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First Time Buyers |
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| To ensure you make
the right choices when you purchase your home, it's essential to
surround yourself with a qualified team of professionals. You'll need
an experienced real estate agent you feel comfortable with to work on
your behalf. You'll need a lawyer with experience in real estate
transactions, and with whom you have a good working relationship. And,
you' ll need David So and The Mortgage Centre to access the financing
you need at the best possible price. |
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You couldn't be starting your house hunting at
a better time. Housing in most parts of Canada is as affordable now as at any time since the 70s. Lower interest rates and the highly competitive mortgage market have resulted in more flexibility and a range of financing choices that benefit the homebuyer. And, for first-time buyers the Canadian government offers the First Home Loan Insurance program, allowing a down payment of only five percent! As well, the RRSP Home Buyer's Plan allows first-time buyers to apply RRSP contributions toward their down payment. There is also a large selection available in all price ranges, assuring a wide choice of designs, sizes and types of housing. Finding and Purchasing the Right Home So now that you've decided to make your move and purchase your first home, how do you go about it? First, decide where you want to live based on such things as transportation, distance to work, proximity to schools, day-care, recreation facilities, shopping, health care etc. When you hear "10 minutes to downtown", test it for yourself, during your own commuting times - you don't want to find that the 10 minutes was determined at 2 a.m.! Next, find a real estate agent who is really interested in giving you service...whose attitude and availability indicates that they are working for you. Take note of who is most active in the neighborhoods your are interested in. You'll see SOLD and FOR SALE signs, ads in local newspapers etc. An agent who actively makes sales calls, who keeps you informed of sales or listings in the areas in which you are interested is aggressively pursuing business and will be knowledgeable about specific areas and the market as a whole. Meet with a few agents from different companies and assess their presentation packages. Are they prepared? Have they done some homework in advance? Do they have any special affiliations or packaged discount programs with other corporations where you can save on your mortgage, on moving costs or on household purchases for your new home? You'll want to work with someone you relate to, with whom you have some chemistry, and who offers you excellent service and value. Then, shop around for the house you really want - don't settle on the first house you see. Average Montly selling Price 1998-2003 Return to the Top Affordability and Financing You'll need to review your current expenses thoroughly. Consider how much added expense you can comfortably absorb in taking on a mortgage. Then either apply online or Contact Us to arrange a pre-approved mortgage. A pre-approved mortgage lets you know how much money you qualify for, so that when you're looking at houses, you'll know exactly what you can afford. And when you sit down with David So and The Mortgage Centre team, take the opportunity to review all of your questions so that you can begin house hunting right away! To determine affordability, we'll look at your Gross Debt Service Ratio (GDS) and your Total Debt Service Ratio (TDS). The GDS ratio is based on what you can afford to pay each month and it includes mortgage payments, taxes and heating. Our maximum GDS ratio is 32%. We also help you estimate the carrying cost with the Total Debt Service Ratio. The maximum TDS ratio is 37 percent . We'll help you do a complete budget analysis based on your net income to determine what you can actually afford. This pre-qualifying stage is also the time to find out about the differences between conventional mortgages and high ratio insured mortgages. Ask about assistance for first time homebuyers such as the five per cent down payment allowed under the "First Home Loan Insurance Program" sponsored by the Canada Mortgage and Housing Corporation (CMHC) and the federal government's "RSP Homebuyer's Plan", which allows you to use funds from your RSP to purchase a home. At your pre-qualification meeting, we'll also review closing costs such as land transfer taxes, legal fees and other disbursements you'll encounter when purchasing a home. Before you're automatically pre-qualified, we'll need to run a credit bureau report. We will also need written confirmation of your income and how much you plan to put down on your purchase. Once you're pre-qualified, the interest rate at which you pre-qualify will be frozen for 60 to 90 days from the time of your application. If interest rates drop below what you pre-qualified for, you'll get the lower rate. If they rise, you'll get the rate at which you were pre-qualified. And, just because you pre-qualified for a mortgage with one financial institution, you're not obligated to obtain your mortgage through that particular lender. As always, we will shop the market to get you the best possible price. Return to the Top Selecting the Right Mortgage The basic choices to look at in selecting a mortgage include:
Mortgage Life Insurance Mortgage life insurance is important, especially where two incomes are involved. The cost is low and can be incorporated into your mortgage payments. Your balance will be paid in full (the maximum varies with different financial institutions) in the event of the death, terminal illness, or permanent disability of one of the income earners so that the other income earner is able to retain the home. These quotes are available with each mortgage approved on our system. Before Signing the Offer The same advice applies to selecting your lawyer as to your real estate agent. Competitive fees, excellent service, a knowledgeable and approachable individual is the combination you need to ensure the right combination of price and service. It's not a bad idea to involve your lawyer before you sign the Offer, because that document will become the legal Agreement of Purchase and Sale once signed by both the buyer and seller. If you wish, have your lawyer read the document carefully and review it with you. Once signed and accepted, your lawyer will order a series of searches from various municipal offices. This is to ensure that the vendors have not been sued and that they have paid all of their realty taxes and utility bills and that there are no old mortgages or liens on the property. Your lawyer will draft a series of closing documents, and will review the closing documents drafted by the lawyer for the vendor. Your lender and lawyer will co-ordinate and draft the appropriate documents. Your lawyer will notify the property tax offices as well as the utility offices that you will be the new owner as of the closing day. A few days before closing, you will visit your lawyer's office to sign the closing documents. You will need to bring a certified cheque for the balance of the closing funds, because the lawyer pays the relevant parties on your behalf (land transfer to the government, balance owing to the vendor etc.) Part of that amount covers the lawyer's fee and the disbursements incurred. The lawyer obtains the mortgage funds directly from the lending institution. Return to the Top Closing Day On closing day, your lawyer will meet a representative from the vendor's law firm at the land registry office. There, your cheque will be exchanged for the keys to your home and the two sides will trade closing documents. Your lawyer will register the new deed and mortgage, so that anyone doing a search will learn that you are the new owner. Finally, you will pick up the keys and - congratulations! You're a home-owner! After closing, your lawyer will send you a reporting letter, as well as copies of all the documents that you have signed including the deed, the mortgage and the survey and a summary of the flow of funds. Making House-Hunting Fun Take the guesswork out of shopping for a home by taking advantage of all the professional resources available through David So and The Mortgage Centre. There's no shortage of information available to guide you through the many choices available when purchasing your first home, and to help you make an informed purchase decision. Banks, as well as CMHC, the Canadian Bankers' Association, the Ontario Real Estate Association and the Home Builders' Association all have brochures (even videos) to make house-hunting stress free and fun. We have copies available and can provide them by email or fax - just contact us! Mortgage Application Checklist When you are ready to finalize your mortgage, you'll need to provide us with the following: A copy of the accepted Offer To Purchase and the land survey. A salary letter from your employer. Self-employed individuals need financial statements for the past three years as well as personal income tax returns. Confirmation that your down payment came from your own resources (i.e. bank statements or a gift letter). A list of all your assets and debts along with account numbers. A copy of the Real Estate Listing if buying an existing home. Condominium financial statements, if applicable. If you are buying a home to be constructed, bring a picture of the property, a copy of the building plans and specifications, the land survey, plus your agreement with the builder. Next steps There's no better time then the present - talk to David So and The Mortgage Centre or apply now to get started on buying your first home! Return to the Top |
