Buying a Home

Congratulations! You have decided to purchase a home, or are thinking about buying one. You'll be joining the ranks of hundreds of families who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family. When you own your own home, your hard-earned dollars contribute to your mortgage, not a landlord's. The equity you earn is yours. Over time, your home will increase in value.

In this Home Buyer's Guide, you'll find the information you need to make a wise buying decision. We'll take you through the planning process step-by-step, to help you determine which home is right for you. You'll find a host of informative articles on mortgages, viewing homes, the offer, closing details and moving.

Step #1 - Before you Shop, Develop a Needs vs. Wants List

Everyone has a picture of their ideal home. This would include all the features you not only need, but have long desired. However, when it comes time to buying a home, the desires cost more. While it's nice to think about having a beautifully landscaped backyard, or a solarium, perhaps even some built-in appliances, these are usually considered luxury items, which can add considerably to the price of your home.

That's why it's a good idea to develop a needs and wants lists. With this list, begin with items you really need like adequate space, garage and number of bedrooms. For most people, basic needs should be considered first. After that, you could consider additional desires, if you can manage these benefits financially.

With such a list in your hands, you're less likely to be caught up in the excitement of the pursuit. You'll have a good idea of what you want, within you price range, and if you can afford those additional items.

Step #2 - Get Pre-approved Before You Start Shopping

It is very important to know exactly how much you qualify for before you begin to shop. It will give you a price range to shop in and also guarantee a rate for you for up to 120 days. Most importantly, you'll tell sellers that you are a serious prospect. Depending upon market conditions, a seller may lean towards an unconditional offer. You'll have less negotiating power if you have to wait for mortgage approval.

Banks and financial institutions have developed many programs especially for home buyers, be that first-time buyers or those with equity in their homes. Complete our online affordability calculator and apply with us to get an official pre-approval certificate.  

Step #3 - Choose Your Winning Team

Buying a home is a complicated process, with many people involved. From choosing the right mortgage, to finding a home inspector, to viewing available properties, there are many steps involved for even the hardiest person. We have developed a team of professionals who specialize in every area of the home buying process so you don't ever have to worry about what you may have missed. We have partnerships with mortgage brokers, lawyers, real estate agents, and more to make sure you receive everything you deserve! We understand that the home buying process can become very expensive so we have negotiated discounts with all our partners on almost every service along the way so you have a complete package at the best prices possible!

Step #4 - Viewing Homes

You've established your budget. You've been pre-approved for a mortgage. You've contacted a real estate agent to assist you with the purchase of a home. Now the fun begins!

You'll probably be looking at a few homes before you decide on the perfect one for your family. Before you decide to purchase that home you've absolutely fallen in love with, be sure to be objective in your decision. On appearance alone, the fireplace, the new flooring, paint job and new carpeting create a warm and inviting feeling. Yet, is the home really that perfect? Take a deep breath. Take some time to think about the bigger picture of the home in terms of your needs. Carefully consider whether this home offers the features that will last beyond the first impression. Here are some essential factors to consider:

• Location is a significant factor in your choice of home. An established community, with a good reputation, a low crime rate and well-maintained homes, maintains home values. A garbage dump, industrious buildings disposing bad odors and major freeways surrounding your neighborhood are unattractive and disruptive to a peaceful lifestyle.

• Consider availability to major roads and highways.

• Also consider the condition of public areas such as streets, sidewalks, parks and recreational facilities.

• Public services should also be established including street cleaning, snow removal, garbage collection, and emergency services.

• You'll also want convenient access to medical services including hospitals, doctors and dentists.

• If you have a young family, be sure that schools, and related school services, are also within easy access.

• Recreational, shopping and entertainment needs should also be considered.  

Step #5 - The Offer

When you have found the home you want, you will need to make a formal, written offer. This is called an "offer to purchase." This is a legally binding document which should be completed with due care and diligence. This document outlines what you, the buyer will give (a combination of price and terms) to the seller in exchange for the home.

It is highly recommended that a lawyer or real estate agent prepare the offer on your behalf. This will reduce any financial or time errors. Review the document before signing. If there is anything you don't understand, be sure to ask for clarification. Once signed, the document is binding and you could face consequences upon default.

An interested buyer will present an offer to your real estate agent through his or her agent. Your agent will discuss the offer with you, ensuring you understand all aspects. The offer should clearly outline all terms, conditions and details of the sale including:

• Buyer information. Seller information. This includes items (for both parties) such as name, legal and civic address of the property to be purchased.

• The purchase price.

• Inclusions in the purchase price (e.g. appliances, carpeting, fixtures, etc.) related to the original listing. List any additions or exclusions. Be sure there are no liens or payment dates due on these items.

• Detailed financial information: deposit amount, refund of interest on deposit, down payment and mortgage, etc.

• Closing date for the sale of the property

• If you are assuming the seller's mortgage, complete details of this obligation. If the mortgage is not being assumed, the owner needs to provide supporting documents, to show clear title (free of all encumbrances). Existing mortgages must be discharged with sale proceeds on closing.

• Possession date

• Any Conditions to sale, such as satisfactory home inspection, mortgage approval; sale of an existing home, etc.)

• Any work/obligations to be completed by seller between the closing date and the date of occupancy (e.g. repairs, painting, leaving the premises)

• Offer time frame. This is the period for which the offer is valid. The offer either expires or is up for re-negotiation on that date.

• A Real Property Report is mandatory by the financial institution for mortgage approval and by the lawyer or notary for transfer of ownership. This certificate indicates outdoor improvements, from the date of construction, such as decks, patios or pools.  

An Offer can be Conditional or Firm

When your offer is firm, then you are telling the seller you are willing to purchase the home without any conditions. Upon acceptance of the offer, you have purchased the home. This is a legally binding agreement. Upon default, if you are unable to close, you could lose your deposit and face legal consequences. Be sure to confirm your financial matters prior to signing any documents.

A conditional offer includes stipulations on the purchase. These could revolve around a home inspection, financing, or sale of your existing home. If any of these conditions are not met, then the home is not sold.

The Deposit

A sum of money, usually no larger than 3-5% of the purchase price, shows that you are serious about purchasing the home. This amount will be applied against the purchase of the home when the sale closes.

From Offer to Acceptance

Upon reviewing your offer, the seller can accept it as is, reject it, or return with a counter offer. A counter could be in regards to price, conditions, closing date or other variables. The offers will continue between the seller and the buyer, until both parties have come to some agreement, or one party stops the negotiations.

Once the offer meets with your approval, you'll want to secure the transaction with a deposit. This indicates your intention to proceed with the purchase. When you've accepted the offer, you'll proceed through the closing details until you move in.

Step #6 - Closing Day

Closing day is the day when all the parts of buying and selling a home come together. Each party's lawyer will have successfully completed the details required to ensure all legal aspects are covered. On this day, you'll take possession of the home, get the keys and perhaps even move in. It is also a busy time for the seller, as they will likely be in the midst of moving. However, before that day arrives, there are closing details to complete, to ensure the smooth transfer of the property.  

Lawyer Review

A lawyer represents your interests, and ensures that the legal documentation is properly completed. Your lawyer receives a copy of the offer. He or she reviews the conditions of the sale, the contract, and the information for title transfer and registration. Every condition on the offer must be met by closing date.

It is your lawyer's responsibility to search the title of the property (at the registry office) to ensure that the home is purchased without any legal problems, and there are no liens on the home or the personal property of the seller that forms part of the agreement.

Your lawyer also needs to contact the municipality for taxes, zoning compliance (permits, use, setbacks, pool, fencing, compliance with subdivision agreements, etc.) and public utilities (hydro, gas, etc.) within the time stated in the offer, to ensure that no taxes are outstanding and the home meets with established guidelines.

Preparing a statement of adjustment is also part of your lawyer's duties. This confirms the selling price, adjustments, and the balance (less the deposit you provided with the offer). The lending institution will also draw up a certified cheque for your lawyer, to be held in trust.

With the purchase price of a resale home, the closing is always "subject to usual adjustments." This means that any amount that the seller has already prepaid will be adjusted so that the home buyer pays the excess amount back to the seller, and vice versa. These adjustments can include: municipal property and school taxes, monthly condominium maintenance fees, first and last month's rental for rental properties that may be in the home, utilities, such as hydro and water including GST. Your lawyer will prepare a statement of these settlement charges.

Surveys and Inspections

Your lender requires an up-to-date land survey. This document records the location of the home on the lot, as prepared by a certified land surveyor. It records any changes to the exterior of the home since construction. Any additions such a deck or building additions could affect your taxes, property assessments and zoning restrictions.  

Inspections

If a home inspection was part of the conditions, that should be completed by the date specified in the contract. You should also be satisfied with the report, and any repairs requested as a result of the report results. If you were planning to purchase a resale car, you'd want to avoid the headaches of choosing a lemon. You'd most likely have it inspected by a mechanical service, or mechanic you know. 

When you're purchasing a home, why take a chance on unexpected headaches and money? You'll want to make a careful tour of the home, not only yourself, but with a professional inspector. Spending $400-600 is money well spent, as the inspector will conduct a thorough inspection of the home, and provide you with a report detailing any potential problems. Based on workmanship, average length of time for operating efficiency, the inspector can give you a good idea of the condition of mechanical items of the home, and repair costs down the road. An inspector won't pass or fail the home. Rather, he'll give you an unbiased opinion of its condition.

Financial Matters

Financial details should be finalized and ready for implementation on the closing date. 

Utility Services

Contact utility, cable and phone companies to ensure connections are in place on your moving day.

Insurance

Update your insurance policy so coverage begins on your new home and property upon closing. Your lawyer also needs a copy of the policy before closing.

Completing the Contract

On closing day your lawyer pays the vendor, registers the home in your name and delivers the title and keys. Be sure you have all the keys, including side door, garage door, shed, mailbox, garage door opener, etc. You may want to change the locks or have them re-keyed.