First Time Buyer Series: How Much Money Do I Need?

When you are purchasing your first home it’s important to know the costs involved so you can plan accordingly. Talking to a mortgage broker is a great first step to figuring out a buying range. Here are some of the costs that you will incur once you decide to buy a home.

1.      Professional Agent Fees

a.      Great news! As a buyer, the professional fees for your agent are paid by the seller so you do not have to pay a fee to have a buyer agent working for you.

2.      The Deposit

a.      The deposit is an amount of money that you submit with your offer and is applied to your down payment on the day you take possession of the home. For first time buyers who are not competing on a purchase, usually this amount will range from $10,000 to $15,000. You will need to have this amount available in the form of a certified cheque 24 hours after an agreement has been accepted. This means if you are putting in an offer you should be ready to move around funds right away.

b.      First time buyers can use up to $20,000 from their RRSPs to put towards the purchase of a home- sometimes this money can be used as a deposit for a home depending on if your bank allows you to unlock them beforehand (this may vary from bank to bank).

3.      Home Inspection

a.      If you choose to do a home inspection (we always suggest that you do), the cost can vary depending on the size of the home. This can range anywhere from $100 (for a condo) to $500 (for a larger house) depending on the inspector you use.

4.      Lawyer Fees

a.      Lawyer fees also vary- but you can expect these costs to range from $800 to $1200. These fees are paid on the closing day (the day you move in) to your lawyer.

5.      Title Insurance

a.      You will also have to pay for title insurance on your closing day this is a standard fee of $430.00 for any purchase under $450,000. You lawyer takes care of this for you.

6.      Disbursements

a.      Disbursements is when the lawyer performs a title search on a home to ensure that the seller is indeed the owner of the home and is in good standing with their mortgage etc. This usually costs anywhere from $75.00 to $150.00.

7.      Adjustments

a.      These are when the lawyer makes adjustments to the purchase price based on the utility bills and property taxes that have been paid in advance or need to be paid still by the seller. For example, if the seller has paid the property taxes for the year in advance, then an adjustment would be made so the buyer would pay the excess amount the seller paid back to them on the closing day. Your lawyer will have an idea of what the adjustments are a few days before your closing day.

8.      Land Transfer Tax

a.      When you purchase a home in Ontario you have to pay a land transfer tax to transfer the ownership into your name. When you purchase in Toronto you have to pay two taxes- the provincial tax as well as a municipal tax. In cities outside of Toronto like Mississauga and Oakville, you only have to pay the Provincial tax.  First time buyers are given a rebate when they purchase their first home and this can be automatically filed by your lawyer on the closing day and the money will come right back to you. The rebate is up to $2000 (you can get the rebate for both the Toronto tax and the provincial tax if you are purchasing in Toronto). Go to http://www.thamteam.com/Land-transfer-tax  to use the land transfer tax calculator and see what kind of tax you’ll need to pay based on your purchase price.

Summary

Usually it is recommended by mortgage lenders buyers put aside an extra 1.5% of the purchase price for all of the items listed above, however this amount often does not take into account the rebate that you will receive for land transfer tax as a first time home buyer. This number may also be higher if you are purchasing in Toronto.

 

For more information contact Melanie - melanietham@kw.com.


First Time Buyer Series: The Conditional Period

First Time Buyers: They’ve accepted my offer, now what?
 
Congratulations! They’ve accepted your offer which is a big step in the process, but there are still a ton of things to take care of during the conditional period before the deal becomes firm. Here is a condensed list of what you’ll need to do: 
 
1. Provide the Deposit Cheque-  Once an offer has been accepted, the buyer usually has 24 hours from when the Agreement of Purchase and Sale has been signed to deliver the deposit check to the seller’s brokerage. If the agreement is signed on a statutory holiday or on a Saturday or Sunday the buyer will have 24 hours from the beginning of the next weekday to produce the cheque. The cheque should be certified by your bank or should be a bank draft and is made out to the seller’s brokerage. It is held by that brokerage in a special account to be applied to the buyer’s down payment on closing.  If there are conditions on the offer and they are not waived by the buyer, then the deposit cheque is returned in full to the buyer with no deductions.
 
2. Find a Good Real Estate Lawyer- If you’ve bought a condo or a condo townhouse your agent will almost always include  a condition on your agreement to state that your lawyer will review the status certificate for the condo corporation. The status certificate is the document that gives details on the amount of money in the reserve fund for repairs on the building and will state whether there is an expected increase in the amount you pay each month. It can also show pet restrictions on the building (some condos do not allow dogs of a certain breed or size and some do not allow pets at all). This can be an important document to show how well the building or complex is managed and can indicate future issues with maintenance fees. 
This condition can sometimes take several weeks as it takes time for the document to be sent and then reviewed by the lawyer. During this time the deal is still conditional. Your agent will likely be able to refer you to a trusted real estate lawyer that they have worked with in the past. Click the following link to see our list of preferred suppliers: http://www.thamteam.com/Preferred-suppliers.
 
3. Arrange Financing – In most situations (except if you are competing with others for the house) your offer will also include a condition that will allow you a few days to be approved for financing on the home you have purchased. You may decide to use a bank that you have worked with in the past, use a referral from a trusted source, or shop around for different lenders. The financing condition will allow you to examine what kind of payments you’ll have to make on a mortgage each month and help you feel comfortable with the purchase you just made. If you are not approved by any lenders during the conditional period you have the opportunity to back out of the agreement and you will receive your deposit back in full. 
 
Even after you have been approved for a mortgage by one lender, you may still shop around for lower rates and different packages up until a couple weeks before your closing date. Again, your agent will likely be able to help you with that. We have a mortgage specialist at Scotiabank that we have worked with quite closely and referred several clients to. Mary keeps us updated on when rates are expected to go up often several days beforehand so we can keep our clients in the know and lock in rates before they purchase. Check the Preferred Suppliers link above for Mary’s information. 
 
4. Hire a good home Inspector – It is essential that you hire a good home inspector to ensure that the home you’ve just purchased is in good condition with no major defects. Major defects might include structural damage, foundation cracks, mould, water damage, leaks etc. They will also check all the appliances, electrical, water systems and the roof to ensure that everything is in good working order. Finding an inspector who you trust to be thorough and honest is important. You will likely need the inspector to do the inspection in the first five days following your purchase. If there are major defects, you have the option of adjusting the price on the offer, or adjusting the offer to ensure that the defects are fixed before you take possession of the home. You also have the option of backing out of the deal. Check out the “How Much Money Do I Need?” post in the series to find out information about the cost of an inspection. 
 
5. Waive conditions- Once you have done all the necessary things to satisfy yourself that the conditions have been met on your offer, you will have to sign a waiver before the conditional period is over to ensure that the deal becomes firm. Your agent will then send the waiver to the seller’s agent.
 
 
Are you a present buyer or potential buyer with questions? Contact Melanie at melanietham@kw.com for more information.  
 
Check out the next post in the series: What do I Have to do Before my Closing Date?
 

First Time Buyer Series: Understanding the Agreement of Purchase and Sale

Great, you’ve found a home you like! Now it’s time to put in an offer- this will help explain to you what that entails.
 
1. Putting in an offer
 When you find a home that you love, your agent will be able to provide you with comparable homes that have sold recently to help you decide what kind of offer to put forward on the house you’re interested in. 
 
Once you have decided on the price, your agent will put together documents called the Agreement of Purchase of Sale. The Agreement of Purchase and Sale contains standard clauses from the Ontario Real Estate Association to protect both you and the seller, however there are added components that are negotiable and conditions that your agent may add to the Agreement of Purchase and Sale to ensure that you are protected. If a deal is conditional, that means that certain conditions must be met before a certain time period for the deal to be firm or complete. This conditional time is usually always for the benefit of the buyer. Some of these conditions and negotiable components are as follows:
 
i. The Deposit- The deposit is an amount of money that you will submit after the agreement is accepted to show the sellers that you are serious about following through with the agreement. The deposit is submitted and made out to the seller’s real estate brokerage within 24 hours AFTER the Agreement of Purchase and Sale has been signed and accepted by both parties. If there are conditions on the agreement and they are not waived or met by the buyer then the deal does not go through and the buyer gets their deposit back in full. 
 
ii. Financing Condition- Most first time buyers will need a financing condition to ensure that they can get the financing they need to purchase the home and feel comfortable with the mortgage payments they will be assuming once their offer is accepted. This condition is worded to say that buyers have a certain number of days to secure financing in “their sole and absolute discretion” and that the buyers must waive this condition before the time period allotted or the deal becomes null and void (usually 3-5 days). This gives buyers an escape clause should they find that they are unsatisfied with the mortgage they’ve been quoted. 
 
iii. Home Inspection Condition - Home inspections are one of the most important ways that buyers can protect themselves when purchasing a home. We always recommend that buyers do a home inspection once their offer has been accepted to ensure that they become aware of any defects with the home. If the buyer is unsatisfied with the home inspection report, they have the option of backing out of the deal or asking for a price reduction based on the issues in the inspection. 
 
iv. Status Certificate Condition
This condition is used only when purchasing a condo-townhouse or a condominium. The status report is a document the details the current financial state of the condo corporation. It will show exactly where the maintenance fees go and what they pay for as well as the amount of money in the reserve fund for repairs that need to be done within the condo building or the complex. It will also detail any restrictions on the building such as pet restrictions. 
This document must be ordered the seller and is usually paid for by the seller (it costs about $100 to order). The document is then looked over by your lawyer to ensure there are no red flags or concerns. 
This condition usually takes the longest as it can take several days and sometimes weeks for the document to arrive and then your lawyer is usually given a certain amount of time to review the document (3-5 days).
 
v. Closing Date
The closing date is the date on which the buyers take possession of the home. This is a flexible date and sometimes the sellers have a specific date in mind based on another home they may have already purchased or they prefer a longer closing date as they may not have purchased a home yet. If buyers are flexible about their closing date it can be beneficial as it can make their offer more appealing to the seller.  60-90 days from the purchase date is quite common for a closing date.
 
2. After submitting the offer
a. Once you have submitted the offer, it does not mean you have actually purchased the home. The seller has several options: they can either accept the offer, reject the offer completely, or sign back the offer with a counter offer. If they sign back the offer, the buyers will have the opportunity to either accept their counter offer, reject the offer completely  OR counter the counter offer with another offer. A good agent will help you negotiate this process and help you do what best suits your needs as well as doing their best to keep a good relationship with the selling agent. 
 

First Time Buyer Series: Starting the Process

We know that buying your first home can be a daunting and confusing experience! To help you understand the process, we've put together a series of posts that will explain everything from where to begin, to what the conditions mean on an offer, to your moving day and closing costs.

Today's post: How to get Started

1. Talk to a mortgage broker
  • A mortgage broker will ask you to submit an application so they can assess your financial situation and your ability to purchase a home. A broker will be able to help you find flexible solutions for your situation and give you an idea of what kind of buying range you should look in to find a home that’s right for you. They will give you a pre-approval letter based on your application and a credit check which you can then pass forward to your agent so they can help you find homes within that price range. They can also give you an idea of current interest rates and what kind of mortgage payments you will have based on the money you have to put as a down payment.
2. Choose a real estate agent
  • Hiring a real estate professional will ensure that each step in the home buying process is as stress-free as possible. When working with a real estate agent it’s important to find someone you trust to represent you and your family for one of your biggest investments.
  • An agent will also be able to direct you to their trusted partners for your real estate needs such as mortgage brokers, real estate lawyers, home inspectors and contractors to make the process a little easier for you. Professional fees for  buyer agents are paid for by the seller of the home- this makes it all the more beneficial for buyers to have representatives on their side.
3. Finding the home for you
  • Make a list of what you need and want in a home and what areas you are interested in. This takes some careful thinking and planning. Your realtor will be able to provide you with essential market information and recommendations on ideal properties that fit your criteria and your price range in the areas you are interested. When good properties come on the market they can sell quickly- your agent can ensure that you see those properties as soon as they become available so that you have the best chance of getting that home. Your agent can book appointments and start taking you through properties that match your needs. Once you find the right home for you, you can  put in an offer to purchase the property. 

Watch for the next post in the series: The Agreement of Purchase and Sale 

Contact Melanie if you're interested in receiving more information about the purchase or sale of your next home melanietham@kw.com.

 

The GTA housing market remains strong for July

Check out the latest GTA market watch report for July- home sales remain strong despite a slight increase in mortgage lending rates.

“Last month’s sales represented the best July result since 2009 and was the third best July result on record. Despite recent increases in average borrowing costs, home buyers are still finding affordable home ownership options in the GTA,” said Toronto Real Estate Board President Dianne Usher (Source: Toronto Real Estate Board).

To watch the market watch report video go to:

http://www.youtube.com/watch?v=g0XcQKfkWVY&feature=player_embedded

 

For more information about how the market affects your home or your next purchase contact Lynne, Melanie, or Simon Tham at 905-278-8866.


Open House this Weekend

Come see us at this stunning townhouse in Meadowvale this weekend!

Join us at 2881 Windwood Dr. #23 this weekend for an open house on Saturday and Sunday from 2-4pm.

This goergeous recently renovated end unit townhome is located in a beautifully maintained complex close to major highways and amenities. Featuring three bedrooms, floor to ceiling windows in the living room and stunning private backyard backing onto a park.

Listed at $349,500. Call Melanie for more details 647-389-8081.

 


Working with People you Trust

We really value every single referral we receive because we know that means people value our services and trust us to deliver  the same level of service to their friends and family. We in turn want to refer some of our trusted suppliers who we know will do an excellent job for our clients.

The period of time just before, during and after you purchase or sell your home is what we like to call the "Red Zone"- a crazy and sometimes stressful time where you have some big decisions to make. We want to make the experience easier for you by referring you to the people we know and trust to do an excellent job for you. Real estate lawyers, mortgage brokers, stagers, designers, home inspecters- they are all key players in helping you through the process. 

See our recently updated Preferred Suppliers Page to see who we recommend for each job:

http://www.thamteam.com/Preferred-suppliers

 


Grand Opening

Today is the grand opening of Keller Williams Realty Solutions in Port Credit!  We are so proud to be a part of the team starting this brokerage and we're excited to show off the new premises to our friends, family and clients tonight. The wonderful culture of community and positivity at Keller Williams has been a fantastic one for our family as we continue to grow our business in a way that aligns with our values.  Please join us tonight as we celebrate!

The event begins at 5pm tonight and lasts until 9pm and will be held at our new location at 103 Lakeshore Rd. E (right beside No Frills). We hope to see you there!

Check out the facebook event page for more details: https://www.facebook.com/events/615343075143741/?ref=22

 

 

 


We love our Clients!

Today, one of our clients sent us a testimonial. We love our jobs and spending our time in beautiful spaces, but it's when we get to work with wonderful people like Pio and Anthony and help them find their dream home that we truly appreciate and enjoy what we do. Thanks Pio and Anthony (and Noah) for choosing us, we can't wait to visit you in your new home!

 

"I just bought and sold with the Tham Team. When looking for a new house I had described to Lynne exactly what I was looking for. I had fallen in love with a particular model last year and was too late in putting in the offer. I really couldn’t get that house out of my mind and nothing else could compare to it. Lynne saw how much I loved the house and literally said to me “I will knock on every house in this area to make sure you get a house just like that”. After seeing a lot of houses with Lynne, I knew she understood what we wanted. In the end we actually bought a house that was the same model as the one I fell in love with! I finally have my dream home!

Then came the selling of my house. Lynne recommended a great contractor who was able to freshen up the look of our home. Lynne also was great about telling us what would raise the value of our home vs what would just look nice. After the house was freshly painted I arrived home one day to find the “décor fairies” had been there with wonderful artwork and décor accents. Lynne and Melanie had gone out to do some shopping and brought all the pieces to my house. The accents and artwork truly transformed the home! It really turned into a model home and looked absolutely stunning! After all the work was done we were able to list our house $20K higher than expected. Our house sold and the deal was done in less than a week. Thanks Tham Team for all your hard work and advice. Lynne, Melanie and Simon were so easy to work with and getting along with. We now consider them close friends and keep in constant contact."

-Pio, Anthony and Noah

Buyers and Sellers, 2013