Consultation with agent to analyze needs
In this step, we will help you to determine what type of home and what area of the city would best suit your needs. Having seen so many homes in this city we may be able to point out some details that you may not have thought of.
Establish a Working Relationship with Agent
If you feel that we have competently answered your questions and provided helpful information engendering your trust, you may consider contracting us to locate a home for you.
Financial Pre-Qualification or Pre-Approval by a Lender
At this stage you should visit your bank or a mortgage broker and find out how much money you are qualified to borrow. We are able to refer some good mortgage brokers to you if you do not already know someone. We recommend that you obtain actual pre-approval for a mortgage so that you lock in the current mortgage rate. If the interest rates happen to rise, you will still have the lower rate until the pre-approval expires (usually 90 days.) As a heads up of what to expect, generally your monthly home-carrying cost should not exceed 30-35% of your income.
Select Properties
Because we have special access to all of the listing information, we will input all of your criteria into the computer and help you to begin the process of narrowing down which properties are worthy of your time to go and view.
View Properties
Now comes the exciting part, actually walking through the properties. Buying a home is one of the most emotional and exciting things you will ever do. There is a lot to take in when you walk through a property. The great thing about going through a home with an agent is that we are not emotionally attached to the property and will be able to point out the positive and negative attributes.
Write an Offer to Purchase
Once you have found a suitable home, you instruct us to prepare an Agreement of Purchase and Sale. In addition to the pre-printed clauses on the agreement, we will add clauses specific to your situation including such things as conditions for obtaining of financing, home inspections, final inspections etc. After you have reviewed all the clauses and are comfortable with your understanding of it, you sign it and we contact the seller or the seller’s agent as per the instructions on the listing. Arrangements are made for presentation of the offer to the seller and we begin the negotiating process.
Acceptance of Offer
Once all parties have their copy of the Agreement of Purchase and Sale and the deposit has been paid, the property is deemed to be “sold pending closing”, or “conditionally sold” if there are conditions yet to be satisfied.
Deposit Money
Once an agreement has been reached between the buyer and seller and all the terms confirmed in writing, the buyer will need to provide the deposit funds within 24 hours of the final acceptance. The deposit funds will be held in trust by the seller’s Real Estate brokerage or by the seller’s lawyer, in the event no real estate brokerage is involved. The deposit funds are usually deemed to be a sign of good faith and intent by the buyer to complete the deal.
Mortgage Application
Now you return to your bank or mortgage broker with the signed Agreement of Purchase and Sale and you will be asked to complete a mortgage application.
Credit Report
The mortgage company will do a credit check on you to evaluate your risk based on your credit history.
Appraisal
Depending on the type of mortgage you are applying for and the market conditions, the mortgage lender may require that an appraisal of the home be performed. There is usually a fee of about $250 for this appraisal.
Verifications
The mortgage lender will require proofs of your employment and income. They may ask you for other things as well.
Rejection
There are two reasons why financing may be refused. Either the borrower does not qualify, or the home itself does not qualify for the amount of money which you want to borrow.
Underwriting
If your downpayment is less than 20% of the purchase price then you will need a high-ratio mortgage. This type of mortgage requires loan insurance which can cost an additional .5% to 3.75% of the mortgage amount and is added to the amount owing on the mortgage.
Conditions
The mortgage insurance may give conditions to their commitment, specific to your situation.
Mortgage Approval
Once the mortgage lender has approved your application they will provide to you a Mortgage Commitment Letter. We can then prepare another “Notice of Fulfillment of Condition”, this time removing the condition on financing.
Home Inspection
It is always recommended that a condition be inserted into the offer allowing the buyer to have a home inspection done on the property. Home inspections done by professional home inspectors usually cost between $300 and $500 and take about 3 hours to perform. The home inspector will meet with you (the buyer) and show you all the major components and systems in the home. He will provide his expert opinion on each of these components and systems and point out work that should be done.
Your Agreement of Purchase and Sale may contain other conditions that inspections be done on things like swimming pools or septic systems.
Home Insurance Commitment
It the home your are buying has knob and tube wiring, a condition will need to have been put into the offer allowing you time to ensure that you are able to obtain home insurance.
Remove Conditions
Contact Lawyer/Forward Necessary Paperwork
Usually you provide us with the name and address of your lawyer and we will send to them all the necessary paperwork. You may want to telephone them ahead of time and let them know that you have bought a home and that the paper work will be coming.
Title Search/Title Insurance
Once your lawyer has the paperwork, he/she will begin to do a title search. They are looking to see if mortgages and other encumbrances are registered against the property. They are also looking to see if there are any registered restrictions or easements that run with the land. It is recommended that you purchase title insurance and your lawyer should discuss this with you. Title insurance usually costs on average between $280.00 and $350.00.
Final Inspection
A day or so before closing we will arrange for an appointment to attend at the property with you so that you can do your final walk through. This inspection is to make sure that the seller has left the property in the same state of repair as when you had put the offer on the property.
Closing the Deal
On top of lawyers fees you will also have to pay Land Transfer Tax. In Ontario you will pay 1% of the first $55,000 – $250,00 and up to 2% of any amount over $400,000. The lawyer will also have some disbursements.
Possession of Keys
Your lawyer’s office will contact you a few days before closing and arrange a time to come and sign the papers. They will tell you any amounts they need to complete the transaction and they will require a property insurance binder letter. After closing they will let you know when the transaction has been completed. Your lawyer will transfer the funds to the seller’s lawyer in exchange for the Transfer documentation and the keys. Your lawyer will discuss expected closing times when you see him to sign the papers.