Questions to ask yourself.
Is now the right time?
The dream of home ownership gets propitiated throughout our society. Our media, our television shows, our family and friends can all put a lot of pressure on us to stop renting and buy a home. Buying a home can be a tremendously rewarding experience both in pride of ownership and wealth creation. But it is also a major commitment. Before you get too far in, there are a few things you should ask yourself. (And be honest answering.)
- Are you ready financially?
- If you’re buying your home with your partner or spouse, are you both on the same page?
- Are you happy in your career or would you like to have the flexibility to start over?
- Are you really ready to commit to the biggest investment of your life?
- Conversely, are you and your partner really ready to downsize?
The answers to these questions will give you a better idea of where you are from both a financial and emotional perspective. Because buying a home is really a journey and you should be as prepared as possible for it.
How much can I afford?
To get a rough idea of what the payments will look like for a given price point try the mortgage calculator provided here on our site.
Once you have a rough understanding, the next step is to get pre-qualified by a bank or a credit union.
We recommend reaching out to
Alex Roctus-Mortgage Broker
Alex is a seasoned pro who can quarterback the pre-qualification process and get you a hard number in terms of what you will need to have saved for a down payment and what purchase price you can finance within days of beginning the process. Once you have a hard number in place, the process of deciding where and what kind of home you would like to purchase is a lot easier.
What kind of home are you looking to purchase and where?
What kind of home do you want? There are many choices: townhome, condo, detached, home acreage and so on. Is there a specific community that you want to live in? Is community more important than the size of your home or do you need to have your little piece of heaven – one that you’re willing to commute farther in order to achieve it? Do you want to bounce some ideas off of us? Just pick up the phone and call. We welcome the opportunity to talk about real estate at anytime. We can connect on the phone, meet for coffee, come to your home or – if you prefer – we can meet at our office.
Now It’s time to for us to have a meeting, discuss your goals, and make a plan to view some homes!
We’re happy to meet with you where and when is most convenient for you. Give us a call and we can set up a time to review your goals, set up a search based on those goals and make arrangements to start viewing some properties. This process should be fun and we’ll endeavour to work around your schedule to arrange showings and make sure we find the right house for you. Sometimes it happens quickly; sometimes it takes a while to find that perfect home that’s just right for you. We’re here to help guide you through the entire process.
We found it! Let’s make an offer…
It’s the one you’ve been looking for! We’ll help you decide what price to offer the sellers and how much we should include as a deposit. We will discuss in detail what dates work best as well as what items you want included with the sale. We’ll then draft an offer with terms and conditions that protect your interests. We’ll also explain this document and all of the other paperwork in detail. Once you have signed the offer, we’ll present it to the seller’s agent. If the sellers choose to counter, we will help you understand what they are countering on and then help you decide the best strategy moving forward.
We do our best to ensure your offer is accepted but, sometimes, deals simply don’t come together. This can be a frustrating experience, but you can take heart in knowing that we’re on your side 100% and will do everything that we can to help you continue with your search.
Congratulations! Your offer has now been accepted. Chances are we still have conditions or “Subjects” on the offer. We’ll review the next steps with you in detail as every offer and every property is unique. There are a few things, though, that need to happen right away.
- We will send the accepted offer to your mortgage broker or contact at the bank you’re working with. While YOU may be pre-approved, the bank still needs to review the deal before they grant your financing.
- You will need to get a quote for home/fire insurance in place
- We will obtain all the pertinent documents: title search, property disclosure statements, site surveys, renovation permits (if applicable), sites surveys (if available), strata documents (if applicable). We will help you review these documents and, if everything looks good, it’s time to book a home inspection.
- If you don’t have a home inspector in mind, we would be happy to refer you to some excellent ones.
- Depending on how things go during the inspection, we may remove subjects as is, we may ask for a price reduction or we may decide there is too much work to be done and walk away and send the sellers a release. While walking away from a home you have fallen in love with can be very hard, sometimes it is the only prudent thing to do.
- If your home is on a septic field, it’s important to get a septic test done. Likewise, if the home is on well water, you should also get a water potability study done. Having grown up and helped build homes on acreages with both wells and septic systems and having helped many buyers and sellers navigate these systems as it pertains to the sale or purchase of their home, we are well equipped to guide you through this process.
Once we have done our due diligence and you are satisfied that all of your conditions have been met, it is time to remove subjects. We will draft the paperwork; you will need to obtain a certified cheque or bank draft for the amount agreed upon in the offer. The bank draft will be payable to Vybe Realty Ltd. It will sit in our brokerage’s trust account until the completion day at which point it will make up part of the purchase price.
Once we have removed subjects, we will need to declare a notary or lawyer as the conveyancer.
Well, you’re moving!
At this point it is official. You have bought a home! Tell everyone you know and start making arrangements to move. Rent a truck if you’re moving yourself or arrange to hire movers. Hire cleaners for your current home. This is also the time to start setting up and arranging your utility accounts (Internet, cable, hydro, gas, landline, etc)
About a week before the completion day (the day the title transfers from the previous owner’s name over to your name), the lawyer or notary will call you to come to their office and sign all of the conveyancing paperwork. They will explain everything to you in detail and answer any questions you may have.
We will meet you at your new home on the possession day and hand you the keys (Our favourite thing to do!)
Are you ready for this?
Get in touch with us and we’ll get to work for you!
Usually – wrong. A listing agent is better defined as “the agent working for the seller”. When the listing contract is signed the commission being paid by the seller to the listing firm is legally bound; therefore, generally speaking, the only entity that would benefit from working with the listing agent directly would be the agent working for the seller’s pocket. In addition, when the listing contract is signed it also creates a fiduciary responsibility between the agent working for the seller and the seller. What this means is that anything the agent working for the seller learns about you, they are required to disclose to the seller (unless you and the seller sign a dual agency agreement which basically makes the listing agent a messenger between the two parties). Simply put, if you work with the listing agent directly, you have no representation or advocate in your corner.
In most provinces, traditionally the seller agrees to the commission that will be paid to the agent that is working for them. From there, once the listing is posted publicly on the Multiple Listing System, the commission that the agent will pay to a cooperating broker is posted there. Essentially, this means that both buyer and seller agents are working for free until the deal is closed! The buyer will almost never write a cheque to pay a broker, and the agent working for the seller is paid out of the proceeds of the sale. For rentals, the way the market is right now, the tenant is usually charged a fee of one month’s rent that is often split between two cooperating brokers.
If you can put down 20% or more, this is called a conventional or low ratio mortgage and usually does not require mortgage protection insurance. if you are putting down less than 20%, this is a high ratio mortgage and will require that you pay extra for mortgage default insurance through Canada mortgage and housing corporation (CMHC), Genworth financial, or Canada guarantee. We recommend speaking with your financial institution or mortgage broker for further details.
It’s not necessarily a matter of “more” liability, it’s a matter of how it’s shared. With a single-family home, your homeowner’s insurance will be more expensive than a condo policy, and general maintenance and repairs are solely the owner’s responsibility, so there could be more work/additional cost associated with a single family home. A condominium spreads the liability and burden of maintenance and repair costs across all of the owners, and your condo insurance policy is generally less expensive as the strata’s master insurance covers a lot of the larger ticket items (roof, etc). It’s important to work with your agent and lender to understand the implications of each when deciding which is a better fit both financially and from a maintenance standpoint longterm.
Inspection – Inspection costs vary based on the area, size of the home, and the services the inspector is providing. For a standard home inspection, a buyer should budget $400-600. Of course, other inspections require additional fees, so if you’re thinking about a lead inspection or an additional pest inspection there will be an additional cost, and so on. Lender Costs/Fees (Appraisal, Credit Report, etc) – These fees are often lumped into your closing costs that are paid at the end of the transaction, but sometimes are charged up front. Expect to pay about $390 for an appraisal. Lawyer/Legal Fees – Real estate lawyers and notaries traditionally charge a flat fee and do not charge by the hour. A real estate lawyer that is able to work on behalf of your lender will often waive the personal representation fees on your behalf, as they will be compensated by the lender. Expect to pay about $1000-1200 for lawyer/notary fees. You will be required to pay a deposit once you have performed your due diligence (inspection, financing approval, etc) which is usually around 5% of the purchase price.
A solid pre-approval can certainly give you the leg up on competing offers, so it’s important to be ready when it comes to working with a lender. In short, your pre-approval is the lender saying you can afford “x” after taking a quick glance at your financial situation. The majority of lenders will have very similar rates; however, a local lender on the ground in the area you’re looking in will likely be more competitive and better-known amongst agents, which surprisingly can have an impact on the pre-approvals credibility. You’ll also want to consider access to your mortgage banker throughout the process – a big question to ask is whether they are available on weekends (and whether you will be able to access them via cell phone!). In order to be best prepared for getting pre-approved, begin compiling the following items: 1) Tax returns for the past two years 2) Pay stubs for at least three months. If you are changing jobs or relocating, a copy of your offer letter. You’ll want to talk to your lender about your career change prior to a preapproval, as it may impact your ability to obtain a loan 3) Bank statements for the past three months 4) Other asset/income statements, such as retirement accounts, or real estate leases if you own investment property 5) If obtaining money from a third-party (friend or family member), a gift letter, which your lender can help you with 6) An idea of your credit score and monthly debts – student loans, car loans, etc will be used to calculate your debt-to-income, an important factor in mortgage lending 7) If you have a mortgage already, a couple of months statements may be needed by your lender 8) If you are divorced, a copy of your divorce decree and documentation of any child support or alimony may be necessary Getting all of these items together in advance will help you and your lender be prepared. Many lenders, if given all of this information up front and authorized to pull your credit, will actually be able to pre-underwrite your loan, meaning that you will be approved as a buyer and they will simply need to “approve the home” via appraisal and if needed, a condo document review and verification of facts through a condo questionnaire. This can be a huge bonus and help you shine amongst multiple offers.
Our current market conditions are simply a function of supply and demand, because of this, there are often multiple buyers bidding on the same one property, which creates “the auction effect” – or a bidding war. At one of our recent listings, the scarcity of similar properties becoming available in the neighborhood lead to over a dozen offers being submitted, the majority over ask and a handful presenting as either all cash or boasting no contingencies. It’s not always the highest price that seals the deal, sometimes, other aspects of the offer add significant value to the seller. Limiting contingencies can lessen risk for sellers who are worried about their ability to buy their next place and adding a use & occupancy for a seller after leaseback might help with the timeline on their purchase or significantly increase their buying power. Oftentimes, when there are a number of offers on a property, the agent working for the seller will work with their client to narrow the field to 3-5 of the strongest offers and circle back to those buyers for a second round or “best and final”. This represents an opportunity for the seller to communicate their most desired terms and for the top offers to improve their position before the seller makes a final decision. In our market, there is often an emotional desire to “win” that overpowers the need to make a sound investment decision. It’s very important to discuss goals with your agent after signing a Buyer Agency Agreement in order that they make be able to effectively advise you while keeping your investment goals in mind to avoid making a decision that could negatively impact your financial future.
Assessment/Appraisal Difference We get asked all the time about the different values assigned to a property, and why they often seem to be so substantially far apart! Here’s a quick rundown: Market Value: Simply put, this is what a buyer is willing to pay for a property. A real estate professional will use their knowledge of the market as well as comparable market analysis to give a range of value for a specific property; however, there is both an art and a science to this process so each real estate professional may have a different opinion of value. Appraised Value: An appraisal takes place if there is financing being obtained on a home (or some other situation arises, such as for estate/probate purposes). Basically, a lender wants to be sure that the home is worth what the buyer is paying (and what they are lending), as they will be holding a mortgage on the home as collateral for their loan. Appraisers traditionally will create a radius around a property and select 5-6 comparable properties that have sold, and add or subtract value based on the finishes, overall condition, and basic specs of a property. If financing, it is important that the property appraises. If it does not, the lender may deny the loan. Assessed Value: An assessment is done for tax purposes. The city/town assessors’ office places a value on each property in the municipality each year in order to ascertain what the tax on each property should be.
This is a common question given the market that we work in. With rising prices all over the area, it can be daunting to think about making such a large investment. There are a couple of variables to consider here: 1. Interest Rates: As interest rates continue to rise, buying power decreases. The negative correlation of rising rates outweighs the impact of a market slowdown. When you look at the overall cost of interest rates rising, for every .5 rate increase, it represents an additional 5.5% that you’ll be paying each month. To put this into perspective – for a 30-year loan on a $500,000 purchase with 20% down, you’re looking at an additional $43,000 in mortgage payments over the term of the loan for each .5 rise. 2. Do you have something to sell? If you are planning to leverage equity from a current home, or need to sell before you will buy, keep in mind that should the market cool down, so does your investment. Talk to a mortgage professional sooner rather than later to discuss various scenarios for your next purchase.