have had similar work done
• Ask at your local builder supply store

When you're interviewing contractors, ensure their credibility.  Contact their references.  Ask to see some samples of the contractor's work and speak to his clients to ensure that they were satisfied with the prices, length of time in which the project was completed and overall, how the project was handled.  Also, check with your local Better Business Bureau.
Once you have the names of a few contractors that look promising arrange to get estimates from them.  By arranging for three quotes you'll get a good idea of the costs and quality of work.

When going over the project with your contractor, ensure that he understands your needs and your budget.  Each contractor will have a different idea on how to approach the work and they should inspect your home before giving an estimate.  If contractors are bidding based on an architects plans, be certain that they have detailed their approach to the job based on the drawings.
 

Making an Offer:

When it comes time to make an offer, you Real Estate Agent can provide current market information which will aid you in presenting your offer. Your Agent will communicate the offer, sometimes known as an Offer to Purchase, to the seller, or the seller's representative, on your behalf.  Sometimes there may be more than one offer on a property.  Your Agent will guide you through this process as smoothly and effortlessly as possible.

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

Acceptance Of Offer
Your Offer to Purchase will be presented at the earliest possible opportunity.  The seller may accept the offer, reject it, or submit a counter-offer.  The counter-offer could be in reference to any number of factors, including the closing date and/or the purchase price.  The offers may sometimes go back and forth until both parties have agreed upon an offer or until one or the other ends the negotiations.
 

Closing Costs:

Closing costs are a list of charges your lawyer presents to you on the closing date of your home.  Many people are surprised at the additional costs over and above the price of the home.  According to the CMHC and Genworth Financial you should have at least 1.5% of the purchase price for closing costs in addition to the down payment (have around 2.5% to be on the safe side).  The costs vary among provinces and cities.

Below you will find a brief explanation of these costs.  Please note these are some of the closing costs you may encounter depending on your specific situation.  Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.

Appraisal Fee Generally Required with New Homes
An appraisal provides the lender with a professional opinion of the market value of the property.  This cost is normally the responsibility of the and it can cost between $100 - $300.

Home Inspection Fee Generally Required with Resale Homes
A professional inspection of the home, top to bottom, is for the benefit of the buyer. A home inspection can cost anywhere from $300 - $400 and is well worth the investment.  When hiring a home inspector make sure the inspector has liability insurance just in case they overlook something.

Fire Insurance
Mortgage lenders require a certificate of fire insurance to be in place from the time you take possession of the home.  The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality. The cost can vary anywhere from $250-$600 annually for most properties.

Provincial Sales Tax on Mortgage Insurance
If your mortgage is insured, (CMHC or Genworth Financial), you will be required to pay the applicable taxes on the insurance premium on closing.  While the insurance premium can be added to the mortgage amount, the tax must be paid at closing.

Land Survey Fee or Title Insurance Fee
A recent survey of the property is usually required by lenders.  If one is not available the cost can range between $600 - $900 for a new survey.  In lieu of the survey most lenders today will accept title insurance which can cost considerably less.

Legal Costs and Disbursements
Lawyers and notaries charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting the various searches.
Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies.

Land Transfer Tax
Most provinces charge a land transfer tax payable by the purchaser. The amount varies depending on the province.  Land transfer tax is based on the purchase price.  First time home buyers purchasing a new home may be entitled to a refund.

New Home Warranty
In most provinces new homes are covered by a new home warranty program. The cost to the purchaser for this warranty.
 

Land Transfer Tax:

Buyers in most areas will have to add Land Transfer Taxes to their closing costs.

Land transfer taxes are a part of the process unless you live in Alberta, Saskatchewan, or rural Nova Scotia.  These taxes, levied on properties that are changing hands, are the responsibility of the buyer.  Depending on where you live, taxes can range from a half a per cent to two per cent of the total value of the property.

Many provinces have multi-tiered taxation systems that can sometimes be difficult to understand.  If you buy a property for $260,000 in Ontario, for example, .5 per cent is charged on the first $55,000, 1 per cent is charged on $55,000-$250,000, while the $250,000-$400,000 range is taxed at 1.5 per cent.  Your total tax bill? $2,375.00.

The following chart illustrates Land Transfer Taxes by province.

Ontario
Land Transfer Tax

• Up to $55,000 X .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