Buying Your Home eBook - FSM

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The Ultimate Guide to Buying a Home FREE Downloadable guide! contents 03 Preparing to Buy 04 Considerations 05 Setting a Budget 07 Getting Pre-Approved 08 Financing your Home 09 Home Buyer's Plan 10 The House Hunt 12 Location, Location, Location. 14 Making an Offer 15 Final Steps PREPARING TO BUY 01 IS THE TIME RIGHT? DETERMINING WHETHER YOU’RE READY FOR HOMEOWNERSHIP. Considerations Are you earning enough? Are you ready to stay put? Take into consideration the size of With the transaction costs of buying and selling your down payment and the duration of your real estate you’re unlikely to make a profit on it if mortgage plan. This will determine what your you don’t hold onto the home for at least five monthly mortgage rate will be. If your down years. payment is less than 20% of the value of the home you want to buy, you will also need to If relocation is in the plans for the near future, budget for Mortgage Loan Insurance. hold off on homeownership or look for a property that will be easy to rent while you're As a general rule of thumb, your total monthly away. housing costs (including mortgage payments, property taxes and heating expenses) should The best investments for income properties are be no more than 32% of your gross household centrally located within proximity to public monthly income. transportation, with low carrying costs and monthly fees. How's your credit looking? The first thing a lender will look at when you apply for a loan is your credit score, which indicates how reliable you are as a borrower. Before beginning your house-hunt, contact Equifax Canada or TransUnion Canada and request a credit report, which summarizes your credit history, employment history and personal financial information. Lenders look for a stable history of borrowing and repaying debt from a variety of sources on the report, and a credit history of at least one year. 600 is the minimum USE OUR MORTGAGE CALCULATOR score to obtain a mortgage, but certain lenders TO DETERMINE THE CARRYING might look for a minimum score of COSTS OF ANY PROPERTY >> 650. Lenders are looking for regular payments made to at least two sources of debt. If REQUEST A PRE-APPROVAL you need to improve your score, consider BASED ON YOUR CURRENT applying for a credit card, using it for small CREDIT SCORE >> amounts.. Some borrowers use two cards with different due dates, while always paying the bill in full each time. Doing so can accelerate your credit history quickly while you prepare for homeownership. PERSONAL FINANCES: Most brokers will give you a free and non-binding consultation to help you set your budget. Feel free to contact us and request a precise break-down of SETTING the immediate and long term costs of any listing for sale in Montreal. YOUR BUDGET BOOK A CONSULTATION >> How much does it cost to buy a home? NOMADIC | 24 PLANNING YOUR BUDGET Closing Costs Closing costs are fees that arise during the initial phases of the purchase. They include your: Down payment: Anywhere above 5% of the purchase price of a house or duplex, and above 10% for a triplex. Notary Costs: 1000- 1500$ Certificate of Location: 700- 1500$ Welcome Tax (Property Transfer Duties): 0.5% on the first 50 000$ and 1% of the property value between 50 000$ and 250 0000$, and 1.5% of the value above 250 000$ Lease Cancellation (varies if applicable) Mortgage Insurance: .5% – 2.9% of the total amount of the loan. Inspection Fee: 500$ or more. Home Appraisal Fee: Appraisals are conducted for free by brokers, and some financial institutions, but paying a professional appraiser will cost you about 350$ Other varying fees: condo fees, moving, furnishing, municipal and school taxes. Get Pre-Approved Once you’ve determined that you can afford the 03 1. It determines your exact closing costs of homeownership, the next step is to apply for a pre-approval. buying capacity. Knowing your capacity prevents you from There are several advantages to being pre- unnecessarily visiting properties that cost more approved before you start looking for your dream than what you'll be able to borrow from a bank. home. 02 It secures the best term 03 It strengthens your offer for your financing. Owners will always favor a candidate with a pre-approval over one The conditions of a pre-approval ensure without one. By being pre-approved, an interest rate for a predetermined you reassure the seller of your duration- if the interest rates spike, commitment by having already taken yours won’t. the first step. GET PRE-APPROVED AND LOCK IN THE LOWEST RATE >> 02 FINANCING YOUR HOME Making use of the Home Buyer's Plan Making use of the Home Buyer's Plan The Home Buyer's Plan is a program that allows you to borrow up to $25,000 a year from your retirement savings (RRSPs) to contribute towards financing the purchase of your first home. What are the benefits of the HBP? The main benefit of the program is that it provides first time buyers with the necessary closing costs to enter the housing market. For young couples, who will be able to jointly withdraw up to $50,000, the HBP provides enough capital for an entire down payment. And the risks? Withdrawing from your RRSPs makes your savings plan grow at a smaller rate, and reduces the power of the tax free compounding inside. It changes your stature from a saver to a spender. You will have 15 years to pay back the borrowed amount in full, which you simultaneously pay your mortgage and annual RRSP contribution. Is the HBP for you? Overall, your decision should be based on your age, your employment prospects, and your larger life goals. If you’re planning to relocate within the next 5 years, or if you are paying off other hefty monthly expenses, such as student loans, it may be best to postpone homeownership. If not, the HBP may help you plan for the initial expenses and closing costs. If you decide to make use of the HBP, here are some further considerations: 1. Make sure your funds aren’t locked in a long-term investment plan. For example, if your entire RRSPs are invested into a 10 year nonredeemable plan, you won’t be able to access them for the Home Buyers Plan. 2. Remember the 90 day rule- your RRSPs need to have been deposited for more than 90 days before you can withdraw them on loan. If you’re in your mid 30s, remember that you should be putting at least 5% of your income into retirement savings. 3. Be sure to include hidden costs such as notary fees, moving expenses, transfer duties and monthly condo association fees in your budgeting. FINDING YOUR DREAM HOME 03 THE HOUSE HUNT Where do you start looking? Finding the perfect location Once you have your mortgage pre-approval, it’s time to begin your house-hunt. There are several ways you can filter through locations: 1. By prioritizing lifestyle 2. By prioritizing proximity of services: How long are you willing to drive to get to work? Do you need to have a day-care close by? Is it important to you to live near a park? Do you or your kids need to be located within walking distance to public transportation? 3. By prioritizing size (suburban districts offer more square footage than in the city centre). While listing your negotiables and non negotiables, some factors to considers are: ✓ Do you need parking? ✓ Do you need a balconey? ✓ How many bedrooms to you need? ✓ How much storage space do you need? ✓ Are you willing to invest in renovations? ✓Are you looking for sustainable housing? ✓ Do you need an office space? ✓ Do you require pet-friendly condo association rules? HOW TO: The South West LOCATION 1. The South West The South West has seen rapid development and urbanization over the past couple of years. As a result, LOCATION there have been many new condo projects popping up from Griffintown to St Henri and Pointe St Charles. The advantages of this area are the low purchase prices and the high-demand rental market. Since these LOCATION neighbourhoods are up and coming, it’s a great time to buy in real estate if you’re looking for a long term investment. The cons of this area are two-fold. Firstly, because of over-construction, the short term sales prices fluctuate a lot. Secondly, you need to look carefully into the urban plans near your unit before purchasing it, to avoid buying a condo that will overlook a construction site for the next 5 years. On the whole, living in this area is popular due to the scores of new bars, cafes, restaurants, galleries and gyms being added to the neighbourhood. The South West offers a dynamic, youthful and vibrant lifestyle, with plenty of green spaces and easy access to the canal. SET UP AN ALERT FOR YOUR DREAM HOME Request a list of the Top 10 Condos in the South West >> NOMADIC | 24 2. Rosemont Affordability is a big advantage in this up and coming area: the average home in Rosemont is $100,000 dollars less than in the nearby Plateau. It’s a neighbourhood that is in high demand due to its proximity to the Mile End and its friendly, family oriented community. Rosemont is an excellent place to shop for duplexes and triplexes, especially ones with interesting architectural features. It’s also quite a dynamic neighbourhood, due to its placement near the busy St Laurent and St Denis streets. Request a list of the Top 10 Triplexes in Rosemont >> 3. The Plateau The Plateau has beautiful homes in the classic Montreal style- with sweeping staircases, coloured windows and tree lined streets. It’s a very desirable place to live due to its remarkable architecture and lively commercial arteries. While the homes in this area are appealing, they aren’t as affordable as those in the SouthWest or Rosemont. Prepare to pay at least $400,000 for a 2 bedroom home in this area. Request a list of the Top 10 Duplexes in the Plateau >> 4. NDG NDG is a diverse neighbourhood with properties ranging from urban condos to family homes and duplexes. As an investment, purchasing in NDG requires careful research. There are areas that will bring you a return on your investment whilst there are other areas that will be hard to resell. Be sure to work with a real estate professional who is familiar with the neighbourhood and can guide you towards a safe investment. 5. Outremont Outremont is a well reputed neighbourhood for families – it’s clean and safe, with several large public parks. On the downside, real estate in NDG comes with a hefty price tag. Furthermore, since the homes in this area tend to be older constructions, many need renovations before moving in. Be sure to opt for a home inspection before buying in this area. 6. Verdun, Lachine and Lasalle Verdun is an emerging market that is quickly becoming considered part of the downtown core. Its strategic location (close to the central core) makes it a great investment for anyone with long-term vision. These areas have performed well in this past year and are expected to appreciate at a high rate in the coming decade. 7. Old Montreal There’s a certain status that comes with living in Old Montreal; It’s trendy, sophisticated and very nostalgic, with its upscale boutiques and restaurants. The proximity to the Downtown core and to the Port is also a big plus. However, buying in this area requires a large budget and may be out of reach for young, first time buyers. Request a list of the Top 10 Condos in Old Montreal>> 8. Westmount Westmount is an affluent and well-reputed family enclave city, with lots of greenery, safe streets, quaint houses, and a strong sense of community. MAKING AN OFFER & NEGOTIATING What can you can expect to find on an ✓Expiration date of the offer: offer to purchase? If the vendor does not accept the offer before the expiration date, ✓Your personal identification the offer becomes null and void. ✓Your legal name, the name of the Offers typically expire vendor and the legal civic address of the between 24 hours-36 hours after property. being delivered. ✓The price you’re offering to pay. ✓Inclusions ✓Other conditions ✓Fixtures, furniture or appliances that Other conditions may include a you would want to have included in the satisfactory home inspection sale should be specifically stated in your report, a property appraisal, and offer. lender approval of mortgage ✓Your down-payment amount financing. This means that the ✓Your deposit amount contract will become final only A deposit is not necessary but is often when the conditions are met. given as a sign of good faith when there are multiple offers on a unit. ✓The closing day The closing day is the date you take possession of the home. Closing dates are usually 30 – 60 days after the offer to purchase, but they can be extended upon request. . Once your offer is accepted: Contact your bank to get the final approval in place. This should take 7-10 days from the date of the accepted offer. Book your inspection. The inspector will walk you through the property with a fine comb, and address any and all concerns you may have, while outlining any potential short-term or long- term issues with the property. Note that an inspector will never give you an estimate of renovation costs. He or she is merely a knowledgeable guide present to show you the ins and outs of the property. Following the inspection, if any severe damages have been brought to light, you may have recourse to renegotiate the price or pull out of the sale entirely. E-BOOK: BUYING A HOME LET'S GET STARTED! GET PRE-APPROVED SCHEDULE A FREE CONSULTATION SET UP AN ALERT FOR YOUR DREAM HOME FREE EBOOK| BUYERS