buyers

IF YOU ARE LOOKING FOR A HOME, THIS INFORMATION COULD HELP YOU PLAN A VERY BIG STEP IN YOUR LIFE!

MORTGAGE QUALIFICATION

The most important consideration when purchasing a home involves obtaining a mortgage.   It is very helpful
to know ahead of time the amount of mortgage for which we can qualify.    We all have our dreams, but when it comes to purchasing a home, reality will force us to modify our dreams to something more attainable. So why not know the amount of mortgage we can realistically expect to secure before the search begins?    Find a mortgage company that will "pre-approve" a mortgage for a particular amount, and there should be no disappointing set backs.    This calculator will reveal what payments can be expected for various amounts and terms.

ADDITIONAL COSTS

Be careful not to overlook sale closing costs and extras assoicated with your actual home purchase. For a resale home, these extras can easily add another 1.5% to 2% on top of the purchase price of your home. If buying a brand new home, that figure can rise to 2.5%, so be sure to plan for these fees so that you're not caught by surprise.   Each of these costs is detailed below.

Inspection Fee: You will want an inspection performed by a professional building inspector before finalizing your offer to purchase.   The inspection may bring to light areas where repairs or maintenance are required and will assure you that the house is structurally sound. Usually the inspector will provide you with a written report.   If they don't, then ask for one.

Mortgage Application Fee: Some institutions charge a mortgage application fee to process your application. If your request for a mortgage is turned down, most will return the application fee to you. This application fee is also charged by some institutions each time your mortgage is renewed.

Appraisal Fee: The financial institution extending the mortgage will hire an appraiser to ensure that the property you are buying meets its criteria for a mortgage.   You are generally responsible for the cost of the appraisal.

Legal/Notorial Fees: You will be required to retain a lawyer or notary to act for you in the purchase and mortgaging of the property , and you will be responsible for payment of the legal or notorial fees and disbursements.   Fees for these services may vary significantly, so shop around before making your decision.

Closing Costs: When buying a resale home, the purchase price is always payable "subject to the usual adjustments" at closing.
This means that any amount that the seller has already prepaid will be adjusted so that the home buyer pays the excess amount back to the seller, and vice versa.

These adjustments can include: - municipal property and school taxes
                                                      - monthly condominium maintenance fees
                                                    - first and last months's rental for rental properties that may be in the home
                                                    - utilities such as hydro, water and fuel oil, including GST.

Interest Adjustment Costs: Interest adjustment dates can be a potential cash flow killer, so please take note of your lender's policy.

Most lenders expect the first mortgage payment one month after closing the purchase, however, if you close mid month, some lenders expect the first payment at the beginning of the next month, two weeks before you would normally expect. Or, they charge a pro-rated interest to make up the difference.

When arranging your mortgage, ask how interest is collected to the interest adjustment date.   By asking the right questions, you can avoid a cash flow crisis on closing.

Land Transfer Tax: Sometimes known as the "Welcome Tax", most provinces levy a one-time tax based on a percentage of the purchase price of the property.

Property Insurance: All homes must have adequate insurance coverage against fire, and other risks of loss, theft and liability. You may find that insurance on your new home is more costly than your previous residence. Your mortgage lender requires that you provide your lawyer or notary with proof that your insurance is in place by the closing date.

Moving Costs: Whether the move into your new home is a do-it-yourself affair or you hire movers, there will certainly be costs involved. If you plan to move during the peak spring/summer months, you should contract for service two to three months in advance if possible.

Additional Costs: Depending on the type of mortgage you choose, and the province in which you buy, there could be additional costs, i.e., default insurance premiums (for low down payment mortgages), plus the cost of a survey of the property. A new home warranty fee could also be required if you're buying a new construction.

New Home Costs: Most new home owners will likely need to buy certain items early on - kitchen appliances, tools, gardening equipment, cleaning materials, perhaps some new furniture, carpets or curtains. Its a good idea to tally up the cost of items you think you will need in the short-term and factor these expenses into your initial costs.