Getting Started
Mortgage Terms and Fees
Getting Started
When considering buying a home, the first question you’ll ask is, “What’s my budget?” The answer depends on several factors, such as the location you want, the type of home you prefer, and your income. You must also consider additional expenses such as property taxes, utilities, and condo fees. It’s recommended that your monthly home expenses not exceed 30-35% of your income.
Before starting your search, make sure you have a clear idea of what you want and can afford. Stick to looking at homes within your price range to avoid any unpleasant financial surprises. Meeting with your bank or a mortgage broker to negotiate a pre-approved mortgage is a smart move.
Once you have determined your budget and expenses, you can start your search. It may take some time to find the right home, but it’s out there. If you find a home that you like and can afford, you can make an offer. If the offer is accepted, the next steps are closing and moving into your new home. By putting your plans into action, buying a home can be a straightforward process.
Making an Offer
Sales Representatives
A real estate sales representative can be an invaluable asset, saving you both time and money. With their expertise and experience in the home buying process, they can guide you through the entire process, acting as a skilled negotiator on your behalf.
In addition to negotiating, a sales representative can help you in many other ways, including:
- Refining your list of wants and needs
- Providing access to exclusive listing information through their computer systems
- Screening properties to ensure you don’t waste time on unsuitable options
- Scheduling property viewings and appointments
- Offering useful advice about the local area and neighborhoods
- Introducing you to reliable professionals who can assist you with financing, legal, and inspection matters.
It’s essential to choose a sales representative who specializes in the type of property you’re interested in. For instance, someone who specializes in rural homes may not be the best fit for someone seeking an urban property. It’s also crucial to be transparent and precise with your representative about your requirements and preferences.
Contractors
If you are planning to renovate your home to increase its resale value, finding a trustworthy contractor should be your priority. To ensure you hire a credible contractor, do some research beforehand.
Firstly, ask for referrals and contact their references to inquire about the quality of their work, project completion time, and overall experience. You can also check with the Better Business Bureau to see if there are any complaints filed against the contractor.
Once you have shortlisted some contractors, get detailed estimates from at least three of them to compare their costs and quality of work. When discussing your project with the contractor, make sure they understand your needs and budget. They should also inspect your home before providing an estimate. If the contractors are bidding based on an architect’s plan, ensure that they have detailed their approach to the job based on the drawings.
Be wary of contractors who offer the lowest price, as they may submit additional project costs once the project is underway. On the other hand, a high price may indicate the use of higher quality materials and better workmanship. Therefore, it’s crucial to understand the reasons behind the differences in estimates.
Before signing the contract, ensure that it is detailed and includes specifics such as finishes and brand names of the products to be installed. Review the quotation carefully, checking if the details of the project are outlined, specific costs are detailed, and if there is a provision for extra costs or a cap set for the total project. You should also verify if there is a firm project timeline, allotted time for inspections, and if the work will be subcontracted. Finally, make sure to request to see all material receipts.
Lenders
A lender is someone who provides you with money, and they can be either private or institutional, such as banks or credit unions. You may even have a family member or friend who is willing to lend you money. However, when seeking a lender, you should aim for a mutually beneficial, long-term relationship with favourable terms and rates.
Mortgage Brokers
This refers to a mortgage broker, who helps you find the best mortgage terms and conditions for your needs by doing the research and legwork for you. They act as an intermediary between you and potential lenders, similar to an insurance broker, and provide unbiased referrals. While most brokers receive a finders fee from the lender, some may charge a fee of 2% of the total mortgage amount to provide their services.
Lawyers/Notaries
A lawyer plays a crucial role in safeguarding your interests by handling the necessary legal documentation for your home purchase. The legal procedures can vary depending on your province, but your sales representative can offer recommendations for trustworthy lawyers who can guide you through the steps before receiving the keys to your new home. Choosing a lawyer helps ensure that you are well-protected during the transaction.
Home Inspectors
It’s highly recommended to have the property inspected by a qualified home inspector, whether it’s a condition of purchase or not. A professional home inspector will provide added confidence in your decision-making process. However, since there are no government standards or licenses for home inspectors, it’s crucial to verify their qualifications. In Canada, look for home inspectors who are members of either PACHI or OAHI to ensure that they have met education requirements, possess relevant experience, and carry E&O insurance to protect you.
Insurance Brokers
To secure your property and valuables, obtaining comprehensive insurance coverage is essential. A broker can provide impartial advice and help you save time, effort, and money. In addition, banks typically require full insurance coverage as collateral against your mortgage.
Your Buyer Team and Their Roles
Your Real Estate Sales Representative is a valuable resource when it comes to making an offer on a property. They can provide you with up-to-date market information that will help you determine a fair and competitive offer to present to the seller.
Once you’ve decided on the terms of your offer, your Sales Representative will act as your intermediary and communicate the offer to the seller or their representative. In some cases, there may be multiple offers on the same property. In this situation, your Sales Representative will guide you through the process and provide you with advice on how to make your offer stand out. They will work on your behalf to ensure the negotiation process goes as smoothly and stress-free as possible.