Becoming a homeowner in Canada

There is a saying that it is better to pay into your own equity than waste your money paying for rent. Deciding on whether to buy your own house or continue renting entails careful planning and evaluation.

new home owners
So what do you need to do if you finally decide to buy a house in Canada? The first step is to consider how much you can afford to buy. Determining your housing needs at the moment and any changes in the size of your household in the future is important. If you do not know how much mortgage can be approved for you, it would be best to find an independent mortgage broker who does business with various lending institutions.

Having a mortgage broker is beneficial since they can usually find the best rates available. They can also arrange for an interest rate guarantee which means you can get the lower interest when the rates go low, or maintain the quoted rate when the rates go high during the time you are searching for your house. You will have to provide the mortgage broker information on your financial status such as your income, debt payments, savings, assets, or other investments. He will also consider whether you are a first time buyer, you have a co-signer for the loan and whether you intend to gain rental income for the property.

An efficient mortgage broker will be able to find you rates that are much lower than the prevailing ones. Having a pre-approved mortgage gives you an edge when you make an offer because the seller knows you are capable of buying the property.

mortgage application

Now that you have an idea of how much you can buy, it is time to start looking for a home. You can seek the help of a real estate broker to do this. It is important to know beforehand what features you are looking for in a house, townhouse, or condominium. Location is an essential factor to consider especially when you have kids—you would naturally look into the neighborhood, the schools, accessibility, and the like. You can make a checklist of your home requirements and provide all this information to your broker so he can find a perfect match. If you want to save time visiting houses recommended by your broker, you can also go to the website .
This website lists all the properties for sale and you can search according to the location, number of bedrooms, price range, etc. The website also shows photos of the house which can give you a better idea if it is in good condition or if it needs a lot of repairs. You can just give the listing number to your broker and he can make the necessary arrangements for a site visit.

Once you have a mortgage approval and have found a house to suit your needs, your broker will prepare a Contract of Purchase and Sale which will be presented to the seller. If the seller accepts all terms, the next step is to remove the subject clauses. If not, then a series of counter offers will follow which may or may not lead to an agreement and an eventual sale.

Next, you need to pay the deposit amount agreed upon in the contract. This deposit would be held in trust usually by the realtor’s company and is deductible from the down payment. You can have the house inspected by a certified inspector before you finalize the sale because the outcome can definitely affect the sale transaction. If it has been stipulated in the contract that the sale was made subject to a certified inspection, then the contract can be terminated if the inspection results are unsatisfactory.
Assuming that the inspection reports meet your requirements, the Contract of Purchase and Sale will now be sent to the lending institution that gave your pre-approved mortgage. You may also be required to purchase a homeowner’s insurance or what is called a mortgage insurance to cover payment of the loan in case of death of the borrower.

lawyer
You also need to hire a lawyer to make the documents for the transfer of property to your name. The lawyer will also do a title search for any encumbrances, check the balance of property taxes, make sure the seller’s mortgage has been discharged, and prepare a statement of adjustments (this is a summary of the money you still owe after applying the deposit). He will also arrange for the transfer of the money from the lending institution to the seller and finally to transfer the property in your name. It is necessary therefore to keep in mind that your cash out for the sale does not mean just the down payment. There will be some more costs added to it which you should have on hand to consummate the sale.

The completion day is when you become the legal owner of the house. The lending institution will deliver the money to the lawyer on this day. You, on the other hand, will pay the amount stipulated on the statement of adjustments, and the lawyer will make the payments to the seller and register the title in your name. Finally, you will get the keys to your own home!

You now have no reason to stop working because you have a mortgage to pay! Depending on your age and whether you chose a 25-, 30-, or 40-year mortgage, that is when you can say Freedom 65, 70, or 80!

So how will you be able to pay the monthly amortization? If you have a good paying job that can cover the cost of the monthly payments, then you are very lucky! Otherwise, you might want to consider any of the following options:

(1) if you have a basement, you can rent it out;

(2) you may want to register with language schools and start home-stay services (much similar to boarders in Manila where the students live with you for the duration of their courses); or

(3) get another job to earn more.

Well, whatever it is, you should be proud because you are now a homeowner in Canada!


Source:  Tess Guieb | INQUIRER.net | January 17, 2010

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About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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