A home is one of the biggest purchases that you will make in your lifetime. It can also be a confusing and time consuming experience. That's why it's important to enlist the services of someone who can help guide you through your purchase - a REALTOR®. A real estate professional understands the market, knows exactly what is available and can match your needs and budget to your new home efficiently and effectively.
Explaining the Process
A REALTOR® will not take it for granted that you know all the in's and out's of the buying/selling process. Instead, he or she will provide you with a full explanation of what to expect each step of the way in the home buying process. That's important so you're not faced with any surprises along the way. Everything from the amount of mortgage financing you can qualify for, to closing costs will be discussed with you.
Assessing Your Needs
One of the first questions a REALTOR® will ask is "Why are you moving?" A REALTOR® will also explore any time constraints you might have (perhaps imposed by the need to relocate for employment), your financial situation and any future plans.
A Plan to Find your Dream Home
A REALTOR® will help you identify what you want in your new residence. A pool? A garage? An extra room? A particular model of home? What about the neighbourhood? Proximity to schools and work? A REALTOR® will compare your needs, wants and budget with what is available on the market and make recommendations that save you time and effort. He or she will take you to view houses and help you assess their suitability and price. As an expert on a property, a REALTOR® can provide facts on the neighbourhoods, the cost of heating, the condition of the furnace and so on. In other words, he or she will work with you to achieve your "dream".
Access to Properties for Sale
Multiple Listing Service or MLS is an exclusive service accessible only through a REALTOR® and it can be a valuable tool. Through MLS, the details of a wide variety of listed properties are made available to the REALTOR® you work with. That can save you a tremendous amount of time and effort in your hunt for the right home.
Knowledge of Financing Options
REALTORS® have extensive knowledge of the financing choices available to home buyers and there are many of them. At your request, a REALTOR® will assist in evaluating mortgage options and obtaining financing for you at the most attractive prevailing rates and terms.
A Skilled Negotiator
REALTORS® are experienced in arranging fair deals. He or she will assist in negotiating an offer, acting as a mediator to head off potential conflicts between you and the seller, and draw up a legally binding agreement.
Closing the Deal
Closing is the point at which ownership and usually possession of the property is transferred from the seller to you. It takes place after the parties involved agree that all legal and financial obligations have been met. Your lawyer and your REALTOR® will do much of the work, and your REALTOR® will assist you as the process unfolds including:
- Making sure a copy of the signed Agreement of Purchase and Sale is sent to your lawyer right away. Your lawyer needs to see any conditions that exist, and the date you and the seller have agreed to close. The lawyer will ask you how you (and others involved in the purchase) want to be registered on the title to the property.
- Immediately begin satisfying any of the conditions of the agreement that require your action. These have definite dates attached to them and if you miss one you may have to arrange an extension or possibly risk losing the entire deal. As each condition is met, the REALTOR® will fill out a waiver form for signatures. Note that most lawyers won’t be doing many of the tasks they need to do for closing until the conditions are waived.
- Upon your direction and after the conditions have been met, sending all documents to your lawyer who will begin searching title to the property. This is an exercise of going back through government records to ensure a clear title that is transferable. Electronic registration and title insurance have significantly changed the way titles on properties are transferred.
- If you decide to have the home inspected, ensuring your offer contains a condition that the property passes inspection.
- Giving you a list of phone contact numbers for local utilities (hydro, gas, water) so you can contact the utilities and telephone and cable companies well in advance to arrange for services in your name.
- Reminding you well before closing to contact your insurance agent to arrange homeowner’s insurance coverage to become effective on the date of closing. Your agent can give you a “binder” letter, certifying coverage is in place. If you’re moving from your current owned (rather than rented) home to another, your agent will handle the homeowner’s insurance transfer for you.
REALTORS® have the education and expertise to help turn your dreams into reality.
First Time Home Buyers
As a first time buyer, you're likely to have many questions about selecting, financing and buying your first home. How do we start looking for a home? How much money will we require to purchase the home? How much will the mortgage payments be each month and can we afford it? How does the home buying process work and what can we expect along the way? These are just a few of the questions you're bound to have at the beginning of your exciting journey to buying your very first home!
A RE/MAX Sales Associate can provide the answers to your questions and walk you through the entire process, from viewing potential homes to making an offer to setting up mortgage financing. Although buying your first home can be overwhelming, you can be confident that your RE/MAX Sales Associate will be available to help you every step of the way. RE/MAX can make buying your first home simple and straightforward, eliminating any confusion and doubt and allowing you the opportunity to enjoy your first home, worry-free.
Just a 5% Down Payment?
The following is an excerpt from the Canada Mortgage and Housing Corporation website under the topic of "Mortgage Loan Insurance":
Get into your home sooner. Mortgage Loan Insurance helps you do it. Put as little as 5% down.
When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it.
Having mortgage loan insurance means that if you, the borrower; default on your mortgage, the lender is paid back by the insurer - CMHC or a private company1. With the risk of losing their money removed, lenders have the confidence to make mortgage loans of up to 95% of the purchase price of the home (subject to price ceilings).
That means your down payment can be as little as 5% of the house price. With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home.
What does mortgage loan insurance cost?
There are two components: an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00 and mortgage loan insurance premiums range from 0.5%-3.75% of the amount of your loan (additional charges may apply), depending on the size of the loan and the value of your home. The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments, or paid off in a lump sum at the time of purchase to save interest charges on the premium itself.
Where can mortgage loan insurance be obtained?
See your lender, who can obtain mortgage loan insurance from CMHC or private insurer.
CMHC will insure mortgages of up to 95% of the home's purchase price or the market value of the property, whichever is less. (Restrictions may apply. Contact your local lender.)
Both new and resale homes are eligible. Here are some of the criteria that must be met:
The home must be in Canada and must be your principal residence. Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can't be more than 32% of your gross household income (GDS ratio).
Your total debt load can't be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. For details, please contact CMHC or your local lender.
Right now, 3 million Canadians own homes with insured mortgages.
Ruth and Sidney lived in a rented Revelstoke home for seven years. When the landlord decided to sell the home, he offered the couple the first opportunity to buy it. While his price was fair, Ruth and Sidney didn't have a 25% down payment saved, so they couldn't qualify for a conventional mortgage.
While looking for other options, they found they could be eligible for mortgage loan insurance that would allow them to buy with as little as 5% down.
There are many costs that homebuyers incur, especially upon purchasing your first home that you should expect to pay. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.
Your largest cost at the beginning is your down payment. As a first time buyer, this would likely represent only 5 - 10% of the purchase price. However, you should be prepared to pay for additional costs, such as:
- Legal Fees & Disbursements
- GST and PST (if applicable)
- Property or Land Transfer Tax
- Adjustments (reimbursed to the vendor)
- Property Taxes
- Utility Payments
- Strata or Condominium Fees
- Estoppel certificate fee
- Survey Fee
- Home Inspection Fee
- Water quality and quantity certificate
- Appraisal Fee
- Mortgage broker's fee (if applicable)
- Mortgage Loan Insurance Premium (if less than 25% down)
- Mortgage Loan Insurance Application Fee (if less than 25% down)
- Moving Expenses
- Renovations and repairs
- Furniture, paint, carpeting, window coverings, etc.
- Service and Utility Hook-up Fees
- Property/Condominium Insurance
- Mortgage Application Fee
- Deed and/or Mortgage Registration Fee
Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include:
- Mortgage Payment
- Water and/or Sewer Payments
- Electricity and Gas Services
- Cable and Telephone Services
- Property Taxes
- Strata or Condo Fees
- Repair/maintenance Expenses
- Homeowner's Insurance
Making an OFFER
When you have found a home you are interested in buying, your RE/MAX Sales Associate will walk you through the process of drafting an offer to purchase. Your sales associate will communicate the offer to the seller or the seller's real estate agent for you. Some properties are in demand and you will not be the only interested party making an offer. Your RE/MAX Sales Associate will assist you in generating an offer that is reasonable and protects your interests using specified terms and conditions.
An offer can be drafted with or without conditions; an offer without conditions is known as a firm offer and one with conditions is known as a conditional offer. A conditional offer represents the party with the placement of certain conditions on the purchase. Some of these conditions could be "subject to financing approval", "subject to the strata council allowing pets", "subject to the buyer's house selling", "subject to an approved home inspection", among many others.
The seller may accept your initial offer, reject your offer or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, the closing date or any other items. Offers can be countered back and forth between the parties until one of you accepts or rejects, ending the negotiations.
There are many components of an offer that you should be aware of and understand. Your RE/MAX Sales Associate will answer your questions and explain the entire process to you so that you are comfortable with the steps involved.
- Terms: An offer includes certain "terms", which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller's mortgage (assumability).
- Inclusions and Exclusions: These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.
- Deposit: A deposit is provided from the buyer to the seller as a token of the buyer's assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Your RE/MAX Sales Associate can assist you in proposing a certain and appropriate amount for the deposit.
- Conditions: Items that are usually put in place to protect a party's interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes.
- Possession or Closing Date: This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.
- Purchase Price: This is the amount that the buyer is offering to pay for the property. The price is usually dependent on market conditions and may differ from the seller's current asking price.
Purchasing a home involves a lot of paperwork, most of which are contractual documents that will legally bind you to the numerous terms and conditions. For this reason it is important to have a good lawyer or notary public acting for you. Someone to protect your rights and interests.
Finding a Lawyer/Notary Public
If you don't have a lawyer or notary public, you can look for a referral from friends, family or business acquaintances. Look for someone with real estate experience and discuss their fee scales. Your RE/MAX Sales Associate can help you locate a reliable professional, whom you feel comfortable working with.
Lawyer's/Notary Public's Function
You will need a lawyer or notary public to process your purchase and ensure the terms are met:
1. the correct property is purchased
2. transfer title to your name(s)
3. ensure title is free and clear of prior owners encumbrances
4. your mortgage is registered properly on title
The legal process varies from province to province within Canada. Specifically, you will need to consult with your chosen legal professional and he/she will explain the process and the steps that need to be completed before you get the keys to your new home.
Your lawyer/notary public will prepare a "Statement of Adjustments" outlining all the financial aspects of your sale.
Legal Fees and Disbursements
The difference between legal fees and disbursements is analogous to the parts and labour you pay when fixing your car. Your RE/MAX Sales Associate can help you locate a reliable professional, whom you feel comfortable working with.