How Nancy Helps Buyers

The process of finding a property that suits you in every way is not easy. In fact it could be frustrating, confusing and de-motivating. But it doesn’t have to be.

BEFORE YOU SEARCH

The best way to ensure that your search is stress – free and productive is to prepare yourself for it ahead of time. You may want to answer the following questions to better analyze your current situation, needs and wants:

What are your reasons for considering a move? (ie. Financial/employment changes, lifestyle/family changes, etc.)
How much funds do you or will you have available for a down payment?
What is your realistic expectation of a price range in which you’d make your purchase?
How much time do you have to find a property?
Do you need to sell your existing property, are you a first time buyer or are you looking for an investment?
What specific requirements do you have for the property you seek?
What location/area do you prefer?
Once you have sketched a draft of your financial situation and an idea for the property you are looking for, it will be easier to narrow your search down to specific areas and timelines.

GETTING PRE-APPROVED

Pre-approval means that you, as a buyer have qualified in advance for a mortgage of “x” dollars contingent upon the lender approving the property. Many financial institutions offer pre-approved mortgages, with your interest rate guaranteed not to rise for a certain period of time. A lender can explain to you what specific loan programs are available and most suitable for you and can help you understand your budgetary restrictions by carefully analyzing your current income and credit history. Getting pre-approved is a great way to know your mortgage limit, which allows you to narrow down your search to the properties you can realistically afford. It also gives you a peace of mind that you will not fall into a trap of denial or rejection by lenders when you find your dream property.

ADDITIONAL EXPENSES

There are a number of additional costs/expenses that may await you as a buyer once the transaction is complete. They are:

Realtor’s Commission – the amount of commission is usually calculated as a percentage of a sale price although in some instances it could be a flat fee (ask your agent for more details).
Lawyer’s Fees and Disbursements – usually vary from $600.00 to $2,500.00 depending on the firm/solicitor you use and work involved.
Mortgage Broker’s Fee – usually the Broker gets paid directly by the Lender, although in some instances the fee is covered by you, the buyer.
Appraisal Fee – Your lender may ask you to conduct an appraisal of the property in order to verify its value.
Surveying Costs – at times when a seller cannot provide you with the original survey of the property, you may need to order one yourself.
High – ratio mortgage insurance premium – If a mortgage accounts for more than 80% of either or both a property’s appraised value and its purchase price or, in other words, if the down payment amount is less than 20% of the purchase price/appraised value, it will be have to be insured to protect lender’s security.
Interest Adjustment – as mortgages are normally calculated from the first of each month: if your closing date is the same as the beginning of your mortgage, there will be no adjustment. However, if your closing date is in one month and you move into the property in two weeks, the difference in days between your move and closing date is the adjustment period. You will have to cover the cost of the interest for that period.
Unused portion of any prepaid property taxes or utility bills upon closing – the seller will have to be reimbursed for the payment(s) he/she made with respect to the property which were unused due to the sale.
House Insurance – some Lenders will ask you to arrange for house insurance and to provide them with proof of same.
Land Transfer Tax or “LTT”– As of May 1996 the provincial LTT is levied by the Province of Ontario. The amount of the LTT depends on the sale price of the property and is calculated by using the following formula (for residential properties):
0.5% on the first $55,000; plus 1.0% of the amount from $55,001 to $250,000; plus 1.5% of the amount from $250,001 to $400,000 and, plus 2.0% of the amount in excess of $400,000

*As of February 1, 2009, the Toronto Land Transfer Tax or “TLTT” is levied by the City of Toronto in addition to the provincial LTT only on transactions within the City of Toronto.

Once you are clear on what awaits you in terms of payments and financial obligations, you are then ready to begin your search. The fastest and most time efficient resource there is for searching and finding real estate properties is the Multiple Listing Service, or “MLS”.

The MULTIPLE LISTING SERVICE or “MLS”

The MLS system is a cooperative listing service which is available only to licensed real estate agents and which is operated by your local real estate board. Using the MLS, your agent is able to provide you with a detailed list of available properties that are closest in criteria to your desired one, thereby saving you time and headaches. He/she is also able to provide you with a daily report of new properties listed for sale to keep you up to date.
Mortgage Info

Your Down Payment
A minimum cash down payment from your own resources is required because mortgage lenders won’t advance the entire purchase price of a property. Your minimum down payment would normally be 10%, however, a recent government program has lowered the minimum to 5% for qualified first time buyers. Another temporary program allows first time buyers to use funds from their RRSP for their down payment.
It’s to your advantage to aim for a down payment of 25% or more, so you’ll qualify for a conventional mortgage and avoid paying the mortgage insurance premium. The larger your down payment, the easier it will be to arrange a mortgage and carry it comfortably. The smaller your loan, the lower your interest expense will be, and the more equity you will have in your home. Equity is equal to the value of your home minus the amount of your mortgage.