The first question you're bound to ask is, "How much can I afford?" and that depends on a number of factors;

Your selected location. Is your mind set on a specific area? Downtown? The suburbs? Or even a rural setting? Your preferred type of home? Detached, semi, duplex, high-rise, linked, townhouse, new or resale? There are a variety of home styles you will want to explore.

Your income. After all, it's not just the mortgage you have to take into account. There are probably taxes, utilities, and in some cases condo or strata fees. As a general rule of thumb, your monthly home-carrying cost should not exceed 30-35% of your income.

Market conditions. Is it buyers, sellers or a balanced market?

There are also additional costs to keep in mind. It's a good idea to work out exactly what you want and what you can afford before you begin the search. Be specific! After all, you don't want to suddenly come to the realization that your dream house has come with a nightmare of bills and expenses. Stick to looking at houses in your price range. The more you've thought it out, the better your sales representative can meet your needs.

A part of deciding just what you can afford can be accomplished by meeting with your bank or mortgage broker and negotiating a pre-approved mortgage. There are many types of mortgages and many different terms. Research all of your options. This ensures that there are no surprises once you're ready to make an offer.

Once you've figured out your monthly expenses and what you can afford, you can start your search. It could happen that the first home you see is the one you want, or you might look at home after home with none of them catching your interest. Rest assures, the home you're looking for is out there, and when you find it, you're ready to make an offer. If your offer is accepted, the next steps are closing the sale and moving into your new home.

Purchasing a home is easy once you put your plans into action.

A sales representative is a professional who can save you time and trouble, and possibly a lot of money. You see, sales representatives have the home buying experience most people lack. They know all of the steps and they are good negotiators who will work on your behalf.

A sales representative will:

Introduce you to trusted contacts who should be on your team, such as mortgage brokers, lawyers, and home inspectors. Above all, find a sales representative who is professional in the type of home you're looking for. A country home professional may not be the urban market specialist you need. When speaking with your sales representative, be as clear as possible about your needs.

Contractors

If you've decided to do some renovations on your current home to make it more sellable, it's time to look for a credible contractor. Before anyone begins work on your home, it is important to do your homework.

1. Ask for Referrals

When you're interviewing contractors, ensure their credibility. Contact their references. Ask to see some samples of the contractor's work and speak to his clients to ensure that they were satisfied with the price, length of time in which the project was completed and overall, how the project was handled. Also, check with your local Better Business Bureau.

Once you have the names of a few contractors that look promising, arrange to get estimates from them. By arranging for three quotes you'll get a good idea of the costs and quality of work.

When going over the project with your contractor, ensure that he understands your needs and your budget. Each contractor will have a different idea on how to approach the work and they should inspect your home before giving an estimate. If contractors are bidding based on an architect's plans, be certain that they have detailed their approach to the job based on the drawings.

If there is a significant difference in the price, ask the contractors to explain their estimates. Keep in mind that the lowest price is not always the best. A price that's too low may mean that the contractor has undercut to get the project and then may submit additional project costs once the project is underway. As well, a high price doesn't always mean that your getting gouged. The contractor may have budgeted for higher quality materials and may offer workmanship that is of an overall better quality.

In every case, before you sign the contract, be certain that it is as detailed as possible to the point of noting the specific finishes and brand names of the products to be installed.

2. Evaluating a Quotation:

Appraisers

Hiring an appraiser to appraise the value of property you are considering to buy may seem sensible but it is highly unnecessary. Your lender will want their own personal appraiser anyway, so you could be wasting valuable money. As well, most agents are competent and can do a "Comparative Market Analysis" for you, to establish a value range. The only situation where hiring an appraiser would become necessary is where the property is unusual with no comparable sales.

Lenders

The true test for a buyer is "what else can we buy for the same or less money?"

In short, a lender is anyone who will give you money. There are private lenders and institutional lenders, like banks and credit unions. Even your brother-in-law can be your lender. Of course, when you're looking for a lender, you're looking for a long-term relationship and terms and rates which are beneficial to you.

You really have a few options. You should go to a mortgage broker who will search the mortgage market for the best rates and conditions based on your circumstances. Usually the broker is paid by the lender without cost to you. However, the cloudier your credit history, the more likely there will be a fee. A good mortgage broker will be connected to all major lenders throughout the mortgage market.

You can also do your own search. With a good credit history, it's really not that complicated. Pick up your newspaper and you'll see what the difference lending institutions are offering. Find the institution you feel you would be most comfortable with, and one that offers the terms and conditions you're looking for. Then, go in person and negotiate your best deal.

Mortgage Brokers

This is a person who will do the leg work in finding the institution which offers the mortgage terms and conditions that are right for you. Much like an insurance broker, this professional works for you and can offer you an unbiased referral. Although most brokers are paid a finders fee by the lender, some will charge 2% of the total mortgage to find you a lender.

Lawyers/Notaries

A lawyer is there to represent your interest, and to process the documentation required. The legal aspects differ from province to province. Your sales representative can recommend lawyers to advise you on the steps to be taken before the keys to your new home are presented to you. A lawyer helps ensure you are protected!

Home Inspectors

Have the home inspected! Whether you make it a condition of purchase or not, having the property pre-inspected by a qualified home inspector will give you the added confidence that you've made the right decision. Be very careful to verify the qualifications of your home inspector because there are no government standards or licenses for home inspectors. Some home inspectors in Canada do not have any form of accreditation. For your protection make sure your home inspector is a member of PACHI or OAHI. This is your assurance that they have met their education requirements, have the experience and carry E&O Insurance.

Insurance Brokers

You will want to make sure your property and valuables will be covered. A broker offers independent advice and can save you time, trouble and money. Plus, the bank will insist that you carry full insurance since your property is used as a collateral against your mortgage.

Mortgage Types

Conventional and High-Ratio Mortgages

To qualify for a conventional mortgage, you simple have to have a 25% down payment of the purchase price, with the mortgage not exceeding 75% of the appraised value.

If your down payment is less than 25%, then you qualify for a high-ratio mortgage. This type of mortgage requires loan insurance, which can cost an additional .5%-3.75% of the mortgage amount. With this type of mortgage you could also be limited to a maximum house price.

Second Mortgage

If you cannot add on to your mortgage, you may consider a second mortgage. Each mortgage uses your home as security and gives the mortgagee the right to take your home if you default on your loan. The first mortgagee gets paid first in cases of default and has the best chance of recovering all of its money. So it only goes to figure that subsequent mortgages usually come with a higher interest rate.

Mortgage Features

Here are some mortgage options you should know about:

Every lending institution is different, and each will have their own customizable mortgage options. When you're hunting for a lender and a home, see how the following features could be beneficial to you.

Pre-Payment

This is a wonderful option if you receive regular bonuses or if your income fluctuates throughout the year. With a pre-payment privilege, you have the right to make payments toward the principal portion of your mortgage over and above the monthly payments. A mortgage with a pre-payment option is closed. An open mortgage means you can pay the entire principal sum without notice of bonus.

Portability

If you still have time remaining on that fantastic loan you negotiated, portability is one option you will want to discuss with your lender. Quite simply, it means transferring the balance of you current mortgage at the existing rates with the existing terms and conditions, to you new home.

Assumability

Let's say that the vendor has negotiated a dynamite mortgage. With an assumable mortgage you, the purchaser, simply assume the obligations of the mortgage. This is a wonderful feature especially if the terms are more favourable than the existing market conditions would allow. Remember, when it is time for you to sell, you may still be liable for any mortgage you allow the buyer to assume. This means if the buyer stops making payments, you could be accountable for the payments. Be sure to have the subsequent buyer approved for the assumption of the payments, thereby avoiding this potential land mine.

Expandability

If you need additional funds down the road, will your mortgage terms allow you to increase the principal amount? Usually, your new rate will be a blended amount of the initial mortgage rate and the prevailing rates. It is a great option to discuss with your lender if you foresee large expenses in your future like renovations or education costs.

Land Transfer Tax

Buyers in most areas will have to add land transfer taxes to their closing costs.

Land transfer taxes are a part of the process unless you live in Alberta, Saskatchewan, or rural Nova Scotia. These taxes, levied on properties that are changing hands, are the responsibility of the buyer. Depending on where you live, taxes can range from half a per cent to two per cent of the total value of the property.

Many provinces have multi-tiered taxation systems that can sometimes be difficult to understand. If you buy a property for $260,000 in Ontario, for example, .5 per cent is charged on the first $55,000, 1 per cent is charged on $55,000 - $250,000, while the $250,000 - $400,000 range is taxed at 1.5 per cent. Your total tax bill? $2,375.00

The following illustrates land transfer taxes by province.

Ontario

Land Transfer Tax Up to $55,000 x .5% of the total property value From $55,000 to $250,000 X 1% of the total property value From $250,000 to $400,000 X 1.5% of total property value From $400,000 and up X 2% of total property value

Making An Offer

When it comes time to make an offer, your sales representative can provide current market information which will aid you in presenting your offer. Your sales representatives will communicate the offer, sometimes known as an offer to purchase, to the seller, or the sellers representative, on your behalf. Sometimes there may be more than one offer on a property. Your sales representative will guide you through this process as smoothly and effortlessly as possible.

Firm Offer To Purchase

Usually preferred by the seller because it means that you are prepared to purchase the home without any conditions. If the offer is accepted - the home is yours.

Conditional Offer To Purchase

Usually means that you have placed one or more conditions on the purchase, such as "subject to home inspection", "subject to financing", or "subject to sale of buyers existing home". The home is not sold until all the conditions have been met.

Acceptance of Offer

Your offer to purchase will be presented at the earliest possible opportunity. The seller may accept the offer, reject it, or submit a counter-offer. The counter-offer could be in reference to any number of factors, including the closing date and/or the purchase price. The offers may sometimes go back and forth until both parties have agreed upon an offer until one or the other ends the negotiations.

An Agency Contract, ensures that the Realtor (R) is working exclusively for the buyer and providing loyalty, confidentiality, full disclosure and negotiates on your behalf. A Realtor (R) who does not represent the buyer is not bound to perform the above duties. The Realtor (R) works with you to find and evaluate the properties that you view and prepares a market study to determine the value in the marketplace. In order for us to "trade" in real estate, it is mandatory that either there be a Buyer Representation Agreement or a Buyer Customer Service Agreement in place.

An Explanation of
Buyer Representation vs. Buyer Customer Service

Buyer Representation

• Confidentiality: The buyer can feel secure to divulge information without the fear of harming their negotiating position.
  
• Full Access: It is the responsibility of the salesperson to ensure that the buyer has access to the entire market. This includes private sales, expired listings, properties listed exclusively etc.
  
• First Opportunity: A buyer-client should know that he/she will have first access to any new opportunity that comes up be it via MLS or any other means at his broker's disposal.
  
• Educating the Buyer: The salesperson is obligated to assist the buyer in making an objective comparison of all competing properties, comprehensive enough for the buyer to make an informed decision as to the value of the property in question and to make an offer accordingly.
  
• Price: The Salesperson is obligated to present all sales statistics in order for the buyer to make the most informed pricing decision, irrespective of the seller's asking price.
  
• Personal Information: Knowledge of any personal information about the seller must be shared with the buyer, including but not limited to the price the seller is willing to accept, a price that has already been accepted or rejected, as the case may be, and the seller's motivation.
  
• Negotiating: The salesperson is obligated to provide negotiating strategies and techniques that are in the best interest of the buyer.
  
• We are obligated to protect and promote your best interests. We are working for you and our allegiance is to you.
  

Buyer Customer Service

• All information gained about that buyer will be shared with the seller to enhance the negotiating position of the seller.
  
• The salesperson is acting as a sub-representative and has no such obligation to the buyer.
  
• A buyer-customer may have access to all potential properties, but only after the buyer-client has been given first opportunity and not if it conflicts with the buyer-client's desire for a property.
  
• It is the obligation of the salesperson to present comparable facts that protect and enhance the value of the property in question.
  
• To provide price information to the buyer that supports the seller's listing price.
  
• The salesperson is obligated to provide the seller with strategies and techniques that are in the best interest of the seller.
  
• Must share information about the buyer which may include but is not limited to: financial information and ability and/or willingness to pay more, motivation, and ability and/or willingness to change closing date.
  
  
  • The salesperson is not obligated to satisfy any particular needs other than dealing fairly, honestly and with integrity with the buyer-customer.
    
• Negotiate clauses that are in the best interest of the seller, which may include but are not limited to, closing dates, chattels or a condition on the seller being able to purchase another home.
  

Our allegiance is ultimately to the seller.

The brokerage's allegiance is to whomever is under contract.