Love is in the air. While you are being surround by the ideas of grand gestures of love and commitment this Valentine’s Day, you and your loved one might be thinking of making a big move – moving in together! Before jumping into this with both feet, you two need to sit down together to have a serious discussion about expectations and what this will mean for each of you. Going into this with a clear mind will not only allow you to enjoy the buying experience as well as to help alleviate disappointment later on.
Be open and honest – After making the decision to live together, the next most important discussion is regarding your finances. Speaking to your loved one to better understand their spending habits, income, debts and savings. Discuss whether it is best separately split financial costs or to open a joint account to cover your monthly housing costs. However, whatever decision you make, it should be equally agreed on, including how the account will be used and how much will be deposited into them.
Budgeting bliss – When two people come together to live under one roof it is imperative to understand and agree on the lifestyle you would like to have. The best way to achieve and maintain that lifestyle is by creating a budget.Your budget will outline your essential and non-essential expenses, allowing you to not only pay your bills, but to be able to save for the future. Whether your goal is to save for a vacation, house or children’s education fund, it will help motivate you to not only create your budget, but stick to it as well.
For more information on how to draw up a budget visit the Financial Consumer Agency of Canada (FCAC) website, fcac.gc.ca.
Source: Financial Consumer Agency of Canada (FCAC)
When it comes to buying a home or renegotiating your mortgage come renewal time, you have a couple of options. You can visit the bank that currently holds your mortgage and speak with a mortgage specialist. Or, you can visit a mortgage broker, who will look at current rates from lenders across the country and offer you a few options to choose from. So which is better? It’s really a personal preference.
A mortgage broker is a trained professional who will represent you and find the best borrowing rates from hundreds of lenders such as chartered banks, credit unions, trust companies and private lenders. Their services are free to homebuyers as they are paid by the lender, and therefore privy to the lowest borrowing rates. A broker may be particularly beneficial to buyers with lower credit or high debt as brokers are often able to secure loans from alternative lenders.
In addition to their connections and experience, they also offer convenience. Brokers do the legwork for you. They can help with every aspect of a mortgage, from determining out how much you can afford, to choosing the best mortgage product, to finding ways to save money and pay off your mortgage faster. Something to keep in mind: since brokers are paid by the very lenders who you are trying to get the best deal from, lenders may pay financial incentives to brokers who send them a certain amount of volume.
In addition, if you are a long-term customer with a financial institution, you may have already developed a strong relationship with your own bank. As a loyal customer, you may be rewarded with lower borrowing options, special interest rates or waived home appraisal fees, as gratitude for committed service. When it comes to choosing a mortgage broker, talk to someone in the know. Ideally, contact your real estate salesperson and ask who their preferred vendors are. They will be able to provide you contact information for one or two reputable brokers in your area.
As a consumer, you take your time when making a major purchase, researching products, asking for opinions and weighing the pros and cons of the many different options available. When it comes to making life’s biggest purchase – a new home – you’ve likely done the same. You’ve visited the neighbourhoods you’re interested in and have an idea of the average market price. You may have toured a few open houses and have your mind set on the ideal floor plan and style of home you prefer.
It’s true - there’s a lot to think about and even more to understand when buying a home and what you see when you walk from room to room is just the tip of the iceberg. It’s for this reason that finding a seasoned professional to guide you every step of the way is a smart decision for house hunters. Even if you’ve owned a home before and feel confident in your ability to find “the right house”, a real estate salesperson has the breadth of knowledge and a special skill set that comes only with experience – they are dealing with the sale and acquisition of homes on a daily basis.
Here are just a few of the things that a realtor will be looking for during your hunt for a new home:
Wiring – Homes built up until the 1940’s were likely outfitted with knob and tube wiring. In the 60’s, aluminum wire became a popular choice. Both are considered a fire hazard and today many insurance companies will refuse to insure a home with one of these types of electrical wiring or will charge a higher premium. Your realtor will be able to tell if a home has knob and tube or aluminum wiring. Replacing the electrical wiring in an entire house can cost anywhere from $7,000 - $15,000.
HVAC system – A salesperson will be able to tell you the exact age of the furnace and air conditioner and may be able to tell you if these systems have been properly maintained.
Plumbing – Sump pumps, septic tanks, wells and sewer systems….your realtor will be able to explain each of these features in detail.
Buyers have plenty of choice when it comes to choosing the type of home they will buy. You can purchase new from a builder, or shop around for a resale townhouse, single family home or condominium.
The latter is an excellent option for first-time buyers, young professionals and retirees or those looking to downsize. That’s not to say that all condos are affordable. A spacious unit in a well-appointed building can easily boast a price tag well into the millions with maintenance fees approaching $1,000 per month.
Whatever your price range, there are a few things to consider and research before settling on a condo purchase.
The first factor to consider is those condominium fees.Possibly one of the great mysteries of homeownership, these fees can turn an outright purchase into what seems like a rental, with monthly payments to factor into your budget for as long as you live at that address. If you have never paid condo fees before and the concept has you running scared, take a few minutes here to understand what they are and what they cover:
• The cost of keeping common spaces (elevators, indoor and outdoor gardens, lobbies and hallways, etc.) clean and in good working order.
• The upkeep of amenities such as fitness rooms, swimming pools, bowling alleys, theatre rooms, spas and party rooms.
• Snow removal, roof repair and insurance.
You’ll also want to think about the building’s amenities. Before you move into a condo, decide whether its in-house bells and whistles are perks you’ll use often enough to warrant the fees you’ll be paying for them each month.
A final consideration is the condo corporation’s status certificate. A status certificate is a prospective condo owner's first look into the financial health of their potential investment. This comprehensive report gives all the details on the current fees that owners pay, any large fee increases that may be on the horizon and any liens or arrears owed by particular owner(s). Financial statements are also a part of the status certificate and will show the trends in expenditures and receipts of the past, and provide comparisons of a corporation’s actual and expected costs. To get your hands on a condominium’s status certificate, you must submit a written request to the condo board’s management company, plus a $100 fee. They have 10 days, as required by law, to provide the certificate.
Even homeowners who do all their homework before buying are occasionally surprised by how quickly the many expenses of home ownership add up each and every month. But rest assured; if you stick to your budget and make a few sacrifices here and there, it is possible to save money and maybe even pay off your mortgage a few years early!
Mortgages are compounded with hundreds of payments to slowly reduce both your principle loan as well as interest charges, so you can expect interest-heavy payments for the first five to seven years as your bank makes lending you all that money worth their while. But there are ways to pay down your mortgage faster and save money in the long run!
Bi-weekly is best - Opting for an accelerated biweekly payment schedule will not only allow you to make 26 payments a year, it will also reduce both your interest rates and principle amount faster. Lenders may charge you an additional fee, but this is money well spent.
Round it up – Did you know that a hypothetical increased payment of $1,000 instead of $830 could save up to $48,000 over the course of the mortgage? That’s nearly eight years of payments! Ask your lender if this is an option for you.
Make a lump payment – If you get an annual bonus or consistently receive a substantial income tax return, consider using the windfall as a lump payment at the time of your mortgage renewal or sooner if your lender allows it.
When it comes to saving money, it’s common to have difficulty during your first few years of homeownership as you adjust to the added expenses. But it can be done. Here are a few simple ideas to help you cut back:
-Online grocery shopping. How many times do you walk into a grocery store with nine or ten items on your list and leave with a cart full? Instead, do your shopping online and simply drive to the store to pick up your order – no more impulse buying! Check your local retailers to see if the service is offered
-Make your own lunch and coffee every day
-Use public transportation if available
-Install a programmable thermostat to save on energy bills
It’s true that the home itself is generally what will seal the deal when house hunting, but the neighbourhood in which that home is located is also important. Here are some questions you can ponder before beginning your hunt for a new home:
Is a rural or urban location right for you? Are you looking to buy a home with plenty of outdoor space and lots of privacy? Or would you prefer the hustle and bustle of city living? Both lifestyles offer many pros and cons. Living in a country home spares you from contending with the gridlock of busy urban centres but may actually increase your commute time overall. Living in a major city offers the convenience of nearby amenities, but homes are more expensive than those in a rural setting.
Do you require easy highway access? For those who commute to work, this should be at the top of your list of considerations. Purchasing a home with easy highway access can save you time and frustration during your daily commute.
Is there a specific school district you want to be in? For many families, this is an important factor when house hunting. Do you want your children to be within walking distance to their school? Is there a Catholic school close by as well? Is there a school in the neighbourhood that offers a French Immersion program?
Do you want to be within walking distance to parks and rec centres? For families who lead an active lifestyle, these amenities may be at the top of your want list when choosing a neighbourhood to call home. Find out if there are walking trails close by, team sports to get involved in and extracurricular activities for kids.
Which local neighbourhoods are considered safest?All it takes is a phone call to the local police department to get information about the crime statistics in your community. You can also make your own observations by simply driving around the neighbourhood. Are the homes well cared for? Are there signs of vandalism or graffiti?
How have property values and taxes changed in the past 5 years? Your realtor should be able to answer any questions you have about property values and market trends in the neighbourhood. Ask about future developments in the area that may increase or decrease property value. Your realtor will also be able to tell you the property tax rate and how much it has gone up in the past ten years.
While interest rates remain low, there have been a few changes in recent months and some even bigger changes in recent years that have made purchasing a home tougher for first-time buyers. Prices across most of the country are on the rise and housing stock is low in many areas, creating a fast-paced, red-hot real estate market that is leaving some in the dust.
Here are three things you should consider before you start the hunt for your first home:
Can you afford it? Without a doubt, this is the most important question of all when planning the largest purchase of your life. In addition to mortgage payments, be sure to factor in all the added costs that homeowners face. Closing costs, property tax, monthly utility bills, home maintenance and repairs will add up quickly and with the new mortgage rules that went into effect last fall, getting pre-approved is tougher.
Is your down payment sufficient? While it's ideal to put down 20 percent (to avoid paying mortgage insurance, which can tack an extra $50 to $100 per month onto your debt load) the law in Canada requires purchasers to pay, up front, at least five percent of the purchase price. If you're having trouble coming up with this amount, talk to your lender or a financial planner for suggestions on saving money faster.
Is home ownership right for you, right now? This is a valid question for Millennials who are considering taking the leap into owning real estate. Buying a home is a major life event and, while owning real estate is always a wise investment, if you have a career that could include a transfer a year down the road or there's a chance you may return to school to further your education, the timing might not be right. Location is another factor to consider. Do you foresee yourself in this town or city for a number of years? Buying and selling a home and moving are costly steps, so be sure you've found the right location to set down your roots.
With some thoughtful consideration, you will make the right choice. Having a trusted realtor on your side will always be a benefit, so take some time to find the professional who's right for you!
Home inspections have become commonplace in the Ontario real estate industry. In fact, many deals hinge on the completion of a home inspection report that is satisfactory to the buyer involved. Traditionally, the buyer has been responsible for paying for and arranging an inspection after the offer has been accepted. The seller agrees to facilitate access to the home for the inspector, the buyer and usually the buyer's realtor during an agreed upon time frame before the deal becomes firm.
In recent years, however, some sellers have taken the reins and obtained a pre-listing home inspection before their home even hits the market. There are a number of reasons why a pre-listing home inspection can benefit sellers.
1. Be the first to find out about any problems. Obtaining an inspection before listing a home puts the seller in the driver's seat when it comes to necessary fixes, whether major or minor. Some buyers will get hung up on small repairs, especially if a few start piling up during a home inspection. By having a pre-listing inspection done, the seller can repair leaky faucets, secure handrails on staircases, improve inadequate insulation, etc. before buyers begin viewing their home. And if there are major issues discovered, the seller can decide how to proceed, attaching any repair estimates or paid invoices to the inspection report.
2. It encourages a firm deal. If a buyer can view a completed home inspection report before making their offer, they know exactly what they purchasing and will likely feel more comfortable forgoing a home inspection condition in the offer.
3. Convenience. By obtaining a pre-listing home inspection, the seller is able to hire a reputable inspector (choose one who is a member of the OAHI – the Ontario Association of Home Inspectors) and schedule the appointment at their convenience.
A pre-listing home inspection also benefits buyers. It will help them determine a fair offer price and decide if they are willing to repair any highlighted issues before making an offer. Buyers will also enjoy a savings of $350-$500 off their closing costs (the typical cost of an inspection).
When it comes to buying or selling a home, there are a few important documents that will come into play during the process. Some of these forms include pre-written clauses that your realtor will discuss and explain to you. Due to the nature of these contracts, be sure to read them thoroughly and always, always ask for clarification if needed.
Seller Representation Agreement (Listing Agreement): The listing agreement serves a number of functions. It establishes the relationship between the brokerage (and real estate representative) and the seller, it outlines specifics about the property for sale and it explains the services that will be performed and remuneration agreed upon. A Data Input Form will also be completed, describing the property in more depth i.e. legal description, age, room dimensions, zoning, etc.
Seller Property Information Statement (SPIS): Completing this form is optional for sellers. This form expands on information already provided about the property for sale, including items like restrictive covenants, known easements, details about past renovations, moisture issues, etc. If a SPIS has been provided by the seller, the salesperson should inform potential buyers of its existence. It is important to note that the SPIS is not a warranty or guarantee for buyers and should not replace a home inspection.
Buyer Representation Agreement: This agreement is an authority granted by a buyer to a real estate brokerage to act on his or her behalf during the purchase of a property. It outlines and explains the responsibilities of both parties and the commission arrangement. While a realtor in Ontario is required to complete the agreement and submit it to the buyer before any offer is made, the buyer is under no obligation to sign it.
Agreement of Purchase and Sale: An agreement of purchase and sale is like a conversation in writing that expresses the buyer's wish to purchase a property and the proposed terms of sale. It only becomes legally binding when everything is mutually agreed upon and signed by both parties. Commonly referred to as an offer, this document summarizes the terms that the buyer is seeking. Items always covered in the agreement of purchase and sale will be deposit amount and sale price, conditions, chattels and fixtures, completion (closing) date, etc.
While the exact forms may vary from city to city across the province, the fundamental concept behind each is the same.