THE TEN STEPS TO HOME OWNERSHIP
STEP ONE
Congratulations on your decision to purchase a new home. Your first step toward buying your new home will be to analyze your needs. By analyzing your needs you will be able to get a clear picture of exactly what you want your new home to look like and how it should function for you.
First, you should write down why you are looking for a new home. For example, are you currently renting and would like to have a home where you can begin building equity? Maybe you recently married and have outgrown your current residence. Or, maybe you have just gotten a promotion which requires you to move to a new city. These factors will all have a bearing on how you approach your home search.
Second, establish a time frame that you would like to stay within for buying your home. Depending on your reasons for wanting a new home and the current state of the market in the area you are looking to buy, you should be able to come up with a rough guideline which you can finalize at a later time.
Last, you most likely have a mental picture of what you would like your house to look like and what features it should have. It's very important to write these ideas down to avoid any ambiguity later in your home search. You should make at least two lists: one should be a list describing your dream home and the other should list the features of the home that are an absolute must have in order to buy it. In a perfect world, your new home would fulfill both lists 100 percent. It is more likely that you will end up blending the two lists into a schedule of prioritized items as you progress through the buying process. This is a natural and evolutionary process as you get clearer about what you want and what is available.
I can save you time and money by putting my expertise to work for you. I will be able to help you organize your wants and needs and then assist you in realizing how your wants and needs will fit into your home purchase plan. I will be able to helpfully focus your energies into what is possible for you and your family.
STEP TWO
Now that you have your list of features you want in your new home, you are ready to start looking! Well, not just yet. You are going to need to know in what price range to look. There are two ways to go about this. You can get prequalified or preapproved for a mortgage. Either way you will need to contact a mortgage company. There are some key differences between prequalification and preapproval for a loan that you need to be aware of. Loan prequalification is a simple process. It takes into account very basic information regarding your financial status and gives you an amount for which you may qualify. This can be done strictly on a verbal level or electronically over the Internet. The prequalified amount is based solely on the information you provide. In most markets, prequalified buyers usually hold little clout compared to preapproved buyers due to the fact that the information given during the prequalification process is not thoroughly investigated and therefore may be unreliable. Where a preapproved buyer is actually approved for a loan of a certain amount, a prequalified buyer is only told that they might be approved for a certain amount.
Preapproval is a much more involved process. The lender will take all pertinent information regarding your finances and perform an extensive check on your current financial status. This will ultimately give you the exact amount that you will be eligible for (depending on what type of loan you decide to go with). Being preapproved lets the seller know that you have gone through an extensive financial background check and there should be no unexpected obstacles to buying the home. You can see how being preapproved would be more attractive to a seller than just being prequalified. The type of mortgage you apply for will depend on many factors, but the majority of that decision will be based on your ability to pay a monthly installment. If you can only afford a $1000 dollar a month payment, you are not going to go out and buy a $500,000 home, unless you have a large sum of money set aside to make a sizable down payment! Financial planners say that you shouldn't pay more than 32% of your gross income for housing (that includes principal, interest, taxes). Depending on your debt to income ratio, that percentage may change. Once you have determined what you can afford, the next step is to choose a mortgage plan. There are many different mortgages out there, so take some time and explore all of the possible plans for which you qualify. You could save yourself thousands of dollars in the long run!
I can save you time and money by being your professional guide through the entire loan process. They will be able to counsel you on the advantages and disadvantages of certain types of loans and help you understand the "real" cost of a mortgage. I will also act as your personal advocate and liaison between you and the lender as you proceed through the approval process and closing by working with your lender on a regular basis.
STEP THREE
Now that you have your list of needs and wants and you know how much you can afford to spend, it's time to look at some houses! Well, not just yet. Step back for a moment and consider the larger picture. People don't just buy a house; they buy the neighborhood the house is in. Think about that...if you found the perfect house but it was in a neighborhood that was not to your liking, would you make an offer on it? Most likely the answer would be, "No." So, you will need to make another list of what type of neighborhood you want to live in. You will most likely want to consider things like how living in the neighborhood will effect your drive time to and from work, what amenities are offered (swimming pool, tennis courts, park, etc.), and, if you have children who are attending school or soon will be, what school district you will be in and how close the schools are. You may even want to make two lists just like you did with your home criteria.
I can save you time and money by taking the information from your list of needs and wants for your home, your preapproval, and your list of needs and wants for the neighborhood and incorporating them into a broad search profile which will then be narrowed down to specific areas dictated by the market in which you will be looking. My experience in the local market will be an invaluable resource during this step.
STEP FOUR
At this point you will have a good idea of what you can afford and what type of neighborhood you will want to live in. Taking that information into consideration you are ready to embark on your actual home search. If you don't know much about the city that you are moving to you will most likely want to start your search by finding neighborhoods that meet your criteria and then narrowing your search to particular homes in the area. There are a few ways to go about doing this. You can access local publications highlighting available real estate in the area, you can contact local Neighborhood Associations, visit the local Chamber of Commerce, look on the Internet, and you can even drive through neighborhoods that you feel would meet your needs. Driving around a particular area looking for a home that is for sale is good because you can actually see the house, but it can be very time consuming and very "hit or miss."
I can save you time and money by keeping up-to-date on available properties that possibly meet your criteria and I will screen these properties for you. You can eliminate the haphazard searching through papers and the Internet and let the listings come to you through me. Then, when you find one that you like, I can arrange for you to walk through the property when it is convenient for you.
STEP FIVE
Now that you have found the home you would like to purchase, it's time to make an offer. Taking into account the recent sales of homes in that neighborhood which are similar in size, quality, conveniences, and amenities, what are you willing to pay for the home? Make sure that you have everything down in written form... no verbal agreements. Present the seller with a written document detailing what needs to be done by both parties to execute the transaction. The contract should protect the best interests of all parties involved and should be comprehensive in nature. Once it is accepted by the seller, it may be too late to make any changes, so make sure review your offer thoroughly before submitting it. The contract, though not limited to this list, should include the following: A legal description of the property The offering price The down payment Financing arrangements A list of fees and who will pay them Amount of the deposit Inspection rights and possible repair allowances The method of conveying the title and who will handle the closing A list of appliances and furnishings which will stay with the home The settlement date Any relevant contingencies. Remember that the legalities of this phase are very important. If you have any questions or concerns, they need to be addressed right away. After all, no one has ever said at their closing, "I wish I had asked fewer questions."
I can save you time and money by making sure that your contract meets all the legal requirements according to local and national guidelines. I will be able to expertly advise you on how to create an offer that will have the best chance of being accepted. Also, I will ensure your financial position as the buyer by including any necessary contingencies which would protect you if a particular requirement is not met.
STEP SIX
Once your offer is made there may need to be some negotiating in order to reach an agreement. Keep in mind that almost everything is negotiable when you are buying a house. This can give you a great deal of leverage in the buying process, that is, if you have adequate information and you use it in an appropriate manner. Some of the things that you may have to negotiate on are:
The price Financing Closing costs Repairs that need to be done Appliances and fixtures Landscaping Painting Occupancy time frame. The key to successful negotiating is keeping in mind that the end result must make both you, the buyer, and the seller happy. Otherwise, negative feelings will persist throughout the remainder of the process and someone may walk away feeling that they were not treated fairly.
I can save you time and money by representing your best interests and negotiating on your behalf. I have the knowledge and expertise necessary to make sure that your offer is accepted at the best price and terms possible for you.
STEP SEVEN
After your offer has been accepted, the property will need a thorough examination. Working with your lender, you may need to have a formal appraisal and a survey done for the property designated in the contract. A property inspection, a foundation inspection, and an environmental inspection may also need to be completed to make sure that the property is up to the standards set forth in your written agreement. If there are issues or inconsistencies brought to light during this time, it may delay or even nullify the contract depending on the contingencies set forth in the contract. Having these procedures done in a timely and professional manner is a must. Investigate each vendor to make sure that they are reputable and have a clean operational history.
Homeowner insurance is another very important item that will need to be taken care of at this point. Insurance experts recommend that you obtain insurance equal to the full replacement value of the home. Unless you have insurance coverage on the home, the closing can not proceed.
I can save you time and money by supervising the coordination of all necessary vendors and serving as your advocate when working with each vendor. I will make sure that the vendors have access to the property at the appropriate times to perform their procedures and oversee the execution of those procedures on your behalf. My experience in this area will be invaluable in making sure that everything is completed on time and in a professional and legal manner.
STEP EIGHT
As the closing date draws near you will need to be in contact with the moving company or closing lawyer and your lender to make sure that all the necessary documents are being prepared. You will also need to confirm that the documents will be delivered to the correct location so they can be reviewed and that they will be ready on the appropriate date. At this point, you should find out what form of payment you will need to bring to the closing for any unpaid fees. Make sure that your payment is made out to the appropriate party.
I can save you time and money by coordinating the necessary documentation with your closing lawyer. I can work with the closing lawyer as your consultant to insure thoroughness, accuracy, and timeliness. Making sure that each document is ready and available will enable you to have a quick, easy closing.
STEP NINE
Closing is where ownership of the home is legally transferred from the seller to the buyer. It is a formal meeting in which most parties involved in the buying/selling process will attend. Closing procedures are usually held at the lawyer's office. Your closing officer coordinates the document signing and the collection and disbursement of funds. In order for the closing to go smoothly, each party involved should bring the necessary documentation and be prepared to pay any related fees (closing costs). There may be more than one form of acceptable payment for your closing costs so ask the closing lawyer which form of payment will be required and to whom it should be paid. Sellers sometimes pay for a portion or all of the closing costs, depending on local market conditions, terms of thepurchase contract, and the seller's cash and timing considerations. Any such concessions should be acknowledged in writing. Most lenders will allow a credit from the seller to the buyer for the non-recurring closing costs. However, they usually won't allow a credit that reduces the amount of the buyer's down payment or any of the buyer's recurring costs, such as expenses for fire insurance premiums, Private Mortgage Insurance, or property taxes.
I can save you time and money by being present at the closing reading the documents on your behalf and answering any questions or helping to resolve any issues that may come up. I will also be available to manage any last minute or unexpected details that come up.
STEP TEN
Congratulations on the purchase of your new home! Now that you have taken ownership of the property you will need to have your local services such as electricity, cable, and phone set up. You should already be aware of the expenses that are typically associated with owning a home. Neighborhood Association fees, landscaping costs, and annual taxes should be budgeted for throughout the year to keep from getting into a financial bind.
I can save you time and money by helping you coordinate the set-up of these local services. No doubt I already know who the local vendors are for such services as water and electricity, as well as others, so I can help provide you with a list of contacts.
HOME BUYERS WORKSHEET
WANTNEED
PRICE RANGE _________________ ____________________
SQUARE FEET _________________ ____________________
HOME STYLE: TOWNHOUSE CONDO SEMI-DETCHED
BEDROOMS _________________ ____________________
BATH ROOMS _________________ ____________________
GARAGE _________________ ____________________
BASEMENT _________________ ____________________
SCHOOL DISTRICT:___________________________________________________
CITY CHOICES IN ORDER:_______________________________________________
______________________________________________________________________
OTHER FEATURES/AMENITIES:
FORMAL DINING ROOM, FIREPLACE, FAMILY ROOM, GREAT ROOM CONCEPT,
FINISHED BASEMENT, DISHWASHER, A/C, FIRST FLOOR LAUNDRY, FIRST FLOOR BEDROOM, MASTER BATH, OVERSIZED LOT,
NEWER HOME (LESS THAN 10 YEARS OLD), NEW HOME (NEVER LIVED IN)
OLDER HOME (BEFORE 1980)
ADDITIONAL REQUIRMENTS:___________________________________________
_____________________________________________________________________
YOUR PERSONAL TIME FRAME: LESS THAN 30 DAYS, 30-60 DAYS, 60-90 DAYS,
3-6 MONTHS, 6 MONTHS-1 YEAR, LONGER THAN ONE YEAR.
ARE YOU BOUND BY A LEASE? UNTIL WHEN?
ARE YOU PRE-APPROVED? WHICH MORTGAGE COMPANY?
Land Transfer Tax Refund for First-Time Home Buyers
Land Transfer Tax applies to all transfers of land in Ontario.
First-time homebuyers may be eligible for a refund of all or part of the tax.
- For agreements of purchase and sale entered into before December 14, 2007, the refund only applies on the purchase of a newly constructed home.
- For agreements of purchase and sale entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.
How much is the Refund?
The maximum amount of the refund is $2,000. If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Revenue. No interest is paid on this refund.
Who Qualifies?
To claim a refund, you:
- must be at least 18 years of age;
- must occupy the home as your principal residence within 9 months of after the date of transfer
- can not have owned a home, or an interest in a home, anywhere in the world.
In addition:
your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse; and
in the case of a newly constructed home, you must be entitled to a Tarion New Home Warranty.
How Do I Apply?
Qualifying taxpayers may claim an immediate refund at time of registration in one of two ways:
- If registering electronically, by completing the required statements under the "explanation" tab of the electronic affidavit.
- If registering on paper, by filing an Ontario Land Transfer Tax Refund Affidavit For First-Time Purchasers of Eligible Homes
at the Land Registry Office.
What is the application deadline?
Applications for a refund must be made within 18 months after the date of the transfer.
If application was not made at registration and the tax was paid, qualified purchasers may apply for a refund by completing an Ontario Land Transfer Tax Refund Affidavit For First-Time Purchasers of Eligible Homes and send it to the ministry.
For full details on the refund program, please see Ontario Tax Bulletin LTT 1-2008 Land Transfer Tax Refunds for First-Time Homebuyers.
FEDERAL GOVERNMENT BUDGETS >2009
First-Time Home Buyers' Tax Credit (HBTC)
1. What is the Home Buyers' Tax Credit (HBTC)?
For 2009 and subsequent years, the budget proposes to introduce a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (i.e., closing after this date).
2. How is the new HBTC calculated?
The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750.
3. Who is eligible for the HBTC?
An individual will qualify for the HBTC if:
- they acquire a qualifying home; and
- neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the year of purchase or any of the four preceding years.
If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first time home buyer. However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.
4. What is a qualifying home?
A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles you to possess and gives you an equity interest in a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
As well, you or the related person with a disability must intend to occupy the home as a principal place of residence no later than one year after buying it.
5. If I buy a house, can my spouse or common-law partner claim the HBTC?
Either one of you can claim the credit or you can share the credit. However, the total of both your claims cannot exceed $750.
6. My friend and I intend to purchase a home, and we both meet the conditions for the HBTC. Can we both claim the credit?
Either one of you can claim the credit or you can share the credit. However, the total of both your claims cannot exceed $750.
7. Do I have to register the acquisition of the home under the applicable land registration system?
Yes. The individual's interest in the home must be registered in accordance with the applicable land registration system.
8. Who is considered a person with a disability for purposes of the HBTC?
For the purposes of the HBTC, an individual eligible for the Disability Tax Credit (DTC) is one for whom an amount can be claimed under the DTC for the year in which an agreement to acquire the home is entered into, or could be claimed if costs for an attendant care or care in a nursing home were not claimed for the [Medical Expense Tax Credit].
9. How will I claim the HBTC?
Beginning with the 2009 personal income tax return, a new line will be incorporated to allow you to claim the credit.
10. Do I have to submit any supporting documents with my income tax return?
No. However, you must ensure that this information is available, should it be requested by the CRA.
11. Is the HBTC connected to the existing Home Buyer's Plan?
No. Although some of the eligibility conditions for the HBTC and the Home Buyer's Plan are similar, they are not connected. Your eligibility for the HBTC will not change whether or not you also participate in the Home Buyer's Plan.
12. Where can I get more information about the new HBTC?
