Buying a home can be exciting! It can also be challenging! Whether you are buying a home for your family to live in, or as an investment, being a well informed buyer will help to make the buying process run smoothly. By establishing how much you can afford to offer as the purchase price, as well as, knowing the costs that you could incur, will help you to avoid surprises. When you use the services of a real estate professional to assist you in buying your home, you will be given buying techniques and advice that will gear you towards ownership in a methodical manner. Buying a home can be a wonderful experience if you are guided correctly.
The main steps in the process involve getting financing arranged, getting an Agreement of Purchase and Sale (Offer) accepted, getting an inspection arranged and submitting the Offer to the lawyer. Since the purchase of a home is one of the biggest investments a family will make it is recommended that buyers know about some of the costs involved in the purchase. How much you should spend on the house is an important factor since there can be heavy financial commitments to owning a home. Your real estate agent will be able to advise you on lending institutions that can assist you with the type of mortgage best suited to your needs. You will need to know how much cash you have for a down-payment, how much you have for completing the transaction, whether or not you have equity from a previously owned house or not, and what monthly payments you can realistically carry.
Most people use the services of a real estate agent to buy a house because of the benefits to the buyer. As a buyer, you will have the advantage of working with a professional without a charge to you. Real estate commissions are normally paid to the agent by the seller of the house. The agent is paid a percentage of the purchase price of the home. The buyers benefit because agents have access to the Multiple Listing Services which allows purchasers to choose from a huge inventory of houses. Your agent will select homes to show you that match your requirements.
Once you have a handle on the on the amount of investment you are prepared to make for the purchase, your agent can help you to find a house that suits your budget. It is a good idea to have a clear idea of the kind of home you need, the number of bedrooms and bathrooms, whether a garage is necessary or not, and other features you think are necessary. Once you find the right house and establish the price and terms you will offer, your agent will present and negotiate an Agreement of Purchase and Sale (Offer) on your behalf. The Agreement of Purchase and Sale (Offer) is a standard form that contains clauses necessary in the legal contract. The down-payment, purchase price, the closing date and other terms and conditions will be included in the Agreement of Purchase and Sale. Once the Offer is accepted, the Agreement of Purchase and Sale along with all Schedules and documents related to the sale will be given to the lawyer to proceed with the legal aspects of the sale.
Professional fees vary from province to province and from property to property, however, as a guideline, below is a list of some typical types of expenses you could incur.
- Deposit at Time of Offer
- Balance of Purchase Price
- Inspection of the Property Fees
- Property survey (if the seller does not provide you with one)
- Legal fee + GST
- Legal disbursements + GST (out of pocket expenses incurred by the lawyer)
- Land Transfer tax
- Cost of arranging a new mortgage - may include application - appraisal fees
- Closing Adjustments with the seller - taxes, rental income, maintenance, utility charges
- Mortgage Insurance
- House Insurance
Costs associated with buying a home to closing the transaction varies and often can run from 11/2% to 2% on the basic purchase price.
Your agent is trained to assist you in the buying process in a smooth and methodical manner hence keeping your anxiety at bay.