Your First Home , livre ebook

Self-Counsel Press - Kimberley Marr

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97 pages

English

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Buying Your First Home: whether a condominium, townhouse, single family dwelling, or other type of abode, is often the single largest purchase in a person’s life. But just how confident do you feel that you know what you’re getting into? When you're looking to buy your first home, who can you trust? Brokers, bankers, realtors ... everyone's biased in their own way. How do you understand what you should look for in these professionals, and what you can or should do yourself? How do you understand how much a mortgage will actually cost, how it works, and how to pay it off quickly? Why do you need a notary or a lawyer? Is mortgage insurance worth it? This multitude of questions can be overwhelming for first-time purchasers, even for people who’ve purchased property in the past. Your First Home: A Buyer’s Kit alleviates some of the stress of buying a home by explaining what you need to know about buying your first (or second) place.
Introduction xv
1 Renting versus Home Ownership: Do the Math 1
1. Renting Is Paying Someone Else’s Mortgage 2
2. Build Your Own Equity 2
3. Creating Your Home Buyer Plan 3
2 Mortgage: How Much Can You Afford? 7
1. U nderstanding Mortgage Products 8
1.1 Conventional mortgage 8
1.2 High-ratio mortgage 9
1.3 Second mortgage 9
1.4 Vendor Take Back (VTB) 10
1.5 Builder’s mortgage 10
1.6 Closed mortgage 10
1.7 Open mortgage 11
1.8 Fixed rate mortgage 11
1.9 Variable or adjustable rate mortgage 12
1.10 Convertible mortgage 13
2. Getting Pre-Approved for a Mortgage 13
2.1 Obtain your credit report 14
2.2 U nderstanding the difference between pre-qualify
and pre-approval 16
2.3 Determine how much you can spend on a home 18
3. How to Shop for a Mortgage and Get the Best Deal 21
3.1 U sing the services of a mortgage broker 23
3.2 Mortgage term and interest rates 24
4. Plan Your Budget 25
3 Eliminate Your Mortgage Fast 29
1. Principal versus Interest 29
2. How to Pay off Your Mortgage Quickly 30
3. Your Mortgage Term 32
vi Your First Home: A Buyer’s Kit
4. Begin with a Starter Home 35
5. Pay off Your Mortgage Faster 35
4 Government Programs 47
1. The 5 Percent Down Payment Program 47
2. Home Buyers’ Plan 51
2.1 How to withdraw and repay your RRSP funds 53
3. Moving Expenses 55
4. Land Transfer Tax Programs 55
4.1 Ontario land transfer tax rebate 56
4.2 British Columbia property transfer tax exemption 58
4.3 Prince Edward Island first-time buyer
land transfer tax rebate 59
5. First-Time Home Buyers’ Tax Credit (HBTC) 60
6. Green Home Program 61
7. New Immigrant and Self-Employed Program 62
5 Deciding What to Buy 65
1. Buying a Newly Built Home 65
1.1 Functionally modern layout, features, and current
technology 66
1.2 Green standards 67
1.3 New home warranties 67
1.3a Ontario’s Tarion Warranty Corporation 68
1.3b British Columbia New Home Warranty 69
1.3c A lberta New Home Warranty Program 69
1.3d Québec 70
1.3e A tlantic Home Warranty 70
1.4 Long closing 70
1.5 Harmonized Sales Tax (HST) and Goods and
Services Tax (GST) 71
1.6 New home builder’s agreement of purchase
and sale 71
2. Buying a Resale Home 73
2.1 Home warranty on a resale home 74
Contents vii
2.2 The resale agreement of purchase and
sale contract 75
3. Freeholds and Condominiums 75
6 Understanding the Relationship between You
and Your Real Estate Broker 79
1. U nderstanding What Your Real Estate Agent Does 79
1.1 Tasks of a real estate broker 80
1.1a Determining your plan 80
1.1b Financing plan 80
1.1c Researching properties to view 80
1.1d Booking showing appointments 81
1.1e Discussing the viewed homes 81
1.1f Completing the agreement of purchase
and sale 81
1.1g Connecting you to other relevant
professionals 81
1.2 How to find a real estate broker 82
1.2a Interviewing real estate brokers 82
2. Who Is Working for You? 83
2.1 Buyer representation 84
2.2 Seller representation 85
2.3 Multiple representation 85
2.4 Customer service 85
3. Individual Identification Record 86
7 The Search for Your New Home 87
1. Make a List of What You Want and Don’t Want 87
2. The Different Types of Homes 88
3. The Search Is On! 89
3.1 Do a search 89
3.2 Viewing properties 91
3.3 How long will it take to find a home? 92
3.4 Market data 95
viii Your First Home: A Buyer’s Kit
4. What Type of Economic Market Cycle Is the Real
Estate Market Experiencing? 95
4.1 Seller’s market 96
4.2 Buyer’s market 96
4.3 Balanced market 96
4.4 What type of marketplace are you currently
experiencing? 97
4.5 Seasonal cycles 97
8 The Agreement of Purchase and Sale 99
1. What Is Included in an Agreement of Purchase
and Sale 101
2. Negotiating the Offer 104
9 The Home Inspection 107
1. What Is Covered in a Home Inspection? 108
2. What Is the Role of the Home Inspector? 109
2.1 Insulation 111
2.2 Marijuana grow operations 112
2.3 A ccessory apartments 113
2.4 A ttend the home inspection 113
2.5 The home inspection report 114
3. Is an Inspection Needed for a Newly Constructed
Home? 115
10 The Role of Your Lawyer 117
1. How to Find the Right Lawyer 119
2. What Is the Lawyer’s Role When Closing Your Deal? 120
3. Closing Costs 124
3.1 Ontario land transfer tax 126
3.2 British Columbia property transfer tax 127
3.3 Prince Edward Island first-time buyer land
transfer tax 127
3.4 A lberta and Saskatchewan land transfer fees 128
3.5 Manitoba land transfer tax 128
3.6 Québec land transfer tax 128
Contents ix
3.7 New Brunswick real property transfer tax 128
3.8 Nova Scotia land transfer tax 128
3.9 Newfoundland registration of deeds 129
3.10 Northwest Territories land transfer tax 129
3.11 Yukon Territory land title 129
3.12 Nunavut 130
4. Closing Tasks 130
5. Will and Powers of Attorney 131
11 Title Insurance 133
1. Title Insurance and How It Protects the Buyer 135
2. Title Insurance and What It Doesn’t Cover 137
3. How Do You Choose a Title Insurance Company? 138
4. What Does Title Insurance Cost? 139
5. How Do I Obtain a Title Policy? 139
12 Home and Property Insurance 141
1. Property and Contents Insurance 141
2. Mortgage Insurance 144
13 Moving forward 147
Samples
1 Mortgage for 25 Years 39
2 Mortgage with Monthly and Biweekly Payments
for 25 Years 41
3 Mortgage with Biweekly Payments Plus $50
for 25 Years 42
4 Mortgage with Biweekly Payments Plus $100
for 25 Years 44
Worksheets
1 Monthly Budget 27
2 Home-Buyer Profile 90
3 Home-Buyer Checklist 93
4 Closing Tasks 131

Sujets

Real estate

Informations

Publié par	Self-Counsel Press
Date de parution	01 juillet 2012
Nombre de lectures	17
EAN13	9781770408845
Langue	English

Informations légales : prix de location à la page 0,0030€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

Extrait

YOUR FIRST HOME
A Buyer’s Kit for Condos and Houses!
Kimberley Marr, CAAP , ABR®
Self-Counsel Press
(a division of)
International Self-Counsel Press Ltd.
USA Canada

Copyright © 2012

International Self-Counsel Press
All rights reserved.
Introduction

Buying your first home is an exciting, big step. There is a need amongst first-home buyers for sound guidance, information, and disclosure of facts. Home ownership is a major decision; it is not just about acquiring shelter or making an investment. When you purchase a home you are buying a lifestyle. It is a place where dreams can become reality; for example:

• Enjoying the warmth of a fireplace in the family room.

• Preparing a home-cooked dinner in a spacious kitchen.

• Fulfilling a gardening hobby or inviting friends and family over for a barbecue.
Home is where we raise our children and share life experiences with family and friends. For many, home has even become a place of business thanks to the virtual office options we have today.
Your home may be the largest financial investment you will make. For many, real estate is the cornerstone of their net worth — often the equity in a home is the resource that enhances finances during retirement. Buying a home can be an emotionally charged, confusing, and potentially overwhelming experience.
If you simply mention that you are considering buying your first home, you are sure to get plenty of advice from well-meaning family and friends. While being well informed about the home-buying process and having experience is beneficial, often the advice and information is confusing or incomplete and may be based on someone else’s house-buying experience and personal results. Each situation is different.
Now that you are thinking about this important financial decision, you will begin to notice information and advertisements about various aspects of the home-buying process. Walk into a bank and you will see brochures, posters, and booklets offering myriad mortgage products and options. Which mortgage product is best for you?
Driving around town, you may notice open house signs, or new home billboards, each offering something special and distinct. Open up the real estate section of the newspaper and you will find pages of advertisements offering different housing options and special financing programs.
Turn on the television or surf the Internet and you will hear different opinions about the market, the inventory, prices, interest rates, which areas are hot, and a host of other real estate related topics. You may be asking yourself:

• Where do I begin?

• Who should I contact?

• How much can I afford?
This can be overwhelming and somewhat scary. You may feel that you are on an information and option overload! At this stage, what you really need is an organized plan . Having knowledge helps to alleviate fear. Knowledge also provides you with the confidence to make prudent, well-thought-out decisions.
Plan ahead, gather information, and ask lots of questions. Time and effort needs to be spent on your part in determining your unique needs, objectives, and financial goals. An informed buyer is a successful buyer.
This book is the result of more than 23 years of real estate practice and experience. I have worked with lenders and mortgage brokers, home inspectors, insurance agents, real estate lawyers, accountants, new home builders, and contractors — all of whom have generously shared their time and expertise with me throughout my career. The process of purchasing real estate has several different moving parts and is a team effort. Often when we are embarking on a new project or journey, we don’t even know what we don’t know; this book will share the knowledge and experience that I have acquired as part of a team of professionals. A team of professionals in the real estate industry have reviewed the chapters related to their expertise and have added their insights and advice. First-time buyers need to have this information and understand the process and tasks to consider and complete before buying a home.
My goal in writing this book is to show you a systematic, objective-oriented home-buying process. This book will provide you with information and resources so that you can create your own Home Buyer Plan unique to your needs, wants, and wishes. It answers questions from people just like you, with similar concerns and desires. It offers straightforward answers and clear explanations to help you feel more comfortable and confident in your home-buying decisions.
After reading this book, you will be better prepared to make decisions as well as understand the role of ancillary professionals — other professionals who may become a part of your home-buying team. You will be shown how to qualify for and obtain a mortgage as well as become familiar with mortgage “lingo” such as conventional versus high-ratio mortgages, and the programs that Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada offer first-time buyers in Canada. Information is also included about how to set up and track your home budget, understand government programs and regulations such as the Five Percent Down Payment Home Buyer Program, First Time Home Buyers’ tax credit (HBTC), land transfer tax rebates, and Home Buyers’ Plan (HBP) in relation to your RRSP. My favourite topic is tips for paying off your mortgage quickly thereby building your equity and net worth.
Tools and information are provided to assist you with defining your home needs, wants, and wish list including geographic considerations and housing types and styles. Information regarding the differences between purchasing a newly built home versus a resale home is also reviewed.
This book includes topics about understanding the roles of the real estate agent (also called a broker), lawyer, and home inspector. By understanding the real estate agent’s duties as well as agency relationships, you will be better prepared to research and find a real estate professional to assist you with the buying process if you so choose. Lawyers are an important part of the real estate process; you will find information on legal considerations, agreements of purchase and sale, closing costs, and working with a lawyer. Home inspections and insurance highlights are also reviewed.
The book has been set up in a format to enable you to utilize it as a guide. It will help you with planning and executing your own Home Buyer Plan. The chapters of the book are organized in the order in which you will most likely deal with topics and items during your home-buying process. This book can be used as part of your systematic, objective-oriented plan, so go ahead, feel free to write notes and highlight sections to put this book to use. Write down your plans, thoughts, and ideas. As you progress, you will be assembling a team of professionals who can provide you with additional information and tools to help move you through the home-buying process.
Having knowledge is powerful. Your dreams, lifestyle, and goals are waiting. This book will provide you with information and tools to assist with your home-buying goals so that you can realize an enjoyable and successful first home purchase.
Stop being confused, overwhelmed, and afraid. Let’s get started on your journey!
1
Renting versus Home Ownership: Do the Math

You may have heard that owning real estate is a good investment. You may also wonder if this is a good time to be investing in a home. Perhaps you’ve read that prices have been stable, and in some neighbourhoods, homes are increasing in value and have been for the past several years. Compared to the last three decades, interest rates are exceptionally low. Combined, these factors make home ownership attractive, but don’t forget the lifestyle benefits of owning a home.
One of the lifestyle benefits is being able to put your own creative mark on your home. It is your own space to decorate as you wish. When you rent, you may not want to spend the time and money decorating (e.g., painting, adding nicer light fixtures, upgrading old carpeting or appliances). This is the psychological plus of home ownership!
Let’s compare renting versus buying and owning a home. Everyone needs a place to live. Consider that when you are renting, you are probably paying a mortgage — your landlord’s mortgage! Over time, you are paying off your landlord’s mortgage, and for that, your landlord is grateful. But where does this leave you in the future? Have you ever calculated just how much money you are contributing toward your landlord’s mortgage?

1. Renting Is Paying Someone Else’s Mortgage
Let’s assume you are renting for $1,500 per month, which equals $18,000 per year. Over five years (assuming the rent does not increase), this equals $90,000. Over ten years, this equals $180,000. Over 25 years (which is a popular mortgage amortization time frame), this would equate to $450,000!
What do you have to show for it? Probably a stack of rent receipts. Even worse, you may continue renting in the future, continuing to pay off your landlord’s mortgage. Although your income may keep pace with the cost of living (and annual rental increases), what happens when you retire? Monthly rental amounts may continue to rise, but your retirement income may not, or worse, it may become less. This may necessitate that you move to a smaller home or farther away, or both.
Buying your first home is an exciting and emotionally charged event. It is also a major life decision. As with most new experiences, you