Buyer's Frequently Asked Questions, Click on each question to see the answers
1- What are my costs?
2- What are Market Conditions?
3- Why a Pre-Approved mortgage?
4- What are the Elements of an offer?
5- How do I make an offer?
6- What is a Home Inspection for?
7- Do I absolutely need Homeowner's Insurance?
8- What are Land Transfer Taxes?
9- What do I need to do prior to Moving?
10- Why hire a legal professional?
1- What are my costs? Purchasing a home involves one-time costs
and monthly expenses. The largest one-time cost is the down payment. It represents a certain percentage of the total price
of the property.
In addition to the actual purchase price, there are a number of other expenses that you might be expected to pay for.
These are listed below:
|Mortgage Application and Appraisal Fee
||At time of application
|Property Inspection (optional)
|Deed and/or mortgage registration
|Property Survey (sometimes provided by seller)
|Land Transfer, Deed Tax or Property Purchase Tax
|Mortgage Interest Adjustment and Take Over Fee (if applicable)
|Adjustments for Fuel, Taxes, etc.
|Mortgage Insurance (and application fee if applicable)
|Home and Property Insurance
||Closing and on-going
|Connection charges for utilities such as gas, water and electricity
||Date of move
||Date of move
Other costs may include: Landscaping, Redecorating, Furnishings, Appliances repairs or replacement Typical monthly costs incurred
with home ownership are mortgage payments, maintenance, insurance, condo fees, property taxes and utilities.
2- What are the market conditions? The real estate market is always changing.
It helps to understand how market conditions can affect your position as a buyer. Your agent can provide you with current real estate
market conditions and explain their impact.
Buyer's Market - The supply of homes exceeds the number of buyers (supply is greater than demand). In this market
prices tend to drop and the homes stay on the market longer. Thus listed homes may take longer to sell and you will have more
negotiating power in terms of the selling price.
Seller's Market - The number of buyers exceeds the number of homes on the market (demand greater than supply). In
this market prices are increasing and homes sell quickly. As a buyer you will probably have less negotiating power to obtain a better
selling price for the property of your interests. Fortunately you will be in the driver's seat when selling a property of yours.
Balanced Market - The number of homes on the market is equal to the number of buyers (supply equals demand). In
this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with buyers having a
satisfactory number of homes from which to choose.
3- Why a Pre-Aproved Mortgage? Having a pre-approved mortgage will give you the
confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate
increases while you look for your new home.
Your Mortgage Specialist will answer your questions and help you determine which financing terms and options are right for you. Your
Mortgage Specialist and your agent work as a team to help you find the right home and select the best financing.
Finalizing your Mortgage - Once you've found the home you want to purchase, there are some documents you'll probably
be asked for in order to finalize your financing. They will include:
- A copy of the real estate listing of the property. If the home is still to be built, the mortgage lender will need to see the
architect's or builder's plans and details on lot size and location.
- A copy of the offer to purchase or the building contract, if this document has been prepared.
- Documents to confirm employment, income and source of pre-approval. If you have a pre-approved mortgage, it's a simple matter of
finalizing a few details which your Mortgage Specialist will explain to you.
4- What are the elements of an offer? There are six key components to the
elements of an offer. They are:
Price - Depending on the local market conditions and information provided by your Real Estate Professional, the
price you offer may be different from the seller's price.
Deposit - Your deposit shows good faith and will be applied against the purchase of the home when the sale closes.
As your Real Estate Professional we can advise you on an appropriate amount.
Terms - Includes the total price offered and the financing details. You arrange your own financing or ask to assume
the seller's mortgage, especially if it has an attractive interest rate.
Conditions - These might include "subject to home inspection", "subject to you obtaining financing", or "subject to
you selling your property".
Inclusions and Exclustions - These might include appliances and certain fixtures or decorative items, such as window
coverings or mirrors. These items would remain in the house.
Closing and Possission Date - Generally, the day the title of the property is legally transferred and the transaction
of funds finalized.
5- How do I make an offer? When it comes time to make an offer,
we can as your Real Estate Professional provide current market information and will assist you in drafting your offer. As your Real
Estate Professional, we will communicate the offer, sometimes known as an Offer to Purchase, to the seller, or the seller's
representative, on your behalf. Sometimes there may be more than one offer on a property coming in at the same time. As your Real
Estate Professional, we can guide you through this process.
Firm Offer to Purchase - Usually preferable to the seller, because it means that you are prepared to purchase the home
without any conditions. If the offer is accepted, the home is yours.
Conditional Offer to Purchase - Usually means that you have placed one or more conditions on the purchase, such as
"subject to home inspection", "subject to financing" or "subject to sale of buyer's existing home". The home is not sold until all
the conditions have been met.
Acceptance of Offer - Your Offer to Purchase will be presented as soon as possible. The seller may accept the offer,
reject it, or submit a counter-offer. The counter-offer may be in reference to the price, the closing date, or any number of
variables. The offers can go back and forth until both parties have agreed or one of you ends the negotiations.
6- What is a home inspection for? Buying a home is one of the
most important investment decisions you will make in your lifetime. As such, it makes sound financial sense to enlist the services
of a qualified home inspection company to ensure your home is as solid and secure on the inside as it is on the outside.
A home inspection will determine the structural and mechanical soundness of your home. Your home inspector will identify existing
and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required.
Shortly after the inspection has taken place, a report summarizing the findings is generally provided to the potential purchaser.
By commissioning a home inspection prior to purchase, you're protecting both yourself and your investment, as well as buying a little
Home inspection costs often range according to size, age, and location of the home. Your sales representative can recommend a
reputable home inspection service or arrange for a home inspector to visit your property.
7- Do I absolutely need Homeowner's Insurance? When you purchase a home, consider how
you will protect your investment.
Most mortgage lenders insist on fire insurance coverage at least equal to the loan amount or the building value, whichever is less.
You should also consider a homeowner's policy that combines fire insurance on the building and its contents with personal liability coverage.
Consult your general insurance agent or broker for professional advice on home insurance.
Mortgage Life Insurance - Mortgage life insurance (MLI) is inexpensive coverage on your life which protects your family
or beneficiaries by paying off your outstanding mortgage in the event of your death. For just pennies a day, you will have peace of mind
knowing your beneficiaries will be mortgage free. MLI premiums are based on two factors: your age and mortgage amount. Your premium is
added to your mortgage payment so there's no extra paperwork, and it remains the same until your mortgage is paid off. Joint coverage for spouses is also available.
Dissability Insurance - Disability Insurance is important if your mortgage payments depend entirely or in part on your
income. Disability insurance provides replacement income if an accident or illness prevents you from working.
Job Loss Mortgage Insurance - Recently insurance companies have started to offer Job Loss Mortgage Insurance. This
insurance covers the mortgage payments in the event that you involuntarily lose your job.
8- What are Land Transfer Taxes? Purchasers in most North American
centers can add Land Transfer Taxes to their list of closing costs. Please be informed that Land Transfer Taxes could not necessary be applicable
to your region or country. Your Real Estate Specialist is capable to require further information for you.
9- What do I need to do prior to Moving? Use this helpful checklist
as a reminder of the things you need to do before you move.
Book the movers. You can choose to have the movers pack everything, or just the breakables, or you can pack yourself. It's a good idea
to obtain estimates from several different companies.
If you own your present Home - Arrange to have your gas, water, and electric meters read on the day you leave and
have the bills forwarded to your new address.
- Have your oil tank read and filled before your sale closes, and provide a receipt to your legal professional if required.
- If the water heater or furnace is rented, arrange for a transfer of the rental agreement to the purchaser.
- Disconnect your telephone, cable TV, and water softener.
If you rent your present Home - Give necessary written notice to your landlord and make arrangements for the
return of any monies you have on deposit.
At your new Home - Make arrangements for the gas and electric utilities, water softener, telephone and cable TV
to be connected on the day the sale closes.
- Get "Change of Address" cards from the post office and send out well before moving day.
- Have the post office forward your mail to your new address.
- Cancel any contracted services and pre-authorized cheques.
- Inform gardening, dry cleaning, garbage pick-up, newspapers, magazines, diaper and other home services. Arrange for service at
your new address.
- Obtain a letter of introduction from your current branch to help establish new accounts. Transfer trust or bank accounts and
- Cancel or transfer social, athletic, civic, religious or business affiliations and memberships.
- Arrange for transfer of medical, dental, prescription and optical records.
- Change the address on your driver's license(s) effective the day of the move.
- Collect all items out for cleaning, repair or storage. e.g. fur coats, dry cleaning.
- Make special arrangements for the moving of perishables, such as plants.
- Make special arrangements for the moving of your pets.
- Dispose safely of all flammable liquids as it is illegal for movers to carry them.
10- Why hire a legal professional? A legal professional is there to represent your
interests and to process the legal documentation required. As your Real Estate Professional, we can provide you with the names of legal
professionals who specialize in real estate.
The legal process differs from province to province, state to state and finally country to country. Your lawyer will advise you on the
steps to be taken before the keys to your new home are presented to you.