Buying a Home
TIPS FOR HOME BUYERS
For the majority of us, buying a new home is the biggest financial transaction we will undertake in our live. This information sheet has been designed to assist you in the process of buying a new home.
- Knowing how much you can afford will ensure YOU and YOUR real estate agent stay within your limit. For information on how much you can afford to spend on your new home please contact your Personal Financial Officer or you can apply online.
REDUCE MORTGAGE INTEREST
- Save thousands of dollars in interest and take years off your mortgage by scheduling your payments weekly or bi-weekly versus monthly.
- You don't have to spend the maximum you've been approved for. Could all of your financial obligation be met with one salary if the need arose?
REDUCE FINANCIAL STRESS
- Consolidate credit cards and personal loans with a line of credit. A line of credit can provide a lower interest rate and lower payment. Also, it can be used as an emergency fund for unforeseen or unplanned expenses.
- Currently, 60% of Canadians use the Internet to shop for a home. Go to www.realtor.com or www.mls.ca.
The location of your home will directly affect its future value, your lifestyle and budget. Some important factors to consider when deciding on the location:
- How much time will be spent travelling to and from work?
- Are there day care centers available?
- Can your children walk to school or will they require transportation?
- As your parents age, will they become more dependent on you? Will you require additional space in the future?
- In the new location, will you see more or less of family and friends?
- Is there availability and easy access to public transportation (highways, buses, trains, etc.)?
- Are amenities such as hospital, shopping malls, libraries, and recreational centers, within close proximity?
Things to consider if commuting more than one hour by car to and from work each day:
- Before making a commitment, take the time to travel the route to and from work during rush hour.
- Ensure that you budget for additional expenses that will be incurred in gas, maintenance and insurance (don't underestimate the cost).
- Expect to replace your vehicle every five years.
- Ensure that you have a back-up transportation plan available if needed.
- Risk of being in an accident increases, therefore life and disability insurance should be reviewed to determine that there is adequate coverage.
- Plan for added costs for daycare and after school programs.
BEFORE PUTTING IN AN OFFER
- Visit the home two to three times at different times of the day.
- Carefully examine the home for fresh paint and repairs.
- Take lots of notes.
- Enquire when the roof was last shingled.
- Enquire about the age of the furnace and the air conditioner.
- Check the basement and the attic carefully for water stains, rotting wood and mould, which could be major problems down the road.
- Ask to see a copy of the annual tax, water and heating costs.
- As for information about the neighbours - do they have a barking dog, rowdy teenagers, or do they like to party every weekend?
WHAT TO INCLUDE IN AN OFFER
Conditions to consider when placing an offer to purchase:
- Subject to Professional Home Inspection - This is the biggest investment of your life; a few hundred dollars could save you thousands or considerably more. This is true even for a brand new home. Ensure you have chosen a Registered Home Inspector, not recommended by your real estate agent, who carries errors and omission insurance. Get everything in writing. If the inspector underestimates or misses a costly repair, then the inspector can be held financially responsible.
- Make the offer conditional upon selling your home.
- Ask for a copy of the survey.
- Financing - always make the offer subject to financing; the house may be appraised much lower than your offer. Request five business days.
- Include items such as appliances, backyard play structures, fixtures, or even built in closet organizers. You can also ask to have something removed like old wall-to-wall carpeting, saving you time and money.
- Deposit - give as little as possible. If you cancel an accepted offer, you may lose your deposit; better to give $500 versus $5,000.
- As family or friends for referrals.
- Negotiate legal fees.
- Ensure all disbursement costs are known, and there are no hidden administration fees.
- Ensure lawyer provides all related legal documentation upon closing.
- Have sufficient funds available for all related costs including land transfer tax, set-up fees (new home), moving expenses, legal fees, and disbursements. Your real estate agent and lawyer will provide detail of all the fees.
- Prepare a budget and ensure you don't leave yourself house poor. This will allow you to meet your monthly expenses, still have a savings plan, and afford the occasional luxuries.
- Attend as many as possible in the neighbourhood you're considering, and where no appointments are necessary. This give you the opportunity to compare the value of the housing in the neighbourhood and you can pick up tips on different decorating ideas.
- Ensure that you have purchased or transferred your home insurance prior to taking possession of your new home.
- This is also a good time to review your insurance needs.
- Book as soon as possible to avoid disappointment.