Home Buyers Guide

Find A Professional Realtor Who Can

  • Navigate the home buying process and paperwork from start to finish, ensuring everything flows smoothly without any surprises
  • Find the right home, in the neighbourhood you want, at a price you can afford
  • Compare your property with similar properties that have sold over the past year
  • Get a feel for the neighbourhood including schools, parks and other amenities
  • Find out if you are eligible for government homeownership incentive programs
  • Assess mortgage products and different types of lenders to see what fits your needs
  • Negotiate purchase price and contract terms, such as date of possession, required repairs, included furnishings or equipment
  • Direct you through complex contracts
  • Find qualified industry professionals, such as real estate lawyers, home appraisers and home inspectors
  • Plan for closing costs and other related expenses

Why Hire A Realtor?

Realtors abide by a code of ethics:

  • They are required to treat all parties to a transaction hounestly
  • They are obligated to put the clients’ interests first – ahead of anyone else’s, including their own
  • They are obligated to make full disclosure about any problems with a property
  • They are obligated to be truthful in advertising

Realtors have pricing expertise:

  • Not only can they provide information on comparable houses, they have the experience to know if a specific house is overpriced or underpriced
  • They have the experience to know how well a neighbourhood holds its value
  • They also bring assets to the deal that come from years of watching waves of transactions in the neighbourhood

Realtors find all available homes:

  • Realtors have access to listings that otherwise may not be available to the public – as in some cases, and due to a number of personal reasons, sellers don’t want the fact that they’re selling widely publicized

Realtors know property:

  • They have the knowledge and experience to recognize unique assets a property may have
  • They also have the knowledge and experience to recognize any shortcomings, deficiencies, and room for improvement a property may have – and they will advise you accordingly as to whether you should consider or pass on the purchase

Realtors take care of the paperwork:

  • They know paperwork in and out – they have knowledge and experience dealing with offers, counteroffers, agreements, amendments, clauses, etc.
  • They manage all the paperwork in a timely manner as real estate transactions are often limited by a time frame
  • They explain the necessary paperwork and make sure that it’s filled out accurately and completely

Realtors know the experts:

  • They work with a number of professionals who are involved in the buying process
  • They can recommend a number of trusted professionals such as home inspectors, mortgage specialists, lawyers, moving companies, contractors, etc.

Realtors are experienced negotiators:

  • They always have their clients’ best interest at heart
  • They’ll save you the trouble of getting overly emotional over the deal
  • They handle negotiations in an objective, unemotional and professional manner that yield the best outcomes

Realtors help avoid closing problems:

  • They know what closing issues to watch out for and are able to work through almost any challenge that arises
  • They try to avoid any unexpected title issues, check that financing has gone through and that all professionals involved are staying on task and within the timeline

Decide If You’re Ready To Buy A House

What are the costs associated with homebuying?

Upfront costs:

  • Down payment
  • Closing costs
  • Applicable taxes
  • Moving costs

Ongoing costs:

  • Mortgage payments
  • Property taxes
  • Insurance
  • Utility bills
  • Additional fees
  • Routine maintenance and repairs

Major costs:

  • Potential repairs or renovations

Consider Your Needs and Wants

  • Location
  • Size
  • Special features
  • Lifestyle
  • Forms of homeownership

Get Preapproved For A Mortgage

What documents may be required

Identification

Government identification regarding age, occupation, marital status, children, current address, SIN, phone number, etc.

Work history

  • Employment confirmation (pay stubs and a letter from your employer or a notice of assessment if you are self employed)
  • Length of time with employer

Financial credentials

  • Proof and source of down payment and ability to pay closing costs (recent financial statements of bank accounts and investments)
  • Proof of assets (real estate, car, stocks, bonds, etc.)
  • List of liabilities (credit cards, lines of credit, spousal or child support payments, student loans, car leases or loans, personal loans, etc.)
  • Information about your current real estate property (recent mortgage statement, property tax bill, legal description, property value, etc.)
  • Financial information for a co-borrower, if applicable

Mortgage options

There are many different types of mortgages; here are a few examples:

  • Traditional or conventional mortgages are those that meet the requirement of having a 20 per cent down payment, with the remaining 80 per cent being provided by the lender. These have a low loan-to-value ratio, which means that the amount of the loan is low, relative to the value of the property. Before mortgage insurance was introduced in the 1950s, almost all mortgages were conventional mortgages, with borrowers paying at least 50 per cent of the cost of the home upfront.
  • High-ratio mortgages are those in which the borrower has a down payment of less than 20 per cent, requiring the lender to provide a higher ratio of the loan. If you’re a borrower with a high-ratio mortgage then you are required by law to get mortgage default insurance, which is commonly known as mortgage insurance. The premiums for mortgage insurance are often rolled into the mortgage loan payments. High-ratio mortgages were generally thought of as being undesirable, but in an environment with historically low interest rates, high-ratio mortgages are the norm rather than the exception. Even people who might be able to afford the 20 per cent down payment required for a traditional mortgage sometimes choose to get mortgage insurance instead of fronting a 20 per cent down payment, keeping the extra cash liquid for closing costs or emergency funds.
  • Fixed rate mortgages feature an interest rate that doesn’t change, or is “fixed”, for a set period of time, often between 1 and 5 years. It’s easier to manage a budget with a fixed rate mortgage, since your payments won’t change during that fixed term. The interest rates for fixed mortgages tend to be slightly higher than other types of mortgages where the rate changes; what you gain in stability, you pay for with a higher mortgage interest rate. Fixed rate mortgages are most beneficial when interest rates are low and expected to rise over the length of the term – although predicting rate increases and decreases are far from an exact science. Five-year fixed rate mortgages are one of the most popular mortgage products in Canada.
  • An adjustable rate mortgage (ARM) is reviewed at intervals and then adjusted based on the current prime rate, the rate at which a commercial bank’s optimal customers can borrow money. This rate adjustment affects both the monthly payment as well as the interest rate of the loan. If you have an adjustable rate mortgage and the interest rate drops, then you benefit from the lower mortgage rate instead of being locked into the higher mortgage rate as you would be with a fixed mortgage. The risk, of course, is that if interest rates rise, then you are on the hook for those increase in payments as well. Adjustments can happen without much notice, and as often as eight times per year. Adjustable rate mortgages are beneficial if you can withstand fluctuation in monthly payments but want to take advantage of lower rates.
  • A variable rate mortgage (VRM) is another type of mortgage where the interest rate of the loan fluctuates based on the current prime rate. With a VRM, though, your monthly payment remains the same because the fluctuating amount is the amount of the payment that’s applied to the mortgage principal. A VRM allows you to keep some stability in terms of consistent monthly payments, but also reap the benefits if interest rates fall. Rates are typically lower with a VRM than they would be with a fixed rate mortgage.
  • A convertible mortgage is one that can move from a variable to a fixed rate, or a shorter to a longer term, at any time without a penalty. If you take advantage of this option, then your interest rate will also change to the current rate offered by the lender for the new term. This would be a good option to consider if you want to stick with a variable rate for the moment, but expect rates to rise.
  • A hybrid mortgage, also known as a 50/50 mortgage, is a combination of fixed and variable rate mortgages, allowing you to get the best of both worlds. With a hybrid mortgage, part of the loan is financed at a fixed rate and the other part of the loan is financed at a variable rate. The terms for both parts may be different, which may be tricky to manage when it comes time to renew your term, and it also may be difficult to transfer a hybrid mortgage to another lender. Still, you benefit from stability as well as potentially falling rates.
  • Closed mortgages have restrictions when it comes to being paid off or renegotiated before the specified loan term is complete. Some closed mortgages cannot be paid off before the term ends without paying a large penalty, and other closed mortgages have a prepayment limit, with the borrower incurring severe penalties if any payment over that limit is made.
  • Open mortgages are flexible in that you can make lump sum prepayments or accelerated payments without penalty in order to pay the loan before the end of the amortization period. Although open mortgages have greater flexibility, they tend to have slightly higher interest rates than that of a closed mortgage.
  • Reverse mortgages, or home equity conversion mortgages, are mortgages that allow you to transform the equity in their home to cash while still living in the property. This has been touted as a good option for homeowners who are nearing retirement and who have considerable equity in their homes if they aren’t planning on moving and need to supplement their retirement income.
  • A portable mortgage is exactly what it sounds like: it can move when you do. With a portable mortgage, you can take your current mortgage and apply it to another property if you move. You usually won’t have to pay penalties for breaking your mortgage contract, and you get to keep the interest rate of your current loan without going through the approval process again. This is beneficial if your current mortgage has a lower interest than anything you could get with your new home purchase.
  • An assumable mortgage is one that can be assumed by someone else. If you’re looking to assume someone’s mortgage, then you’d usually have to be approved by the current lender, and the terms of that mortgage have to remain the same once transferred.
  • A Home Equity Line of Credit (HELOC)is often used in conjunction with a mortgage but can also be used as a mortgage on its own for up to 65% of the property’s assessed value. With a HELOC, you can borrow money as needed up to that amount, although the interest is tied to the prime rate and can change at any time. With a HELOC you have the flexibility of paying as much of the loan as you want or making interest-only payments.
  • A cash back mortgage is a product that offers you a percentage of the to-be-purchased property as cash upfront, and can be used for anything other than the down payment. The interest rate for this type of loan is high, generally costing the borrower almost twice the value of the cash. This option is generally used by people who need cash immediately following the purchase of their home for anything from moving expenses to furniture.
  • A collateral mortgage is a mortgage in which your lender can lend you more money as your property value increases without needing to refinance your mortgage. It’s a good option if you think you’ll need another loan in the future. If you fell behind on payments, however, the bank has the right to raise your interest rate by as much as 10 percentage points. It is not transferrable to another lender, even at the end of the loan term, and that fact has made it a very attractive product for banks who want to retain their customers. Some banks only offer collateral mortgages, so be sure to read the fine print and ensure that you’re getting what you think you’re getting.

Submit An Offer

Deciding on the offer price:

Ask for a comparative market analysis – CMA contains detailed information about the property you are considering alongside comparable properties in the area

  • Compare list and sold prices of each comparable property
  • Factor in the pros and cons of the home you’re interested in; does it have any special characteristics that are of importance to you?
  • Consider the amount of time the property has been on the market
  • Consider the real estate market; is it a buyer’s market? Is it a seller’s market?

What’s included in the offer:

  • Price – how much you want to pay for the house
  • Deposit – good faith money to be applied against the purchase price at closing
  • Terms – total price offered and the financing details
  • Conditions – items that must be completed or fulfilled prior to the closing (such as a home inspection, obtaining financing, selling your existing home, anything you want the seller to pay for, etc.)
  • Inclusions/Exclusions – items that you want to be included or excluded as part of the purchase price (such as appliances, window coverings, etc.)
  • A request for a current land survey
  • Date the offer expires
  • Closing date – the date you want to take possession of the home; the day that the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified

Proceed With The Closing Process

Immediately begin satisfying any conditions of the agreement that require action on your part:

  • Hire an independent and a reputable home inspector to do a home inspection
  • Order home appraisal to confirm value of the property
  • Verify and finalize the details of your mortgage
  • Hire a lawyer
  • Do final walk through of the property

What A Lawyer Does

Once A Deal Is Firm, Your Lawyer Will:

  • Search the Title of the Property. Your Agreement of Purchase and Sale stipulates that you are going to receive title to the property free and clear. Your lawyer will confirm the name of the registered owners and legal description and will investigate any claims or charges registered against the property (mortgages, builder’s liens, easements, rights of way, judgements, leases, etc.)

Your lawyer will also need to review and ensure:

  • The property survey certificate if it exists (they aren’t very common in Toronto)
  • Property taxes have been paid
  • Outstanding utility accounts have been paid
  • Zoning bylaws have been complied with
  • Status of mortgages that the Seller has on the property
  • Your financing will be sufficient and in place on closing
  • Compliance with restrictions, warranties, conditions and agreements
  • Fixtures and chattels included in the purchase price
  • Documents prepared by the Seller’s lawyer
  • Documents related to the condo – bylaws, financial statements, disclosure statements, etc.
  • Property insurance coverage
  • Details of the mortgage being obtained

Prior To Closing Your Lawyer Will:

  • Prepare documents relating to any sales tax for the chattels that you are purchasing
  • Arrange for you to sign any mortgage documents and make arrangements for funding to the lawyer’s trust account from the mortgage proceeds
  • Show you a purchaser’s statement of adjustments that give you a balance outstanding that you have to come up with before closing (normally need to provide this amount to your lawyer two days beforehand)
  • Prepare all documents for filing in the land registry office on the closing date

On Closing Day Your Lawyer Will:

  • Search of title of the property to make sure there are no last-minute claims against title
  • Release funds held in his trust account and send any amount owing to the Seller’s lawyer
  • Receive a copy of the certificate of possession from the New Home Warranty Program (for new construction condos)
  • Pay any money required on the date of closing as outlined in the statement of adjustments – sales tax, land transfer tax, balance of commission

After Closing Your Lawyer Will:

  • Send you a ‘Reporting Letter’ with all the documents and records including an account of all of their fees
  • Ensure all the Seller’s obligations have been satisfied

Closing

  • Your real estate lawyer will meet you 2 to 3 days before the purchase closing date to sign your purchase and mortgage documents. The Lawyer will review them with you and would make you sign all the legal papers.
  • You have to take any deposit money or down payment that is required to close the purchase at this time.
  • The purchaser’s lawyer would have received all the documents that are required by the seller’s lawyer to transfer title and will review them with the purchaser.
  • Now the closing date has arrived. On this date, the seller’s lawyer receives the required money from the purchaser’s lawyer to close the transaction. The purchaser’s lawyer will now send the documents to Land Titles for registration.
  • Once the main sellers have received the money from the purchaser’s lawyer, they tell their realtor to release keys.
  • Now your realtor will get the house key from seller’s realtor and will meet you to, the buyer, to welcome you to your new home!

Get Updates on Homes For Sale

If the time for you has come to “Find Your Dream Home”, then I would love to help you. If you would like to have new listings emailed to you as soon as they become available, then, by filling out the form below, you will be placed on the Top Priority list. No Obligation… new listings will be sent to your E-Mail address. One of them just might be… YOUR DREAM HOME!

Find Your Dream Home

House Type

Approx. Age of Home

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Kathryn Gorzkowski

Sales Representative

Sutton Group - Summit Realty Inc., Brokerage

33 Pearl Street, Mississauga,
Ontario, L5M 1X1
summitcitycentre.sutton.com

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