Advise Needed.....I'm buying a house finally

[freakshow]

Step 4: Making An Offer

If you have decided that this is the right home for you, decide on a figure and have your agent prepare the Offer (Agreement of Purchase And Sale). With your agent, list everything you want included (i.e., conditions on financing and inspection, survey clause, appliances, light fixtures, etc.). At this time, you may want your lawyer to check it out, and certainly prior to waiving any conditions to make the offer firm.

A firm offer : means that you will buy the property as outlined in the offer of purchase and that there are no conditions attached. Once the vendor accepts the offer, you are both bound to the agreement.

A conditional offer : means that you will buy the property if those certain conditions are met. We recommend that a condition on financing is included, especially for high-ratio insured mortgages. If you have a condition on financing clause, get in contact with us right away. We'll get right on it to finalize the mortgage approval. At this time, you will need the following information:

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Copy of the accepted Offer To Purchase
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Copy of MLS listing (if listed on MLS service)
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Completed and signed application (if one is not on file yet, so that we can run a credit check).
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Confirmation of your earnings: if you are salaried, a signed letter of employment, 3 years tax returns and assessments if commissioned, and 3 years tax returns and financial statements if self-employed.
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Confirmation of your down payment: it may be from your savings, RRSP, equity from sale of another home (copy of sales agreement), a gift letter for any money gift.
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If purchasing a condominium, a copy of the financial statements for the condominium corporation

Once all conditions have been satisfied (the offer has been accepted), a deposit is required as a symbol of commitment to the offer of purchase, and it is made payable to the listing Real Estate Firm "In Trust". Interest on the deposit can be requested, and this deposit will be applied towards your down payment on closing.

Step 5: Closing the deal and taking possession

After the mortgage has been approved and all conditions waived, you must deliver the following documents to your lawyer:

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Copy of the complete accepted offer to purchase (all schedules, waivers, etc)
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Certificate of Fire Insurance - The insurance company will need to know the details of property and Mortgage Company to prepare this. Lenders usually require you to arrange for full replacement value of the building.
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A copy of a Survey, signed by a qualified land surveyor. In lieu of a survey, title insurance is acceptable with most lenders.
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Advise us of the name, address, and phone number of your lawyer so that the mortgage instructions can be sent to him/her.
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You should arrange for utilities (such as electricity, water, fuel, and telephone) to begin service in your name.
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A few days before the closing date, you will meet with your lawyer to go over all details. At this time, you will also be provided with a dollar figure so that you can prepare your certified cheque, made in trust to the lawyer. This amount will cover for the balance of the down payment, closing costs and adjustments (please refer to section: "Closing Costs and Adjustments" for details and estimated costs).

On closing day, the lender will provide your lawyer with the agreed mortgage funds to close the transaction. Your lawyer will register the property and the mortgage in your name, and obtain the keys and the deed for you.

 

[freakshow]

Now that you know what you can afford, the next step is to determine the additional costs of the home-buying process. According to CMHC and GE Capital, one should have, in addition to the down payment, at least 1.5% of the purchase price for closing costs (we say 2-2.5%, just to be on the safe side). The costs vary across provinces, and for that matter, cities.

Below you will find a brief explanation of these costs, yet it may not include all items required specific to your property, or the area in which you have purchased. This is a guideline, but your lawyer can provide a fairly close estimate, and is the best resource.

Appraisal Fee:

The appraisal provides the lenders with a professional opinion of the market value of the property. This cost is normally the borrower's responsibility and it ranges as low as $100 for a drive-by appraisal to as much as $200 for a full appraisal, and the average being $175, plus G.S.T. Occasionally, the costs could be slightly higher for larger, custom-built homes, or homes in remote parts.

Home Inspection Fee:

A professional inspection of the home, top to bottom, is for the benefit of the buyer, therefore, that's who absorbs the cost. A typical home inspection can cost anywhere from $250-$350, but our opinion is that they are well worth the investment. New home buyers may not worry about it, but a definite must for buyers purchasing properties older than 5 years. When hiring a home inspector, make sure the inspector has liability insurance, just in case a mistake is made.

Fire Insurance:

All mortgage lenders will require a certificate of fire insurance to be in place from the time you take possession of the home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. The cost can vary anywhere from $250-$600 for most properties.

Land Survey Fee Or Title Insurance Fee:

A recent Survey of the property is usually required by the lender, and if one is not available, it normally costs anywhere from $600-$900 for a new survey. In lieu of the Survey, most lenders today will accept Title Insurance, at a much lower price of approximately $225.

Legal Costs and Disbursements:

A lawyer or notary will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc., plus G.S.T.

Land Transfer Tax:

Most provinces charge a land transfer tax, payable by the purchaser, and the amount varies from province to province. This tax is based on the purchase price (refer to mortgage ABC's for exact calculation).

New Home Warranty:

In many provinces, new homes are covered by a new home warranty program. The cost to the purchaser for this warranty is approximately $600 and should the builder default or fail to build to an agreed-upon standard, the fund will finish or repair the deficiencies.

Mortgage Application and Processing Fee:

On a high-ratio insured mortgage (mortgages above 75% of the purchase price), the mortgage insurer (CMHC or GE Capital) charges a fee of $165-$185 for applying and processing the file, as well as appraising the property. On new homes, this fee drops to $75.

Closing Adjustments:

An estimate should be made for closing adjustments for bills that the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the purchaser's responsibility. Your lawyer/notary will let you know what they are exactly once the various searches have been completed.

G.S.T.:

On the purchase of a newly constructed home, GST is payable, but make sure you know who pays this, you or the builder. Therefore, on the offer, the purchase price will say "Plus GST" or "GST Included", and who gets the GST new home rebate. A lot of builders have included this cost into the purchase price so that the buyer does not have to come up with that at closing. (As well, this tax is also charged on all professional fees).

 

[Goober Mcfly]

Land Survey Fee Or Title Insurance Fee:

A recent Survey of the property is usually required by the lender, and if one is not available, it normally costs anywhere from $600-$900 for a new survey. In lieu of the Survey, most lenders today will accept Title Insurance, at a much lower price of approximately $225.

You need to be aware that Title Insurance only protects the lender, not you. So if 5 years down the road, you find out your neighbour's house is on your property, your bank is in the clear, but you're fucked.

Get a survey. At least you have someone to sue if the above happens.

 

[Warm Hands]

When it comes to finding an agent, I have found in my experience that certain agents tend to specialize in certain neighborhoods. If you have already isolated a neighborhood or two that you want to move into, drive around the neighborhood and see who's name you see on the for sale signs and set up appointments to meet with them so that they can show you just why you should be trusting them. Don't be afraid to be firm about what your expectations are.

Before you find the agent, the best thing you can do, as has been suggested by others in this thread, is to set out your budget and then get pre-approved.

One thing I didn't consider when I bought my first house, but subsequently learned, is that the mortgage insurance that your bank will try to sell you is a huge scam based on the cost vs. benefit. It is much wiser to pass on the mortgage insurance and instead arrange for life insurance through an insurance company, either term or whole life, to cover the value of the mortgage. Instead of paying the same premium month after month to cover a declining mortgage balance, you will pay the same premium and get the same payout.

Good luck.

WH

 

[freakshow]

You need to be aware that Title Insurance only protects the lender, not you. So if 5 years down the road, you find out your neighbour's house is on your property, your bank is in the clear, but you're fucked.

Get a survey. At least you have someone to sue if the above happens.

ERRRRRRRRRRR...........Wrong answer!!!!!!!!

http://www.firstcanadiantitle.com/en/index_flash.html



http://www.firstcanadiantitle.com/en/products_services/index.html

 

[johndoe125]

Suggestion

The comments above are excellent advise, the only thing that I would add, is that you need to treat the purchase not only as buying a "home" but also as an investment. With that in mind you should try to estimate how long you think you will live in the property in question and if you plan on selling down the road or keeping it as a rental property.

This should guide you in the sense of what type of mortgage you should obtain. ie. variable rate, short term, 5 year term or longer

 

[Goober Mcfly]

ERRRRRRRRRRR...........Wrong answer!!!!!!!!

http://www.firstcanadiantitle.com/en/index_flash.html



http://www.firstcanadiantitle.com/en/products_services/index.html

Okay, point taken. But you need to make sure you are protected for your part of the ownership.

A survey signed by a registered Ontario Land Surveyor is the best protection of what possibly could be your biggest investment ever. To try to save a couple of hundred bucks on a $300k home is silly. You wouldn't buy a used car without getting it checked out by a mechanic, would you?

Honestly, a home inspection covers your ass in the bricks and mortars, and a land survey covers your ass in the title. It's well worth it.

http://www.aols.org/boundariesandland/boundaries.asp

http://www.aols.org/boundariesandland/titleinsurance.asp

 

[freakshow]

The biggest coverage for Title Insurance is Fraud!!!!!!!!!

Imagine the look on your face when TD calls you and tells you your 4 months behind on your mortgage, meanwhile your mortgage is with Scotia!!!!!!!


Invest in it because there is over $300 million dollars of mortgage fraud annually in canada.

Registring a mortgage on a property is alot easier than most people think!!!!!!!!

 

[Goober Mcfly]

Wow, pushing insurance to cover yourself from fraud. That's ironic.

 

[KBear]

Title Insurance is really only required if the existing survey is out of date, there have been additions/changes to the property, or it does not exist. If the property being purchased is in a newer area there will be an existing survey available that will be acceptable to the bank.

 

[Goober Mcfly]

Remember, if using an older survey, it is only guaranteed as far as the date it is signed. If there have been additions to the property or the neighbouring properties, call whatever company produced the survey.

They'll probably update it to current conditions for a fairly reasonable price.

 

[freakshow]

Wow, pushing insurance to cover yourself from fraud. That's ironic.

Are you a part-time Insurance rep?????????//

 

[DATYdude]

Don't listen to Goober

Sorry Goob but you're misinformed about most of what you've written.

Most of the talk about survey vs title insurance and all that detail, while important, is almost meaningless when you're talking about new housing, especially condominiums. Title insurance is the best protection against fraud, that's the best reasonb to buy it.

But all of that is detail: What's really important in new housing is finding a reputable builder and a neighbourhood and living situation that works for you.

Check out www.Tarion.com.

 

[Goober Mcfly]

Sorry Goob but you're misinformed about most of what you've written.

Most of the talk about survey vs title insurance and all that detail, while important, is almost meaningless when you're talking about new housing, especially condominiums. Title insurance is the best protection against fraud, that's the best reasonb to buy it.

True, condominiums by law require a survey to have been completed at the building stage or the conversion stage. New housing is pretty safe as well.

I should have qualified my comments as pertaining mainly to existing, older neighbourhoods. Say, pre-1990's.

On a side note, I learned somthing about the fraud aspect....so that's cool.

 

[n_v]

Okay...I really don't know where to start...I am a first time home buyer, I do have more than 5% to put down....I have filed legit taxes and now I feel really lost....any advice?

www.torontorealestateboard.com

 

[KBear]

When a property is registered with the registry office, there are certain guaranties being made by that office, and I believe one has to do with fraud.

If a mortgage is registered on your property and you cant convince the bank, the lawyers, or the registry office that you are a victim of fraud, then it is unlikely that the insurer is going to pay out to discharge the mortgage that “someone” has put in place.

 

[DATYdude]

Sorry KBear

... but that's exactly what the title insurers do. Normally a victim of fraud (imagine your property was transfered from your name to a fraudster and then mortaged) would have to use all available avenues (i.e. sue the fraudster) and then as their last resport, look to the Land Titles Assurance Fund, which is the last resort in this sort of situation. It could take years and lots of $ in legal fees to get money back, and meanwhile the bank has probably already sold your house by power of sale (crazy, isn't it that the bank's mortgage is valid even though it's a fraud, but that's the state of the law).

Title insurance covers fraud, the insurer will pay the bank so that you can keep your house.

So bottom line is title insurance, even for existing homeowners, which costs a one-time fee of about $250, is a pretty good deal, especially for the insurers, who almost never have to pay out because fraud or other title problems are relatively rare. Still, the insurance is often meant to protect against very small chances of catastrophic occurances.

Oh and registration of thd land does not guarantee all aspects of title, and there are several designations in Ontario, each having different consequences.

Get a lawyer's help if you're buying or selling in Ontario.

PS KBear - nice pics.

 

[MuffinMuncher]

Wow... is this a TERB record?

Goober's been wrong 4 times in the same thread... is this why he's not a moderator anymore?

Gem, why dont you just ask John to build you an apartment in the spacious rafters of Midway. That way you wont have to wonder where your car is in the morning.

 

[KBear]

Okay...I really don't know where to start...I am a first time home buyer, I do have more than 5% to put down....I have filed legit taxes and now I feel really lost....any advice?

Geminixoxo, if you learn nothing else from this thread, I hope you will learn this. Dont tell too many people you are buying a home, because on the surface is seems simple, and everyone will want to give you an opinion on where to buy, what to buy, and how to buy it. Few will be able to give useful advice, however most will be more lost then you are.

This flood of useless and conflicting advice will confuse you, and make what should be a fun experience, less enjoyable.

 

[freakshow]

...

So bottom line is title insurance, even for existing homeowners, which costs a one-time fee of about $250, is a pretty good deal, especially for the insurers, who almost never have to pay out because fraud or other title problems are relatively rare. Still, the insurance is often meant to protect against very small chances of catastrophic occurances.



PS KBear - nice pics.

there is over $300 million dollars of mortgage fraud annually in canada.