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Buying a Home?

Congratulations!

Buying real estate can be such a rewarding experience!

This buyer’s guide, put together by Mike Morisset of Origin-Silverman Mortgage Group, has been created to help you through the steps of purchasing your home or investment.

It will explain who the participants are in the home buying process and what they do. It will also help you understand the mortgage approval process, and the costs involved in purchasing a home.

Use this guide to provide you with the reliable answers to your questions. Your home buying team will be able to discuss any of this information in more detail.

I hope you will choose me to be the Realtor on your home buying team!

Real Estate is about building relationships. I try to find out as much about the buyer as possible, their needs, wants, urgency and financial ability. I would be pleased to meet with you at any time to talk about our community, about current market statistics, discuss your needs, and finally to show you some properties. Once we have found a home that you are pleased with, I will assist you through the contract, completion and possession process.

I look forward to meeting you!

Jim

The Home Buying Process

Step 1: Per-approval
When you first decide you want to purchase a home, it is wise to get a pre-approved mortgage. The pre-approval will tell you how much of a mortgage you qualify for, ensuring you are looking at homes in your price range.

Step 2: House Hunting
Once you know your price range, your realtor will begin researching the available properties and will show you homes that fit your criteria.

Step 3: Offer In and Accepted
Once you have found a home you are interested in, you will make an offer, subject to financing. Your offer may also have other subjects, such as subject to satisfactory home inspection or subject to review of strata minutes. Once the offer is accepted, you will provide a copy of the purchase agreement to the mortgage broker.

Step 4: Lender, Insurer, Appraisal
Your mortgage broker will work with the lender, insurer and appraiser to get you final approval on the financing. Your mortgage broker may ask you for further documentation at this time. You will want to collect the requested paperwork and submit it to your mortgage broker in a timely fashion.

Step 5: Firm Sale
Once you have met all your financing conditions, your broker will instruct you to remove the subject to financing. This is done with your realtor. You may remove other subjects at this time, such as “subject to satisfactory home inspection”. Once all the conditions are off, you have a “firm sale”. Instructions from the lender will be sent to the lawyer’s office at this time.

Step 6: Moving Details
The lawyer is now receiving and preparing mortgage documents. You will want to use this time to start preparing for the move.

Step 7: Lawyers
The lawyer will call you in to sign, usually 3-4 days prior to the completion date. The completion date is the date the money is given to the sellers and the property is transferred to your name.

Step 8: Move In
Usually your possession date will be the day after your completion date. This is the day you receive keys and can move into your new home.

Step 9: First Mortgage Payment
Unlike with rent, you pay your mortgage at the end of the month. (If the purchase of your home was completed on June 1, and you choose monthly payments, you will not have a mortgage payment until July 1. If you choose weekly payment, the payments would come out at the end of every week.) You will receive the details of the mortgage repayment from your mortgage lender.

You Support Team

When you purchase your new home there are a number of key players who will help you along the process.

Your Realtor

Your realtor is your partner in the home buying process.
Once your realtor understand what type of home you are looking for, they will begin researching the market on your behalf. The will search all the available properties for sale and will show you the ones in your price range that meet your criteria. Once you have found the home you are interested in, your Realtor will prepare an offer and represent you in the negotiation process.
Generally you do not pay a fee to the realtor who represents you when you are buying a home. The realtor is paid by the seller of the home. Realtors are licensed through provincial bodies and are knowledgeable about the markets they work in.

Your Mortgage Broker
Your mortgage broker will take time to understand your financial needs and will research the market to find the best mortgage for you. Your mortgage broker will represent you to the lenders, and will negotiate terms on your behalf.
Usually there are no fees to use a mortgage broker as they are paid by the lenders.

Lender
Your mortgage broker will choose the lender that best suits your requirements The majority of your contract with the lender will be after your mortgage funds. You will receive contract information you can use when you want to make changes to your mortgage in the future.

Insurer
If you have less than 20% of the value of the property as a down payment, you will be required to have mortgage insurance. Mortgage insurance protects you lender against any losses incurred. Your mortgage broker and lender will arrange this insurance for you. The insurance companies in Canada are CMHC and GE.

Appraiser
The appraiser’s role is to provide the lender with a market value of the home. The market value is the price that the home would sell at with reasonable exposure on the market to a large number of buyers. Your mortgage broker will arrange the appraisal for you.

Home Inspector
A home inspector provides you with information on the construction on your home. They will make you aware of any repairs that need to be done in the near future, and will let you know what types of repairs you can expect in the next few years. Your realtor can provide you with some names of quality home inspectors.

Lawyer
Your lawyer (or notary) will transfer the property to your name, and will draw up and register documents. Your lawyer liaisons with your lender and realtor to ensure they have all the required paperwork to process the sale. Your mortgage broker will refer you to a lawyer (notary).

Documentation Required
In order to process your mortgage application, we will require documentation to support your mortgage application. Please note that there may be other conditions not listed here that we might require.

Proof of Income

Employees
• A job letter
-If you are salary, confirm your salary amount and length of employment
-If you are paid hourly, confirm your pay per hour, number of hours worked per week, and length of employment
• A current pay stub
• A T4 or Notice of Assessment*

Commissioned or self-employed
• Two years’ financial statements
• Two years’ Notice of Assessments and 2 year’s T1 General

Down Payment Verification

• If your down payment is from savings in your bank account, provide three months of bank statements. The statements must state you account number and name.
• If your down payment is from investments (RSP, GIC, Stocks, Bonds,) provide a copy of a recent account statement.
• If your down payment is a gift, provide a copy of a gift letter and proof that the gift has been deposited into your account.

Additional Documentation

• Offer to purchase and MLS feature sheet for the new property.
• Disclosure statement, Form B and 2 years Annual General Meeting Minutes from Strata Corporation
• Void cheque where mortgage payment will be withdrawn.
• Name of lawyer (notary) you will use for this transaction.

 

*Notice of Assessment is the summary form Revenue Canada sends after you income tax has been filed. It specifies what you claimed on your taxes last year. If you do not have a copy of your Notice of Assessment you can call Revenue Canada at 1-800=959-8281 to obtain a copy.

Descriptions of Closing Costs

1. Legal Fees
A lawyer or notary will be necessary in the home buying process. You lawyer will prepare the mortgage documents, have you sigh the documents, and will transfer the property into your name. (Estimated cost- $700 - $1000)

2. Appraisal Fees
An accredited appraiser will look at your home and determine if the price you have offered is what the home is worth. They will compare recent sales of similar properties to determine the estimated value of your home. They will provide a report to your lender that confirms the value. (Estimated Cost - $250 plus GST)

3. Property Transfer Tax
The Property Transfer Tax (P.T.T.) is calculated as follows:
1% on the first $200,000 and 2% on any amount in excess of $200,000.

The P.T.T. on a home purchased for $375,000 amounts to $5,500.
This tax is waived for a first time buyer who meets the following qualifications:

• You are buying your first home.
• You are a Canadian Citizen
• You have been a British Columbia resident for 12 months or more
• Purchase price is no greater than $425,000 (Partial exemption between $425,000 - $450,000)
• Terms of mortgage is 12 months or longer
• Property size is no greater than 1.24 acres
• Buyer will occupy the property within 92 days of purchase
• Buyer will live in the residence for a minimum of 12 months

4. Property Tax Adjustment
You may have to pay some of your annual property taxes at the time of closing. This would be done when you sign at the lawyer’s office. Because every situation is different, you are best to confirm with your lawyer what you will owe.

5. Interest Adjustment
If you have chosen a monthly mortgage payment, and you payment comes out on the first day of the month, you may have an interest adjustment. If the purchase of your home closes on May 29, for example, you will have three days of interest on your mortgage. (May 29-31). If the purchase closes earlier in the month, you may have a larger interest adjustment, it is best to talk with your lawyer to find out what your interest adjustment will be.

6. Title Insurance
Title insurance is something used instead of a survey, and may be requested by your mortgage broker, lender or lawyer. Your mortgage broker, lender, or lawyer will discuss title insurance with you if it is applicable for your transaction. Estimated Cost $135)

7. Fire Insurance
Fire insurance ensures you have adequate coverage to pay off your mortgage in case of fire. The lawyer will want proof that there is fire insurance in place when you go into sign the papers at their office. Ask your mortgage broker for a referral to an insurance agent who will be able to assist you. If you are purchasing a condominium or townhome strata, check that fire insurance is covered in your strata or maintenance fees. Additional insurance will likely be required to cover you for your personal belongings replacement.

8. High Ratio Insurance Premium
When a borrower has less than 20% down on the purchase of their home, they must pay a mortgage insurance premium. The premium varies, so you should check the amount with your mortgage lender. Most people will add this premium to their mortgage and it will be incorporated into the mortgage payment. You do have the option of paying this amount up front.

9. Home Inspection
Many people choose to have home inspections, although most of the time it is optional. A home inspector will look through your home and provide you with their professional opinion on the construction of the home. They will advise of any maintenance needing done, and will help you understand what you can expect for maintenance expenses in the next few years. (Estimated Cost- $350)

10. Mortgage Processing Fees
Depending on your application you may have a mortgage processing fee. This is a fee charged by the lender and/or mortgage broker to process you application. These fees will be disclosed to you prior to your proceeding with a mortgage commitment.

11. Survey
Most financial institutions require surveys. Surveys confirm where the house is sitting on the lot and make the lender more aware of anything unusual about the property. You may be able to get an acceptable copy of the survey from the previous owners or by Title Insurance, and save the survey fee.

12. Utilities Connection Charges
Some utilities charge a move or connection fee. You will need to contact each utility to find out their charge.

ESTIMATED CLOSING COSTS


















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