Buyers Hot Tips
Why should you choose the Jancsik’s to help you buy a home?
How do I find the right Realtor to work with?
The key word is right. While there’s no shortage of qualified agents to choose from, it’s important that you find the one who can fully understand you wants, needs, and individual tastes, and whose personal and professional judgment your respect. We have included a few guidelines about the kind of experience and service capabilities you should be looking for. Above all, look for someone who makes you feel comfortable and whose word you trust.
Getting started in your search
The first question you’re bound to ask is, “How much home can I afford?” That depends on a number of factors:
Your selected location. Are you set on a specific area? In town? A rural setting? Waterfront?
Your preferred type of home. Detached? Semi ? Duplex ? Cottage ? Farm ? 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 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, sellers 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 the realization that your dream house has 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 sales representative can meet your needs.
A part of deciding just what you can afford can be accomplished by meeting with your 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.
Being Pre-Approved for Financing
Most people buying a home need a mortgage. In the past, arranging a mortgage was often left to the very end, sometimes even after a home was bought, forcing buyers to scramble for financing. Today, lenders will pre-approve buyers for a mortgage amount, sometimes they’ll even do it over the phone or the Internet. It’s a no cost, no obligation way for you to find out what you can afford to buy based on how much you can afford to borrow. When getting pre-approved, see how long the rate commitment is good for. It differs from lender to lender. With a pre-approved mortgage, you can confidently negotiate the purchase price of a home, knowing the mortgage financing is arranged, subject to final appraisal and credit review.
Have You Been Qualified for a Mortgage?
When approving borrowers for a mortgage, lenders look at two factors, down payment and income. If the down payment is 25% or more, it’s a conventional mortgage. If not, it’s a high ratio mortgage requiring default insurance from Canada Mortgage and Housing Corporation or GE Capital Mortgage Insurance Canada. As for income, lenders look at two ratios.
One is the GDS, or Gross Debt Service Ratio. No more than 30% to 32% of borrower’s gross annual income should go to “mortgage expenses”, principal, interest, property taxes and heating costs (plus a portion of condominium maintenance fees where applicable). The second, is the TDS, or the Total Debt Service Ratio. This looks at the gross annual income needed for all debt payments including house, credit cards, personal loan payments and car loans. Depending on the lender, TDS payments should not exceed 37% to 42% of gross annual income.
The combined income of both spouses are usually considered, but usually not rental income. Armed with this information, buyers can search for homes that fit their budgets with the confidence that, when they find their dream home, they’ll have no problem getting the mortgage to close the deal.
What about Default Insurance
If you are applying for a high ratio mortgage, (exceeding 75% of the property’s value), it must be insured against default. Mortgage default insurance protects lenders by guaranteeing them the payment if you default on your payments, but you are still responsible for the debt. Borrowers must pay insurer 1.25% of the mortgage amount when the loan-to-value ratio is between 75% to 80%; 2% between 80% and 85%; 2.5% between 85% and 90%; and 3.75% between 90% and 95%. While the insurance premium can be paid up front on closing, it’s usually added to the amount borrowed. Be aware that this means you’re paying interest on the insurance premium.
When I start visiting properties, what should we be looking for the first time through?
When 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.
The property you choose will play a major role in your families life. It can be an excellent investment, of course, but more importantly, it should fit the way you really live, with space and features that appeal to everyone in the family.
As you look at each property, pay attention to these important considerations…………
How many bedrooms should you be considering?
As a rule of thumb, ask any questions you have about specific rooms, features, or functions. Pay particular attention to areas that you feel could become “problem” areas: additions, defects, areas that have been repaired. In most cases, we will be able to provide you with detailed Info on each property you see.
What should I mention about the homes we see?
There are many advantages to buying a resale home. You’ll see exactly what you are buying, the floor plan, the location, the neighborhood. Recreational facilities, schools, transportation, shopping and support services will be already established. You’ll also have an opportunity to negotiate for existing appliances, window coverings, central air conditioning and central vacuum equipment, light fixtures and other extras that you’d have to install in a new home.
It’s a good idea to protect yourself by making your offer conditional upon a satisfactory report from a qualified home inspector. Home inspectors examine the major systems in the house, plumbing, heating, electrical, plus the roof, windows, foundation and insulation. They’ll provide the Buyer with a detailed written report. If any major problem arises, at this time the buyer can decide not to go ahead with the purchase and get the deposit back.
When I’ve found the property I like, how do I make an offer?
When you’ve found that special property, you’ll probably feel excited and a bit nervous. We are ready to help you through this important time. With us, you’ll write an “Agreement of Purchase and Sale”….a written document that declares how much you will pay for the home provided that certain conditions are met. This is a legally binding contract that you will sign and date. Your offer will have a time limit for the seller to accept, reject, or make a counter-offer. If a counter-offer is made, you have time to respond. Often, offers go back and forth until accepted or one party decides to end negotiations.
Lawyers and Closing Costs!
Buying and selling real estate has become very specialized in the last few years. So when, you’re looking for a lawyer, make sure it’s a real estate lawyer, one who spends most of his time closing real estate deals.
Your real estate agent or banker can recommend several good lawyers.
Ask family, friends and neighbors for recommendations.
Never choose a real estate lawyer just because their fees are lowest.
As with any professional, quality and experience are the key to service, not just price. Besides the basic legal fees when buying a home, lawyers will charge for disbursements (out of pocket expenses like couriers, travel time, postage) plus GST. The adjustments include things like property and school taxes, condominium fees, utilities and rental income. You may also have charges for arranging a new mortgage and appraisal fees. Land transfer tax will also be charged and is based on the sale price of your home. For example, the land transfer tax for a $200,000 home would be an extra $1,725. For a resale home, set aside an extra 1 ½% to 2% of the purchase price to cover these additional costs. For a new home, the costs will be slightly more, closer to 2 ½% to 3% of the purchase price.
When the sold sign goes up on the Property.
There’s so much to remember…..what do I have to do?
We as your realtor will help you with many of the things and we will keep in close contact with you right through the closing period!
Here’s a partial closing list….
Remember to put your deed, survey, mortgage documents and any other paperwork from this transaction in a safe place.
Purchasing a home is easy once you put your plans into action.