|What Can You Afford?
Prepare For Your Move
Glossary Of Terms
|Whether a first-timer, or a seasoned relocator, you've decided it's time to invest in the great Canadian/American dream of property ownership. And whether this is the purchase of your first home or your tenth, there are a number of factors involved in the process that you should be either introduced to, or reminded about. The following information should help make you a confident expert!
Purchasing a home involves both one-time costs and ongoing monthly expenses. The largest one-time cost is the downpayment which usually represents between 5% and 25% of the property's total price. A number of typical one-time expenses are addressed in the Guide to Closing Costs. Other costs may include landscaping, redecorating, furnishings, appliances and repairs. Typical monthly costs of home ownership would include mortgage payments, maintenance, insurance, condo fees, property taxes and utilities.
The most certain way of determining your home-hunting price range ability is to discuss your particular situation with a mortgage expert. This resource will be able to take a look at your income, assets and liabilities, and give you, and your Realtor, the price range of property that you can afford. Your mortgage expert will answer your questions and help you determine which financing terms and options are right for you.
Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home. A few suggested local motgage experts are included on the Local Services page. If you are a first-time buyer be sure to ask your mortgage expert about the Ontario Home Ownership Savings Plan (OHOSP).
|The real estate market is continually changing. The nature of your experience, as a buyer in the marketplace, will be determined by the market conditions at the time. A Buyer's Market is one where the supply of homes on the market (inventory) exceeds demand. A Buyer's Market is characterised by a large inventory, homes on the market longer, and dropping prices. In a Buyer's Market purchasers have more to look at, can take more time shopping, and enjoy greater negotiating leverage.
A Seller's Market is one where the number of buyers exceeds the supply of homes, and is characterised by a small inventory, many buyers, homes selling quickly and as a result of multiple offers, and increasing prices. In a Seller's Market buyers may have to pay more and make quicker decisions. Conditional offers may be more often rejected. Aurora, and the Greater Toronto Area, has been experiencing a decidedly Seller's Market since the beginning of 1999.
A relationship with a full-time professional residential sales representative is your best way to find that ideal new home. Your agent can educate you in the home buying process, and locate all suitable properties through the MLS system, regularly monitoring the marketplace for new properties and notifying you immediately via telephone, fax or email. Your agent will make all arrangements to view selected properties, and help you to determine if you have found the right home by providing you with a CMA (Comparable Market Analysis) for the property.
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|Services Your Realtor Should Provide:
|Additional Services Your Realtor Should Provide:
- a thorough knowledge of neighborhoods, schools, and community facilities
- providing professional financing guidance and arranging mortgage preapproval
- informing you about the standard expenses associated with a home purchase
- disclosing any known material facts about properties viewed
- helping you successfully understand and navigate the offer process, ensuring that
the offer is professionaly prepared and promptly presented to the seller for
- providing you with information on the availability of related services such as
appraisals, home inspections, lawyers, surveyors, contractors, painters, etc.
- coordinating all of the details to ensure a smooth transaction
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|Your Offer's Major Components
|When you have found the right property, your Realtor will draft your offer, the major components of which include:
Your Offer to Purchase will be presented as soon as possible. The seller may accept the offer, reject it, or submit a counter-offer. The counter-offer may be in reference to the price, the closing date, or any number of variables. Offers can go back and forth until both parties have agreed, or one of the parties decides to end negotiations.
- Price - Depending on market conditions, your opinion of value and market
information provided by your Realtor, the price you offer may differ from the seller's asking price.
- Deposit - The deposit demonstrates your good faith and is applied against the
purchase of the home upon closing. Your Realtor can advise you on the appropriate amount.
- Terms - These include the price offered and any financing details.
- Conditions - Typical conditions include "subject to home inspection", "subject to securing financing", and "subject to the sale of a buyer's property".
- Inclusions and Exclusions - These might include appliances, window coverings,
and light fixtures.
- Closing and Possession Date - Generally, the day the title of the property is legally transferred and the transaction of funds finalize
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|Buying a home is one of the most important investment decisions you will make in your lifetime. As such, it makes sound financial sense to enlist the services of a qualified home inspection company to ensure that your new home does not come with some unpleasant surprises. A home inspection will determine the structural and mechanical soundness of the home. Your home inspector will identify existing and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required. Upon completion of the actual inspection, a report summarizing the inspector's findings is generally provided to the potential buyer.
Home Inspections By commissioning a home inspection prior to purchase, you're protecting both yourself and your investment, as well as buying a little peace-of-mind. Home inspection costs often range according to the size, age, and location of the home. Your Realtor should be able to refer you to a selection of reputable home inspection companies.
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|When you purchase your home, consider how you will protect your investment.
Most lenders insist on fire insurance coverage at least equal to the loan amount or the building value, whichever is less. You should also consider a homeowner's policy that combines fire insurance on the building and its contents with personal liability coverage.
Mortgage Life Insurance
When lenders refer to mortgage insurance, they're referring to coverage that's provided by CMHC or MICC for a high ratio mortgage (over 75% of purchase price). Mortgage Life Insurance (MLI) is inexpensive coverage on your life which protects your family or beneficiaries by paying off your outstanding mortgage in the event of your death.
Disability Insurance is important if your mortgage payments depend entirely, or in part,
on your income. Disability insurance provides replacement income if an accident or illness prevents you from working.
Job Loss Mortgage Insurance
Recently, insurance companies have started to offer Job Loss Mortgage Insurance. This insurance covers the mortgage payments in the event that you involuntarily lose your job.
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|Prepare For Your Move
|Print and use the Moving Checklist as a reminder of the things you need to do prior to
Book the movers. You can choose to have them pack everything, or just the breakables,
or you can pack everything yourself. It's a good idea to get estimates from several different moving companies.
If you own your present home:
If you rent your present home:
- Arrange to have your gas, water, and electric meters read on the day you leave and have bills forwarded to your new address.
- Have your oil tank read and filled before your sale closes, and provide a receipt to
your legal professional if required.
- If the water heater or furnace are rented, arrange for a transfer of the rental agreement
to the purchaser.
- Disconnect your telephone, cable TV, and water softener
At your "new" home:
- Give the necessary written notice to your landlord and make arrangements for the
return of any monies you have on deposit.
- Make arrangements for the gas and electric utilities, water softener, telephone and cable TV to be connected on the day the sale closes
- Get "Change of Address" cards from the post office and send out well before moving day.
- Have the post office forward your mail to your new address.
- Cancel any contracted services and pre-authorized cheques.
- Inform gardening, dry cleaning, garbage pick-up, newspapers, magazines, diaper and other home services. Arrange for service at your new address.
- Transfer trust and bank accounts and securities. Obtain a letter of introduction from
your current branch to help establish new accounts.
- Cancel or transfer social, athletic, civic, religious or business affiliations and memberships.
- Arrange for transfer of medical, dental, prescription and optical records.
- Change the address on your driver's license(s) effective the day of the move.
- Collect all items out for cleaning, repair or storage, eg. fur coats, dry cleaning.
- Make special arrangements for the moving of perishables, such as plants.
- Make special arrangements for the moving of your pets.
- Dispose safely of all flamable liquids as it is illegal for movers to carry them
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|Homebuyer's Glossary Of Terms
The actual number of years it will take to pay back your mortgage loan.
An estimate of the value of the property. Conducted for the purpose of mortgage lending,
by a certified appraiser. This appraisal is not to be confused with a building inspection.
Allows the buyer to take over the seller's mortgage on the property.
A mortgage that locks you into a specific payment schedule. A penalty usually applies if
you repay the loan in full before the end of a closed term.
A common payment among owners which is allocated to pay expenses.
A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less.
The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.
The difference between the home's selling value and the debts against it.
A mortgage that exceeds 75% of the home's appraised value. These mortgages must be insured for payment.
The value charged by the lender for the use of the lender's money, expressed as a percentage.
Land Transfer Tax, Deed Tax or Property Purchase Tax:
A fee paid to the municipal and/or provincial government for the transferring of property
from seller to buyer.
The end of the term, at which time you can pay off the mortgage or renew it.
The person or the financial institution that lends the money.
Applies to high-ratio mortgages. It protects the lender against loss if the borrower is
unable to repay the mortgage.
Mortgage Life Insurance:
Pays off the mortgage if the borrower dies.
Allows partial or full payment of the principal at any time, without penalty.
A mortgage option that enables borrowers to take their current mortgage with them to
another property, without penalty.
Qualifies you for a mortgage before you start shopping. You know exactly how much you
can spend and are free to make a "firm" offer when you find the right home.
Voluntary payments in addition to regular mortgage payments.
The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.
Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage.
Re-negotiating of a mortgage loan at the end of a term for a new term.
Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.
The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.
Legal ownership in a property.
A mortgage with fixed payments, but fluctuates with interest rates. The changing interest
rate determines how much of the payment goes towards the principal.
Vendor Take-back Mortgage:
When the seller provides some or all of the mortgage financing in order to sell the property.
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