Where To Start!!
Figure out what you can afford, Pre Qualify for a loan.
First you have to decide if your going to go to your bank or use a mortgage brokers Mortgage Brokers tend to work with many lenders and will shop around for your best options, whereas your Bank’s or Credit Union loan officer often have an interest in keeping a long term customer happy. In short, shop around, a mortgage is your largest financial commitment and should be considered before anything else. First Time Home Buyers should investigate the incentives that are available to help them purchase a new home. To qualify for pre-approval, the lender/ Broker needs to see proof of income, bank account statements, savings account information and credit reports to determine the homebuyer’s buying power and get you a pre approval.
This will give you an idea of what you can afford and what your potential payments will be.
Once you’ve become pre-qualified for a loan, and or have your current home ready to put on the market. You can be ready to write an offer when you come across the perfect home, this is very important, you don’t want to start the search unprepared and risk missing out.
Now you have a preapproval, you have a commitment at the current interest rate, just incase rates go up your covered.
Now your ready to put your house-hunting efforts into full gear.
Work with a realtor
A realtor is key to finding the right home. Saving you time and get you into only the right properties for your needs. Working hard to make sure this process is as easy as possible.
Know what you want
Make a list of wants and needs. Sit down with your agent and talk over what you want your next home to provide, how long you expect to live there, growing family? Is retirement around the corner?
Chances are you will visit a few homes before choosing one. Keeping notes on what each provide and what they don’t. Also key things of interest on each place, colors, kitchens, yards, hot tub, features on each home that stick out for you. Some things to compare are the homes, utility costs, property taxes and major repairs. These will affect your monthly housing expenses. Also very good to keep in mind.
You have found the one!!
Making an Offer to Purchase
After you have found the home you want to buy, you and your realtor will write up an Offer to Purchase. Together you will decide on where you want to start with a price, what you want to put down for a deposit, when you want to take possession, what things you want included (appliances, window coverings etc) and what subject you will be adding in there to protect you as the buyer. (Financing, title, appraisal, inspection, insurance, strata documents etc. ) This means that the contract will become firm and binding only when the conditions are met.
What Happens After You Make an Offer to Purchase?
Your realtor has helped you prepare an Offer to Purchase. This offer includes all the details of the sale. The realtor presents the offer to the vendor. What can you expect to happen next? There are three possible responses.
Response 1 - The vendor accepts your offer. The deal is concluded and you move on to the next steps in the buying process.
Response 2 –The vendor makes a counter-offer. The counter-offer might ask for a higher price, or different terms. You can sign the offer back to the vendor, offering a higher price than your original offer, but lower than the vendor’s counter-offer. If the vender accepts this counter-offer, the deal is concluded. This process can go back and forth a few time if needed to come together and please both parties.
Response 3 –The vendor makes a counter-offer, asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment with costs you can’t afford. You reject the counter-offer because the price is still too high, or you can’t agree to the conditions. The sale doesn’t go through.
Getting a Mortgage
Once your Offer to Purchase has been accepted, go to see your lender or broker. They will verify (and update, if necessary) your financial information and put together what’s needed to complete the mortgage application. Your lender may ask you to get a property appraisal , a land survey, or both. You may also be asked to get title insurance. Your lender will tell you about the various types of mortgages, terms, interest rates, amortization period and, payment schedules available.
Depending on your down payment, you may have a conventional mortgage or a high-ratio mortgage.
Types of Mortgages
Conventional Mortgage A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property’s purchase price or market value — whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.
High-ratio Mortgage If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing. There are other lenders that can provide mortgage insurance as well, GE works with credit unions and is also an option to consider.
The term is the length of time that the mortgage contract conditions, including interest rate, will be fixed. The term can be from six months up to ten years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. Think carefully about the term that you want, and don’t be afraid to ask your lender to figure out the differences between a one, two, five-year (or longer) term mortgage.
Mortgage Interest Rates
Mortgage interest rates are fixed, variable or adjustable.
Fixed Mortgage Interest Rate A fixed mortgage interest rate is a locked-in rate that will not increase for the term of the mortgage.
Variable Mortgage Interest Rate A variable rate fluctuates based on market conditions. The mortgage payment remains unchanged.
Adjustable Mortgage Interest Rate With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions.
Open or Closed Mortgage
Closed Mortgage A closed mortgage cannot be paid off, in whole or in part, before the end of its term. With a closed mortgage you must make only your monthly payments — you cannot pay more than the agreed payment. A closed mortgage is a good choice if you’d like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. A closed mortgage may be a poor choice if you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates.
Open Mortgage An open mortgage is flexible. That means that you can usually pay off part of it, or the entire amount at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage loan. Most lenders let you convert an open mortgage to a closed mortgage at any time, although you may have to pay a small fee.
Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run. If each mortgage term is five years, and the mortgage is amortized over 20 years, you will have to renegotiate the mortgage four times (every five years).
A mortgage loan is repaid in regular payments — monthly, biweekly or weekly. More frequent payment schedules (for example weekly) can save some interest costs by reducing the outstanding principal balance more quickly. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.
Your realtor has added subjects to the contract to protect you through the buying process. You will only remove subjects after you are happy and ready to remove them, then making the offer firm and binding. Such as have your financing lined up. Or home inspection, appraisal, insurance completed and your satisfied with the finding. Your realtor will hold your hand through most or this and arrange most everything for you. Lining up home and property insurance prior to the closing date is also important. (I recommend you over lap the insurance by a day or 2 just incase the prior owners insurance runs out in the morning on closing and yours doesn’t kick in till possession the next day, for the cost of an extra day why chance being uninsured even for a moment) Don’t leave anything till the last minute.
Getting ready for completion day
Before your move, keep track of all your mail and make a list of people, subscriptions, and organizations that should be notified of your changing address. Don’t forget about your bank, your insurance agent, your doctor, and your vet. Just before your move, contact the postal service for a change of address form.
Cancel and re-order
Make another list that includes all the contact information for your utility service providers (telephone, gas, electric, water, cable, and Internet access). To save even more time, you can transfer your utilities online. Remember to contact your pest control, lawn care, window cleaning, alarm company and other services to let them know about your move. Proper planning insures that you won’t be paying for services you’re not using!
Closing day is the day when you finally take legal possession and get to call the house your home. The final signing usually happens at the lawyer or notary’s office.
These are the things that happen on closing day:
Your lender will give the mortgage money to your lawyer/notary.
You must give the down payment (minus the deposit) to your lawyer/notary. You must also give the remaining closing costs.
You will go into the lawyers / notary usually prior to closing day with a piece of id and a bank draft with the down payment (minus the deposit) and closing cost (transfer taxes, GST on new properties, lawyer/ notary fees etc). Your lawyer will contact you prior to this meeting with an balance to complete
First Time Home Buyers can be eligible to be exemption from Property Transfer Tax if the purchase value at fair market value is under 425,000.
Property transfer taxes in BC are 1% on the first 200,000 and 2% on the remaining balance of the fair market value of the property.
Pays the vendor
Registers the home electronically in your name at BC land title office
Insures you have a clear title
The amount you spend depends on your decisions about many things. Here are some to think about:
- Do you want to hire professional movers?
- If so, will it be a large company or a smaller local moving company?
- Will you need to buy insurance to protect your items in transit?
- If you plan to move yourself, will you rent a vehicle?
- Will your current auto or home insurance policy cover your items during the move?
- Will you have to pay utility companies a fee to connect their services in your new home? Are there other utility charges (such as a deposit)?
Know what you’re packing
Label boxes in detail, including contents and the room in which they belong. This will save time and questions for you and your movers.
Moving can be manageable, with the right attitude and thoughtful preparation. It will all be over soon – and you’ll have days, weeks or even months to unpack at your leisure. Throw yourself a housewarming party and meet your new neighbors.
Changing the Locks
When you move into your new home you’ll want to change the exterior door locks for security. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself or call a locksmith to do the job.
Both your old home and your new home should be given a thorough cleaning at moving time. Whether you’re buying cleaning supplies and doing it yourself, or hiring someone to clean for you, the costs can really add up. Plan for this expense.
You might want to re-paint, replace some light fixtures, refinish the floor, re-carpet, or do any number of other decorating tasks. Or you may want to hire an interior decorator. Plan your budget, and consider what needs to be done and what you want to get done. Planning out your projects, depending on your budget.