Have a REALTOR® on your team.
Home buying can be a daunting and complex process, which is why you should always have the help of a REALTOR® at your side. Remember, a REALTOR® works for you and is there to look after your best interests. Take a few minutes and all the ways a REALTOR® can help you succeed with the biggest purchase of your life.
1. Make sure you're ready to buy
If you're thinking of buying a home, you've come to the right place. This website can fully prepare you for the home-buying process. Before we jump right in, you have to make sure that, just like Tyler, it's the right time for you to buy. A REALTOR® can help take care of the rest.
Are you ready? Be sure
Few joys can match the pride of owning the roof over your head, but you will have to make some sacrifices. There's the obvious financial responsibility, but your home will also require constant care. That's what real pride of ownership is all about.
Is your bank account ready? Check it twice
Your first home will be the biggest financial obligation you've ever faced, so do it right with the help of a REALTOR® and avoid regretting taking on more than you should. It is ideal to have saved up some money and manage any ongoing debts. In a couple steps, you can determine how much you can afford.
Is right now a good time to buy?
Markets go up, markets go down and even the smartest experts can't accurately predict when a market will peak or bottom out. If you're buying a home as a long-term investment (and for long-term enjoyment), you should be protected from short-term changes in the market. Pick a home that meets the needs of you and your family. Then you'll enjoy living in your investment as it grows in value.
2. Decide what you want to buy
Nowadays, there are many different types of homes to choose from. Without the help of a REALTOR®, you may end up in a neighbourhood that doesn't suit your needs. Take a minute to reflect on your lifestyle, and based on that, decide what best fits you. To help, we've broken down the most popular housing options here.
First, decide where you want to live:
Urban: If you're leaning towards the big city, a REALTOR® can help you consider each factor. Sure the prices are generally higher, but you can walk to a restaurant, maybe even to work. You'll also have the widest range of housing options.
Suburban: Newer schools, modern shopping centres, bigger yards, and bigger homes are just a few of the reasons why so many people love the suburbs.Smaller Cities and TownsSmaller cities and towns in Canada are dotted with thousands of wonderful self-contained communities, and compared to the big city, you can save a bundle.
Rural: Live rural if you're partial to the idea of owning land. How nice would it be to own a few acres all to yourself? Seclusion is not for everybody, but for some, it's heaven.
Next, decide what type of home you want
By now, you probably have a good idea of what type of home is right for you. To familiarize yourself with the terminology, here's a quick overview:
Single-family detached: As the name implies, the home is not attached to the home next door. Styles range from a single-story suburban bungalow, to a three-story Victorian.
Semi-detached or linked: Two houses that share a common wall. Usually less money than a fully detached home.Duplex:A building zoned for two families.
Town house: Also known as terrace or row housing. Several homes with a common style and joined in a row. They usually share walls on both sides.
The condo alternative
How Condos are owned:
You'll own 100% of your unit, and a share of the common areas. Common areas include the necessary plumbing, electrical systems, hallways and elevators. They may also include lots of fun stuff like a private gym or party room.
Membership has privileges and costs: On top of your mortgage and property taxes, condo owners also pay a monthly fee to operate and maintain the common areas. Be sure to look into condo fees, and how well they're managed, before signing anything.
Resale: Previously-lovedNothing can match the charm and character of an older home. As a bonus, the previous owner may have made improvements and upgrades and you get them with the house, usually for less than the cost of putting them in yourself. However, some may have a little too much 'character', like a leaky roof. Know what you're getting into.
New: If you're having a new home built from the bottom up, carefully examine the property, the blueprints and visit other homes built by the same company. Have your REALTOR® and/or lawyer review everything before you sign. While your home is being built, stay on top of the process. And remember, you have a legal right to make a full inspection of the house before you accept it as complete.
You know what you want, but let's talk needs
Are you getting out of a two-bedroom apartment because it's too small? Then your new home should have at least three bedrooms, and probably a second bathroom. REALTORS® call these must-have features "needs". Features you'd like to have are called "wants". Your strategy should be to find a home within your price range that fulfills all or most of your 'needs', and as many of your 'wants' as possible. To help you with this, we've supplied you with your very own Dream Home Checklist. Download it here
3. Sell your current home
Not very many people can hold onto two homes at the same time, so you'll probably need to sell the one you have now. Be sure to check our incredibly helpful Selling section. In the meantime, here's a quick overview.
When should you sell?
Buyer's and seller's markets explained: When there are lots of people looking for homes but not many for sale, it's called a 'seller's market'. When there are lots of homes for sale and not many people buying them, it's called a 'buyer's market'.
Wait for the market to improve?: If you're selling one home and buying another, you don't really have to worry about playing the market. If you sell your existing home for a 'low' price, you're probably also buying at a low price.
Seasonality: Do home sales get frostbite?It's true. Winter sales tend to be slower, and spring sales are brisker. If you need to sell fast, ask a REALTOR® for help establishing a price and making your home look attractive without making you look desperate.
If you need to sell fast: Ask a REALTOR® for help establishing a price and for making your home look attractive, without making you look desperate.
Buy first or sell first? The eternal question
Many people are able to time their sale and purchase so they happen on the same "closing date". As a buyer, you can make your offer "conditional" on the sale of your existing home, so you're not paying for the upkeep of two homes. Or when selling, you can try to extend the "closing period" to give yourself more time to find your next home.
Sell with a REALTOR®, or go it alone?
In the same way that many people decide not to fix their own cars or do their own dental work, it's wise to enlist a professional when selling your most valuable asset. Real estate transactions are complex, time consuming and involve a lot of legal documentation. Your REALTOR® is knowledgeable and highly motivated to help you get the most for your home. Before flying solo, truly know what a REALTOR® can offer.
4. Figure out how much you can afford
Before you start looking for your dream home, let's find out how big you can dream. Knowing your true budget is the first and most important step in buying a home.
A home is a big purchase
It's probably the most expensive thing you'll ever buy, and there are lots of expenses you might not even know about. Some of them include:
Everybody's total costs are different, but it's almost guaranteed you won't have that much money saved up. Hopefully you have enough for a nice down payment, but for the rest...
Yes, you need a mortgage. So determine how much a bank will lend you
Head over to the next step where you'll find helpful tips on arranging your mortgage. But the first step in determining how much a bank will lend you is to understand how much you can afford each month. This is determined using two lending principals.
Gross Debt Service Ratio (GDSR) calculation:
This lending principle simply states that your monthly housing cost should not exceed 32% of your gross monthly family income.
Total Debt Service Ratio (TDSR) calculation:
This lending principle summarizes that your monthly housing cost and payments on all of your other debts (including loans, credit card and lease payments) should not exceed 40% of your gross monthly income.
Our What You Can Afford calculator will help you easily estimate your maximum affordable mortgage payment of principal and interest. Just enter your monthly income and expense amounts, and the calculator will do the rest.
Once you have used the What You Can Afford calculator to estimate your maximum monthly total, you can compare this number to the mortgage payments for specific loan amounts. Simply enter the loan amount in our mortgage calculator and the monthly principal and interest will be figured out for you.
5. Arrange a mortgage
Money makes the world go round, and a mortgage gives you the power to buy a home. This isn't the most fun step in buying a home, but it's vital.
Who do you talk to?
There are hundreds of banks, credit unions and other lenders out there who would love your monthly mortgage payments. So talk to everybody and don't be money-shy! Talk to your banker, other banks and people you know. A REALTOR® can be very knowledgeable about mortgages and can give advice that will help you complete your purchase with no regrets.
Call a mortgage broker
Mortgage brokers are another great resource. They find low rates for a living, and they usually don't get paid unless you sign a mortgage through them, so they're highly motivated to get you the best deal.
Your best mortgage might be the seller's mortgage
Often, you can take over or 'assume' the seller's mortgage. This is a great idea if the seller is locked into a lower interest rate than you can get right now. Your REALTOR® may have additional information.
Refers to how long the bank has agreed to lend you the money - typically from six months to five years. At the end of the term, you usually renegotiate a new term.
The length of time it will take to pay off the whole mortgage, often as long as 25 years. The longer your amortization, the lower your monthly payments, but the more you pay in interest over time.
Interest is the cost of borrowing money, and the interest rate tells you exactly how much. Using this mortgage calculator, check the difference between borrowing $100 000 at 6% and at 9% at the same amortization. Surprising, no?
That interest rate not only affects how much you pay, it also affects how much you can borrow. So keep searching for the best rate!
How big a down payment?
You want as small a mortgage as possible, which means making the biggest down payment possible. Just remember to set money aside for all the fees associated with buying a home. Not to mention moving, repairs, renovations, new furniture... think ahead.
The Home Buyers' Plan A little sweet relief
If you're a first-time homebuyer with money in an RRSP, you can withdraw up to $25,000 without paying any income tax. If your spouse is also eligible, that's $50,000. Ask your REALTOR® how to best take advantage of this plan.
Lock into an interest rate? For how long?
It's a tough question. What if you 'lock in' for five years and the rate goes into a period of decline? That could mean you're stuck paying more than you had to for a long time. But if rates were to steadily climb over the next five years, locking in for five years now would be a great move. Your REALTOR® can provide great advice in every situation so you don't have to second-guess yourself.
What you need to apply for a mortgage
Letter of employment: confirmation(include your position, your pay and how many years you've been with the company)
List your assets: (your car, stocks, bonds, GICs, etc)
List your liabilities:(car payments, student loans, credit card debt, etc)
Social Insurance Number
Your chequing account number
Your lawyer's contact information
Information about the house you want to buy
Don't forget these extra costs:
Application fee: Some mortgage lenders charge a fee to process your application. But ask to see if you can get it waived.
Appraisal fee: Your mortgage lender may need to have your new home appraised by a professional, and they often pass the bill on to you. Sometimes your lender will also waive this fee.
Mortgage broker's fee: Your mortgage broker may charge a fee that's payable on your closing date. Ask your broker to avoid surprises.
Land survey fee: Lenders may require a survey of your property, even if it's an existing survey. Get your lawyer on the case.
Home inspection fee: A home inspection is so important, we devoted an entire step to it. Avoid surprises and protect yourself... this is money well spent.
Home Insurance: Mortgage lenders require you to carry fire and extended-coverage insurance because your home is the security deposit on the mortgage. Often you can have these payments added to your monthly mortgage payments. Shop around.
Title insurance: It's not mandatory, but protects you from all sorts of fraud and potential errors surrounding the title to your land. Ask your lawyer for details.
Legal fees: You'll pay your lawyer for their invaluable time and "disbursements" which are the costs involved in title searches, drawing up the title deed, and preparing your mortgage.
Adjustments: The previous owner may have paid property tax or utilities in advance, and they want to be credited for those payments. Ask your REALTOR® and lawyer what might come up on the closing date.
Maintenance and utility costs: Remember, you'll now have more regular monthly payments in the form of property tax and utilities.
Property Transfer Tax: The amount of this tax varies from province to province.
The GST/HST and new homes: Resale homes don't involve GST/HST, but new homes do. If you intend to live in your new home (instead of renting it out) there is some relief. Consult your REALTOR® and/or lawyer for more information.
REALTOR® Commissions or fees? REALTOR® commissions or fees are subject to GST/HST.
6. Find a REALTOR® who is right for you
REALTORS® aren't just people who help find you a home. They're an invaluable resource for knowledge, contacts and advice that help turn buying a piece of property into a home. Here we explain what you can expect when you enlist the help of a REALTOR®.
There are a number of different kinds of relationships that you can develop with your REALTOR®. However, they all fall primarily under two categories - agency relationships and non-agency relationships.
An agency relationship is one where the REALTOR® represents you exclusively. In that respect, the REALTOR®'s primary obligation is to you, and they are required to act only in your best interests. Anything you tell your REALTOR® agent is strictly confidential, and the REALTOR® has an obligation to disclose to you any information he or she has that is related to the transaction.
Dual agency refers to the situation where the REALTOR® represents both the buyer and the seller as agent at the same time. In this case, both parties are required to sign a dual agency contract setting out the obligations of the REALTOR® to both parties, and obtaining the consent of the parties to this type of representation.
It is possible for a REALTOR® to work with you without being your agent. In this case, the REALTOR® can give you information, but cannot provide you with adv