STEPS TO BUYING A HOME
The purchase of a home will likely be the most expensive venture in your lifetime. It is important to ensure that you have taken the necessary steps to reduce your risk exposure.
STEP ONE - ARE YOU FINANCIALLY READY?
STEP TWO - WHAT TYPE OF PROPERTY?
STEP THREE - WHAT PROFESSIONALS SHOULD YOU HIRE?
STEP FOUR - GET PRE-APPROVED FOR FINANCING
STEP FIVE - SEARCH FOR PROPERTIES
STEP SIX - READY TO MAKE AN OFFER
STEP SEVEN - FINALIZE THE PURCHASE
________________________________________________________
STEP ONE - Are you financially ready?
Your Credit Rating
First begin with your credit rating . Credit reports are an ongoing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you.
If you haven't looked at your credit reports, you might be surprised at their contents, because errors are common.
You can request a copy of your credit report from either Equifax or Transunion. Both are reputable Credit Bureaus in Canada.
Your Financial Situation - What can you afford?
Once you have reviewed your credit rating you should begin reviewing your current financial situation. Evaluate your current financial situation, how much house you can afford and the maximum home price that you should be considering.
TEST YOURSELF at CMHC's website
Complete the various financial exercises to see where you stand. They include: calculating your net worth, your current monthly expenses and your current monthly debt payments.
It is very important that you complete this step first before proceeding to the next steps. Improper financial planning is likely the number one mistake made by home buyers.
Top of Page
________________________________________________________
STEP TWO - what type of property?
Your Current and Future Needs
Before you start searching for a home, you need to sit down and examine your needs both now and in the future. Here are a few things to consider:
- Size Needed: Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?
- Any Special Features: Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
- Lifestyle and Stages of Life: Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement?
Choosing a Location That Is Right for You
Even if you find your dream home that has everything you need, the location might not be. When deciding where to live, you should take the following things into consideration:
- Whether you want to live in a city, a town or even in an out-of-town location
- Where you work and how easy it is to commute
- Where your children will attend school and how they will get there
- Whether you need a safe walking area or recreational facilities such as a park nearby
- How close you would like to be to family and friends
New Home, ReSale or Build your Own
If you are considering a new home here are a few things to consider:
- Personal choices: you may be able to select certain items such as cabinets, flooring, colours etc.
- Up to date standards: you can expect to receive a home that was built under the latest building codes, electrical and energy efficiency standards.
- Maintenance Costs: You could expect that your maintenance costs would be lower as everything is new and items covered by warranty.
- Builder Warranty: A homeowners warranty is offered by Tarion to all new home owners of Ontario.
- Neighbourhood: schools, shopping malls and other services may not be readily available.
- Taxes: The Goods and Services Tax (GST) currently 6%, will apply. However, you may qualify for a rebate of part of the GST on homes that cost less than $450,000. For more information about the New Housing Rebate Program, visit the Canada Revenue Agency website at, www.cra-arc.gc.ca or click here for the CRA bulletin.
Resale Home
- Taxes: You do not have to pay the GST unless the house has been substantially renovated or not used for a residential purpose.
- Extras: Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
- Upgrades and maintenance: You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.
Building Your Own Home
Some people prefer the challenge and flexibility of building their own home. On one hand you can get exactly what you want in terms of size, design, location, quality of material, level of energy-efficiency, etc. However, you should expect to invest lots of time and energy. Be sure to confer with a lawyer to ensure all by-laws and zoning are complied with.
Single-family Detached
The most popular style and the most solid investment. It is a free-standing home which sits on its own lot thereby offering a greater degree of privacy.
Semi-detached
A single-family home that is joined to another one by a common wall. It can offer many of the advantages of a single-family detached home and is usually less expensive to buy and maintain.
Duplex
Two units — one above the other or side by side. The owner usually lives in one unit and rents the other.
Row House or Townhouse
One of several types of single-family homes joined by common walls. It offers less privacy than a single-family detached home but still provides a separate outdoor space. These homes can cost less to buy and maintain.
Link or Carriage Home
Houses joined by garages or carports which provide access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than single-family detached homes.
Condominium
Refers to a form of legal ownership as opposed to a style of construction. Condominiums can be high-rise residential buildings, townhouse complexes, individual houses and low-rise residential buildings
Links
Home Features Checklist
How a Real Estate Agent Can Help
Condominium Buyers' Guide
New Homes/Condos
Toronto Neighbourhoods
Choosing a Neighbourhood with Sustainable Features
Steps to Buying a Home
Top of Page
________________________________________________________
step three - what professionals should you hire?
Because purchasing a home is probably the biggest investment you will ever make, you'll definitely want a team of professionals working with you throughout the process. The following is a list of Professionals you should consider. Click on any of the links below and a further explanation will be given along with our referral recommendation:
Top of Page
________________________________________________________
STEP FOUR - GET PRE-APPROVED FOR FINANCING
Finding the right loan and lender is crucial to your home buying success. It's up to you to determine which lender is best for your needs, and it's always a good idea to have at least a bit of background about the loan process before you talk to a lender.
Visit our Mortgage Resource Centre for more information
Top of Page
________________________________________________________
step fIVE - searching for properties
Buying a home isn't as difficult as you might think, even if you're short on funds, but the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses.
Visit our Real Estate Resource Centre - Search for Properties page for help finding the perfect property.
Links
Toronto Neighbourhoods
New Homes/Condos
Home Hunting Worksheet
Property Search
Top of Page
________________________________________________________
step SIX - ready to make an offer?
It is recommended that you confer with a professional prior to making an offer to the Vendor. Speak to your Real Estate Agent or Lawyer to draft or review the offer to ensure that you have included all chattels (items not affixed to the property) and essential conditions.
Be aware that the OREA standard form contract - Agreement of Purchase and Sale has an area for you to place conditions on your offer. Be extremely careful in this regard. You should refer to our Real Estate Agent Resource Centre, Legal Division for further information and sample clauses.
If you have any hesitation or concern, it is recommended that you contact your Lawyer before submitting your offer. Once the offer is accepted by the vendor there is very little your Lawyer can do to rectify the oversight.
Top of Page
________________________________________________________
step sEVEN - finalizing your purchase
On closing day you will take legal possession and finally get to call your new house your own. There are quite a few things that need to be done on closing day:
- Your lender will provide the mortgage money to your Lawyer.
- You must provide the balance of the purchase price to your Lawyer along with the closing costs. Refer to our fees section for a closing cost estimate.
- Your Lawyer pays the vendor, registers the home in your name, provides you with a deed and the keys to your new home.
Once you have the keys you are ready to move in! Before unloading your personal belongings in your new home, go through the house with the van supervisor and provide any special instructions. The supervisor will also make note of the condition of your goods on an inventory list. Go through the house with the supervisor to make sure the list is complete and accurate. Then, when the van arrives at your new home, mark off the items on the mover's list as they are unloaded. Remember that even if the movers unload and unpack boxes and remove packing materials, they will not put dishes or linens into cupboards.
Also, be sure to inspect the house to ensure that it was left in a condition that reflects the warranty provided in the Agreement of Purchase and Sale.
Top of Page
________________________________________________________
.jpg){kind=logo}
