Home Buying Guide

• Why use a realtor?
• Getting started
  • Make a wish list
  • Determine what you can afford
    • Down payment
    • Mortgage
    • Completion and other costs
• Mortgages & the Pre-Approval Process
  • Understanding mortgages
  • Get pre-approved
  • Where to get pre-approved
• Search for a house
  • Searching for a house
  • Accessing a house
• Offer & Completion
  • Negotiation and acceptance
  • Completion
  • Completion day
• Checklists
  • Home requirements
  • Home hunting
• Guides
  • completion costs
• Glossary

WHY USE A REALTOR?

Is it necessary to buy a house through a Realtor? Although you are not legally required to, why would you undertake such an important purchase without the help of an expert? My expert knowledge of the neighbourhood, future development plans, taxes, zoning, transportation, schools and community services will help you select the property that meets your needs. I will also advise you on financing options and recommend other professionals needed to complete the sale. You will be dealing with sellers and their agents, so you want to make sure you have someone who will represent and promote your interests. Read the RealtyLink article on How Realtors Earn Their Commission

I will:

• help you determine the type of property you need and can afford
• help you find available properties and make appointments to view them
• advise you about market conditions and provide information about the community
• explain the forms used in a real estate transaction and help you prepare an offer to purchase
• present your offer to the seller and negotiate on your behalf
• recommend other professionals, such as a certified home inspector or lawyer/notary
• help you understand agency relationships. For more information, RealtyLink provides an article on Understanding Agency Relationships With Your Realtor.

GETTING STARTED

Make a wish list

Before you begin shopping for a home, make a detailed "wish list" of what you need and want in a home. I will help you prioritize this list and suggest features that you may have overlooked. First, you need to decide upon a location. Think about factors such as school quality, crime rate and proximity to public transportation, shopping areas, work, parks, etc. You can research different communities in the Greater Vancouver area by following the links found in my Community Info section.

Second, you need to choose the type of housing you want (i.e. condominium or house; new or resale) and the amount of space you need.

Print the Home Requirements Checklist, fill it out, and contact me for a free consultation.

For more information, read the following RealtyLink articles:

• Finding a home that suits your lifestyle
• Old versus new - which house is best for you?

Determine what you can afford

Before you start looking for a home, I can assist in determining how much you can afford. The main home buying expenses are the down payment, the mortgage and the completion costs. Current interest rates will effect the amount you can afford. Contact me about the various homebuyer incentive programs that can assist you with your purchase.

• For more information, read the RealtyLink article Incentive programs are worth a second look

Down Payment

For a conventional mortgage, you will need to pay at least 25% of the purchase price as a down payment. However, if you qualify for the Canada Mortgage and Housing Corporation (CMHC) 5% down payment program you can get a high-ratio mortgage where you receive up to 95% financing.

Although your down payment can't be borrowed, gifts from friends or relatives are fine. You can borrow up to $20,000 from your RRSP if you are eligible.

Mortgage

Most people buying a home need to borrow a portion of the money from a bank or other lending institution. I can assist you in calculating how much you are eligible to borrow based on your income and level of debt. You can also use RealtyLinks' mortgage affordability calculator to determine how much you can afford.

Completion and Other Costs

There are additional costs involved in buying a home. These include mortgage insurance, taxes, legal fees, house insurance, inspection reports, appraisal and survey fees. If you are a first time homebuyer, you may be exempt from the Property Transfer Tax.

• For more information about the PTT, read the RealtyLink article Property Transfer Tax
• For more information about Completion Costs read the guide.

For more information on borrowing your down payment from your RRSP, please read the following article on the Home Buyers Plan.

MORTGAGES & the PRE-APPROVAL PROCESS

Understanding Mortgages

Before approaching lenders you should familiarize yourself with some basic mortgage concepts. You can start by reading my Glossary.

Get Pre-Approved

Pre-approval of a mortgage is when your lender has reviewed all your financial information and has determined the maximum amount of money you can borrow. The advantages to pre-approval include:

• You know how much you can borrow, so you don't waste time looking at properties you can't afford.
• You don't have to worry about rising interest rates while shopping for a home, as usually the mortgage broker will guarantee the current interest rate for 60 - 90 days.
• You have an edge when you make an offer, because the seller knows you're more likely to get a loan.
• You save time when you apply for your loan because you've already assembled your paperwork.

Where to get Pre-Approved

Many banks and financial institutions are competing for your business so it makes sense to shop around for a mortgage. Most lenders will reduce their posted interest rate so don't be shy about bargaining. Your ability to bargain for a low rate and a flexible mortgage will often depend on how much business you have with the institution. You can contact banks and credit unions directly, or work with a mortgage broker. I will help you find a lender and the best mortgage package.

Once you have selected your lender, you will need to provide your financial information. Your lender will want the following:

• Personal information such as number of dependents and marital status;
• Details of employment, including a letter from your employer verifying your salary;
• Banking and investment information;
• Details of your assets (i.e.- a car, other property);
• Information on loans and other liabilities;
• Permission to do a credit check.

Once your application is complete, you will know how much you can borrow and you will be ready to start searching for a home. For more information, contact me or your financial institution, or log onto the Canadian Mortgage and Housing Corporation and the Canadian Bankers Association web sites.

SEARCH FOR A HOUSE

When you begin your search, remember to compare each property according to your standards and your priorities as determined in your wish list. By investing time and thought in choosing your property, you can find a home with the most functional fit for your lifestyle.

Searching for a house

I will give you a list of properties for sale that fit your requirements and I will set-up appointments to view houses. You can also use MLS' All Listings search to find properties or the newspaper version, RealtyLink, for properties. Let me know about any properties you find in your search and I will gather additional information to provide you with greater detail on a property for sale.

Assessing a house

While you are visiting various homes for sale it's a good idea to make notes about each house you're seriously considering so you can remember the details about a property. Use my Home Hunting Checklist to help you keep track of your impressions.

When looking at a house you need to consider several factors:

• Exterior Condition - Examine the condition of the siding, roof, gutters, paint, chimneys, windows, decks and patios. Fixing up the exterior of a house, especially adding a new roof, can be expensive.
• Interior - Is it large enough? What's the condition of the bathroom(s) and kitchen? What kind of flooring is under the carpet? Do the rooms and hallways have sufficient lighting? Is there enough storage?
• Structural Problems - Uneven floors and large cracks can indicate problems. Examine the outside of the house and see if there is any visible sinking.
• Mechanical Systems - Find out the age of the heating, plumbing and electrical systems. Consider if you will have to update any of these systems.
• Energy Efficiency - Check to see if the house is insulated and whether the windows are single or double paned. Older houses with no insulation and single-pane windows have greater heating costs.
• Basement / Drainage - Check for leaks, cracks, water stains and mold in the basement. They could indicate poor outside drainage. Make sure there is adequate drainage around the house.
• Water Pressure - Turn on the taps or flush the toilet to make sure there is high water pressure.
• Pests - Ask whether there have been problems with insects or rodents. Is there evidence of damage?
• Neighbourhood - Look at the condition of the houses in the neighbourhood. Ask whether there are noise problems or unruly neighbours. How close is the property to schools, community centres, shopping and other amenities?
• Zoning - Ask your Realtor about the zoning for the property? Are there any restrictive covenants or easements?

For additional considerations for condominium buyers, read the RealtyLink article Finding a Sound and Solid Strata Property.

OFFER & COMPLETION

You've finally found the perfect home and are ready to make an offer. You and I will need to determine what price to offer and fill out a standard form called the Contract of Purchase and Sale. I will present your offer to the seller, who will accept, reject or make a counter-offer.

Negotiation and Acceptance

If your offer is accepted, you will still need to remove the subject clauses before the sale is finalized. If your offer is rejected, there is no deal and that is the end of the transaction. If the seller presents a counter-offer in which some of the terms are changed, you are then free to accept the counter-offer, reject it or make a counter-offer.

Completion

Once your offer is accepted you will need to carry out a number of steps and fulfill certain legal requirements before the completion of the transaction.

1. sPay the deposit amount you agreed to in the contract. This will be kept in trust and will become part of your down payment.
2. Have the home inspected. I recommend that you have your home inspected by a certified home inspector. I can provide you with a list of qualified inspectors.
3. Satisfy the conditions and subject clauses set out in the contract. For example, if you made the sale subject to a certified inspection, you will have to complete the inspection by the stated date. If the findings from the inspection report are not to your satisfaction, then the condition wasn't met and the contract will terminate.
4. Finalize your mortgage. You will need to send your lender a copy of the Contract of Purchase and Sale and an up-to-date land survey of the property. The lender will also arrange to have an appraisal of the property done.
5. Purchase Homeowners' Insurance.
6. Hire a lawyer or notary public. I will send your lawyer/notary a copy of the signed Contract of Purchase and Sale. Your lawyer/notary will:

• Search the title to make sure it is free of complications.
• Make sure the property taxes are up to date.
• Prepare all the documents to transfer ownership to you.
• Ensure that the seller's mortgage is discharged.
• Prepare a Statement of Adjustments showing the money you owe.
• Arrange for the transfer of money from your lender to the seller.
• Ensure you are registered as the owner in the Land Titles Office.

Completion Day

The Completion Day is the day you legally get ownership of the house. There are several things that will take place.

• Your bank will provide the mortgage money to your lawyer/notary.
• You must pay the balance owing, including the down payment, legal fees, property transfer taxes, and any other remaining completion costs. For more information read our Completion Costs Guide.
• Your lawyer/notary will pay the seller and register the home in your name with the Land Title Office.
• You will get the keys to your new home.

GUIDES

Completion Costs

GST - If you buy a newly constructed home, you must pay the 7% GST. However, if your house is less than $450,000 you may be eligible for a rebate. There is no GST on resale housing unless there have been substantial renovations to the property.

Property Transfer Tax - This tax is 1% on the first $200,000 of the sale price and 2% on the remainder. First-time buyers may be exempt from paying this tax.

Prepaid property taxes or utility bills - You will have to reimburse the sellers for any prepaid property taxes or utilities.

Mortgage loan insurance and application fee - If you get a high-ratio mortgage (a mortgage where you pay less than a 25% down payment) you will have to buy mortgage loan insurance from CMHC or a private company. If you qualify for a 5% down payment, CMHC charges an insurance fee that equals 3.75% of the mortgage. If you put 10% or 15% down, your insurance fees will decrease to 2.5% and 2% respectively. The insurance premium usually gets added to your mortgage.

You will also have to pay an application fee. CMHC's standard fee is $235. CMHC also offers a basic service for a $75 fee but it must be accompanied by an appraisal.

Appraisal - Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender covers this cost otherwise you are responsible for covering this cost. The fee ranges from $150 to $350.

Survey fee - Your lender may require an up-to-date survey of the property. If the seller did not provide you with one, you will have to pay to have one done. The fee ranges from $150 to $350.

Home Inspection fee - Most Realtors recommend that you get a home inspection by a certified home inspector. It will cost you from $150 to $350 for a smaller house. Large houses may cost more.

Legal fees - Lawyers/Notaries fees for closing the sale range according to the complexity of the deal but they will probably be at least $400.

Disbursements to Land Titles Office - These fees are approximately $300. Your lawyer/notary will arrange this payment.

GLOSSARY

A full glossary of real estate terminology can be found here.