Step 1 – Determine How Much House You Can Afford
This is a fast and very simple but important step in the process. A banker or mortgage broker can talk to you over the phone or meet with you and discuss your financial situation and then calculate the maximum price home that you can purchase based on your income, other debts and available down payment. This is called Mortgage Pre-Qualification. There is no cost and no commitment. You can also do this using our online calculator which, based on your answers about your income, debts and down payment amount will tell you the maximum price house you could purchase. This method does not however take in to consideration your credit history which may increase or decrease the amount you can borrow. Getting pre-qualified will help you focus on the houses which you can afford.
The Mortgage pre-approval is different from pre-qualification in that you actually go through the application process and the bank or mortgage broker checks your credit history and verifies your income and debt information. When this process is completed you will receive a Pre-approval Letter which is a commitment from the lender that they will lend you the money to buy a house. You can now go house hunting with the confidence that you financing is in place. This can be a tremendous advantage when making an offer on a house.
Step 2 – House Hunting
These days the majority of home buyers start their search for a home on the internet. This is a great way to narrow down your choice of cities and neighbourhoods and start to understand what houses are selling for in those areas. Our experience tells us that the average buyer may spend 3 or 4 months looking on the internet before venturing out to actually look at houses.
Open houses are a great way to visit some houses on your own. You will be able to see several houses in a short period of time and start to get a feeling for the house style and the features which are most appealing and important to you. In addition you will get the opportunity to meet some Realtors® and get a feel for their different styles.
Use A Realtor
When buying a home our services are generally free. We get paid by the seller’s Realtor® out of the commission the sellers pay him/her to sell their home. This is called the commission split. It’s a great deal for the buyer in that they get the benefits of professional representation at no charge.
Step 3 – Make an Offer
Once you have found that dream home, we can guide you through the process of making an offer. We will help you determine a fair price to offer by doing a Market Analysis of homes in the area that have recently sold or are currently up for sale. We will then draft up the offer documents with all of the terms and conditions we feel are needed to protect your best interests and ensure you are getting the best deal possible. Most offers have one or more conditions which must be met before it becomes firm and binding on all parties. Here are some of the most common conditions that are put in offers:
- Offer is conditional on the Buyer being able to get a mortgage on the property
- Offer is conditional on the Buyer have a home inspector inspect the property and the Buyers being satisfied with the results of the inspection
- Offer is conditional on the Buyer selling their house by a certain date
- Offer is conditional on the Buyer being able to get appropriate insurance on the property
We will then present the offer to the sellers and their Realtor® and negotiate on your behalf. Of course you will be involved in all of the decision making, but we will represent you at the negotiating table. All going well we will be able to satisfy everyone’s needs and we will end up with an accepted offer.
If the offer was unconditional then it moves on to the lawyers. If it is a conditional offer the buyer and seller need to go to work on satisfying the conditions. For example, getting approval for a mortgage on the property or having the home inspection done.
Step 4 – Satisfying Conditions
If you went through Mortgage Pre-Approval then usually you only need to provide you bank or mortgage broker with a copy of the offer and the MLS listing and they will begin the process of creating the mortgage and advancing the money to your lawyer to close the deal. If you have not gone through Pre-Approval you will need to see your bank or mortgage broker to apply for a mortgage. The bank may require an appraisal to be done. This is typically paid for by the Buyer and costs $185 to $300 depending on the property.
An inspection by a qualified home inspector is always recommended in order to ensure that there are no unforeseen problems with the home. Once your offer has been accepted by the sellers we will arrange to have a home inspection completed. The usual cost is between $300 and $400. Other inspections may also be recommended if there is a pool, for example, or if the house has non-standard features or mechanical systems.
There can be all kinds of different conditions in an offer to purchase; testing well water, viewing a survey of the property, reviewing leases if it is rented, confirming the cost of insurance and on and on. The Buyer and Seller will have to work through all of these conditions prior to the next step.
Step 5 – Waiving Conditions
Once all of the conditions have been worked through both the Buyer and Seller will have to agree to remove the conditions from the offer and make the offer a binding Agreement of Purchase and Sale. We will have Waivers of Conditions signed by the buyer and or seller and the deal becomes firm and binding on all parties.
The deal then proceeds to the lawyers. Both Buyer and Seller are represented by their own lawyer. The lawyers will do their work and create all the required documents,do title searches etc. Your lawyer will coordinate with your lender to get the money advanced and close the transaction. A week or so prior to closing you will meet with your lawyer to sign all the documents. At this time you will give your lawyer a cheque for the amount of your down-payment plus his fees and disbursements.
Legal fees for a purchase generally are about $1200 which includes Title Insurance.
Step 6 – Closing Day
On Closing Day the lawyers will exchange documents and ensure that everything is in order. Title to the property will be transferred in the Land Registry Office . Once this is complete you will be able to pick up the keys to your new home and move in!!!