12 Steps to Buying Your Home

Buying a home is one of the biggest decisions you will ever make in your life. There are so many things to consider.  At RE/MAX® LifeStyles Realty (Maple Ridge), we want to help you to find your perfect home. Use the following guide to learn more about the home-buying process.

1. Make sure you are ready to buy

Are you ready to buy?

Buying your own home is a great investment and gives you more autonomy over your living space than renting. If you plan on buying a home, make sure that your fiscal house is in order:

  • Save money for your down payment
  • Ensure that you are paying down debts such as student loans and car loan

In terms of timing when to buy, markets go up and markets go down. As buying a home is typically a long-term investment, the short-term ups and downs of the market are less important than the general long-term investment value of buying a home.

2. Figure out how much you can afford

A home is probably the most expensive thing you’ll ever buy, and there are lots of expenses you might not even know about. Your down payment and your qualifying amount for a mortgage will determine the price of a house that you can buy.

Our Income Calculator will help you easily estimate your maximum affordable mortgage payment of principal and interest. All you need to do is enter your monthly income and expense amounts and the calculator will tell you your maximum monthly total.

Our mortgage calculator can help you find out the amounts of your mortgage payments using specific loan amounts and different loan arrangements (e.g., how many years the loan will be etc.).

The price you can afford to pay for a home will depend on six factors:

  • Your income
  • The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender
  • Your ourstanding debts
  • Your credit history
  • The type of mortgage you select
  • Current interest rates

Lenders will analyze your income in relation to your projected cost of the home and outstanding debts. This is determined using two lending principals.

Gross Debt (GDS) ratio calculation: your monthly housing cost should not exceed 32% of your gross monthly family income.

Total Debt Service (TDS) ratio calculation: your monthly housing costs and payments on all of your other debts (including loans, credit cards and lease payments) should not exceed 40% of your gross monthly income.

3. Decide what you want to buy

There are many factors involved in determining what you want to buy:

  • Which city/type of community do you want to live?
  • What type of neighbourhood do you want to live in?
  • What type of home (apartment, townhome, house) do you want?
  • What are your needs and wants for home features/amenities?

The Metro Vancouver and Fraser Valley area has many different types of communities from the big city to the suburbs to rural communities. Big cities, suburbs and rural communities all have their own character. Do you want to live in the middle of all of the “hustle and bustle” or “away from it all?” Also important to consider is the work locations of members of your household and how close/far the city is from your work locations.

Within each city/town, there are a variety of neighbourhoods with different characters appealing to different people. Questions to ask yourself include: Is it very important to you to be able to walk to restaurants, bars, grocery stores and all types of shopping? Or is it more important to be in a quiet area surrounded by parks and nature? Or both? If you have children, you might want to learn more about the area schools, playgrounds and recreational facilities.

There are many different forms of homes available in our cities, each with their advantages and disadvantages. Houses typically have more space and fewer restrictions on use than apartments or townhomes, but they typically require more maintenance and are often more expensive. Apartments may offer superior views to townhomes, but townhomes may be more family-oriented and quieter.

It is also important to consider your needs and your wants for home features. The needs are things that you cannot do without, while the wants are “nice to haves”. For example, for a family of four, a one bedroom property will not do, a three bedroom property would be much better – this is a need. However, having granite countertops in your kitchen, while nice, may not be necessary – this is a want. Wants and needs can relate to:

  • Number of bedrooms and bathrooms
  • Size of dwelling, size of lot
  • Amenities (e.g. swimming pool, fitness centre)
  • Finishings (e.g. granite countertops, hardwood floors)
  • Layout (open vs closed)

4. Find a REALTOR® who is Right for You

You know how much money you have, and you have a good idea of what you want. Now you need the help of a real pro, to make your search a success.

How a RE/MAX® LifeStyles REALTOR® helps buyers like you:

  • Reviews your list of wants and needs and helps you to determine your price range
  • Answer questions about the markets you’re interested in and helps you compare homes and neighborhoods
  • Use the local Multiple Listing Service® (MLS®). The MLS® is the single most powerful tool for buying and selling a home. Your REALTOR® will give you access to exclusive features of the MLS® system that the public is not privy to
  • Preview properties to ensure you’re only shown homes that meet your needs and budget
  • Make appointments and walk you through potential homes, answering all your questions
  • Give up-to-the-minute information on financing and explain your mortgage options
  • Negotiate with the seller, smooth out any potential conflicts and draw up a legally binding contract

 

5. See what’s out there

It is important to set aside enough time and see enough properties to get a good understanding of what is out there. However, it is also important not to waste your time seeing properties that do not meet your needs or that you do not qualify for financially. Your RE/MAX® LifeStyles REALTOR® will help you to find and view the homes to see that best meet your needs.

6. Sell your current home

If you already own a home, you may need to sell it before you buy another one, talk to your REALTOR®. Check out our 10 Steps to Selling Your Home.

Stick with your RE/MAX® LifeStyles REALTOR®. One dream, one team. Your REALTOR® will become an expert on your specific needs and tastes. Scattering your time and energy amongst multiple REALTORS® will work against your goal of finding your best home.

Sell and buy with the same REALTOR®? Absolutely! Especially if you’re remaining in the same community. Your REALTOR® is already an expert on your needs, so it can save you a lot of time and energy.

7. Add a Lawyer or Notary to Your Team

You probably have worked with a lawyer or notary in the past. A lawyer or notary will handle all of the documents for the purchase of your home. They will prepare a statement of adjustments which will include the price of the property, property tax adjustment, property purchase tax, amount of deposit and total mortgage proceeds. They will prepare a title search for the property that you are buying and inform you of any problems. When all is in order, they will register the purchase of your new property and any mortgage with the appropriate government agencies. A lawyer or notary works on your behalf to ensure that everything is handled correctly and promptly.

8. Make an offer

You’ve found a home? Congratulations! Now, if you actually want to make it yours, you have to make a successful offer, one that the seller will accept. RE/MAX® LifeStyles REALTORS® are master negotiators, and will work hard to help you get the best possible price and terms for your purchase.

Preparing the Offer
Here are some terms you’ll see in the offer:

  • Buyer or Purchaser? That’s you and your spouse/partner and possibly other family members.
  • Seller or Vendor? The present owners.
  • Purchase Price? The amount you are offering to purchase the home.
  • Deposit? A cheque you write to the seller’s broker, who deposits it in a trust account. This is your way of saying “my offer is serious.”
  • Clauses particular to this agreement? Every transaction is unique, and your REALTOR® may add conditions important to you. Making your offer conditional upon a proper home inspection is a good idea.
  • Chattels included and fixtures excluded? Be sure you know what is included with the house: washers and dryers, dishwashers, draperies, and window and light fixtures are often included with the house. However, do not just assume that they are included, specify in your offer that you would like these items included.
  • Irrevocability of the offer? The length of time you give the seller to consider your offer.
  • Completion date? The date that the funds for purchasing the property transfer from you to the seller.
  • Adjustment date? The date that taxes, strata fees and other financial obligations for the home become your responsibility.
  • Possession date? The date that you get handed the keys to your property! Congratulations!

Submitting the Offer
When the offer is presented the seller will have the opportunity to:

  • Accept the offer. The seller agrees to the sell price, closing dates and conditions of the offer.
  • Reject the offer. The offer was too far away from the seller’s asking price, or the conditions were unacceptable to them.
  • Counter the offer. You are close to an agreement, but maybe the price is still not quite what they want, or the closing dates are not convenient, or the conditions of the offer are too stringent. A counter offer may go back and forth several times, before it is accepted or it completely lapses.

Once your offer has been accepted and the clauses have been satisfied, you have now bought your new home! But there is still more work to do! Your REALTOR® will then ensure that the appropriate documentation is provided to your lawyer for the completion of your purchase.

At RE/MAX® LifeStyles Realty – Maple Ridge we are an experienced team of negotiators who will act on your behalf to help you to achieve the best possible price for the purchase of your new home.

9. Arrange a mortgage

When you’re looking for a new mortgage, keep in mind it is kind of like shopping. Not all financial institutions are the same. Some have very competitive interest rates, or may have very favorable terms such as early prepayments. If you have an established relationship with your bank, you may want to talk to them first. But make sure to shop around; your bank may not offer the most competitive mortgage products.

Mortgage brokers are another great resource. They find low rates for a living, and they usually don’t get paid unless you sign a mortgage through them, so they’re highly motivated to get you the best deal. Most mortgage brokers are paid by the lending bank, it will cost you nothing to use their services.

Another option sometimes is to take over or assume the seller’s mortgage. This is a great idea if the seller is locked into a lower interest rate than you can get right now.

Mortgage Terminology

Typically from six months to five years, the ‘term’ refers to how long the bank has agreed to lend you the money. At the end of the term, you usually renegotiate a new term. When deciding on the term, consider the interest rate. In times of increasing interest rates, long terms are best. In times of lowering interest rates, shorter terms are best. For many, a long term mortgage offers peace of mind in knowing that their mortgage payments will stay the same for several years.
The length of time it will take you to pay off the whole mortgage.  The longer your amortization, the lower your monthly payments, but the more you pay in interest over time.
Interest is the cost of borrowing money, and the interest rate tells you exactly how much. Using this mortgage calculator, check the difference between borrowing $100,000 at 6% and at 9% at the same amortization. That interest rate not only affects how much you pay, it also affects how much you can borrow. So remember to keep searching for the best rate!
If you’re a first-time homebuyer with money in an RRSP, you can withdraw up to $25,000 without paying any income tax on the initial withdrawal. If your spouse is also eligible, that’s $50,000. You will be required to repay this withdrawal over the next 15 years or take 1/15 of the withdrawal back into your income each year. For more information, talk to your REALTOR® or your accountant.

Don’t forget these extra costs. When you purchase a home, it is typical that you may have some of the following costs, in addition to your down payment:

  • Application fee: Some mortgage lenders charge a fee to process your application.
  • Appraisal fee: Your mortgage lender will require an appraisal of the property, and may require you to pay the fee. If you use a mortgage broker, find out who pays their fee – you or the lending institution.
  • Home Insurance
  • Mortgage broker’s fee
  • Home inspection fee
  • Legal fees
  • Property tax adjustments
  • Property purchase tax
  • The GST and new homes: Resale homes usually don’t involve GST, but new homes do. If you intend to live in your new home (instead of renting it out) there is some relief. Homes costing $350,000 or less get a 36% rebate. Homes over $450,000 do not qualify for this rebate.

10. Find a home inspector

Home inspections are a very important part of the home buying process. They can help you determine items in your home that will need to be fixed and items in your home that are of concern. It’s better to find out any problems now rather than later, so it’s in your best interest to get a home inspection.

  • Your offer to buy may be conditional upon a satisfactory home inspection. In fact, unless you are buying a property to tear down a house and build your dream home, it is recommended that you always get a home inspection! If the seller doesn’t want you closely examining the home before you take possession, this is a cause for concern.
  • Go with a qualified professional. Make sure your inspector is a member of the Canadian Association of Home and Property Inspectors of BC (CAPHI-BC) and/or the National Institute of Building Inspectors (NIBI). It’s your guarantee they have the training and experience for the job.
  • What will they check during the inspection? Plumbing and electrical systems, the roof, visible insulation, walls, ceilings, floors, windows and the integrity of the foundation. They check for nasty stuff such as lead paint, asbestos, mould, outdated and dangerous wiring, and they’ll look for evidence of pests such as mice or termites.
  • Join the inspection. The inspection will help you learn more about your new home. If any problems are detected, you’ll see them firsthand, and you’ll also learn some great maintenance tips.
  • Home inspectors will provide you with an electronic and/or written report that will summarize the condition of the home. If there’s anything that needs work, the home inspector will provide an estimated cost for the repairs.
  • Even new homes could benefit from a home inspector. New does not equal perfect, and construction quality can vary greatly from builder to builder. Repairs and corrections will probably be covered by a provincial new home warranty program.

11. Close the deal

Immediately begin satisfying any conditions of the agreement that require action on your part. Your REALTOR® will fill out the documents stating that the conditions have been satisfied:

  • Have your lawyer begin searching title to the property
  • We recommend a home inspection to avoid any unpleasant surprises on move-in day
  • Well before closing, get your homeowner’s insurance. Your insurance broker will give you a ‘binder’ letter certifying that you’re covered. You can’t get a mortgage without this letter!
  • Contact your lender and have them finalize your mortgage documents. Have your lawyer review them before you sign.
  • Contact utilities like hydro and water, telephone and cable companies to switch your services
  • If you rent, you must give notice to your landlord, or sublease your apartment
  • Begin planning your big move! Contact a moving company, get moving boxes, etc.
  • Send out your change of address information and fill out a card at the post office
  • A day or two before closing, you’ll meet with your lawyer to sign the closing documents. Your lawyer will tell you in advance what certified cheques you’ll need to seal the deal.

The big day arrives. You made it! Your RE/MAX® LifeStyles REALTOR® is handing you the keys to your new home!

12. Move in

Moving day will come sooner than you think, so get planning now.

“Closing date” often means moving date. Unless you have major repairs or renovations planned, you probably want to move within the first few days of taking possession of your home. If you intend to move at the end of the month, contact a moving company or truck rental company well in advance. Most people move at the end of the month, so it can be difficult to book a moving company or moving truck at a short notice. If you can move mid-week or mid-month, a moving company might cut you a deal.

Decide what you need to take with you. A new home represents a great opportunity to reduce clutter and accumulated stuff that you may not need. You can help others by donating some of your old possessions to local charities.

Congratulations! You have moved into your new home (with a little help from us)!

For more information call us at 604-466-2838.