TOP 5 TIPS FOR FIRST TIME HOME BUYERS

1. Consider if it’s a Good Investment 

While making sure a property suits your needs are important in your purchasing decision. It's also important to consider the potential investment value of the property you're looking to purchase. Some things to consider when looking at a property include the neighborhood, school district, location, usable space, immigration trends, curb appeal, and the condition of the home. Purchasing a home isn’t just about housing, it’s also an investment, and like all investments, we want to make sure that it will continue to appreciate. 

2. Pre-Approval & Explore your Mortgage Options 

It’s important to get pre-approved for a mortgage before shopping for homes. Having a pre-approval establishes a realistic price range towards what properties you can realistically afford. It is also important to explore mortgage options from different lenders to find the best rate. Some mortgage lenders won’t give you the best rate until you show them competing rates from other lenders. 

3. Make a Short List of your Non-Negotiables 

It’s good to have some flexibility in the specific features you're looking for in a property, you should still create a shortlist of the features that you MUST have. For most individuals, purchasing a home will be the biggest purchase in their life. Therefore you deserve to find a home that meets all your needs. Creating a shortlist of non-negotiables will also help you narrow down your search and discard any home that isn’t a good fit for you. 

4. Consider Total Costs & Future Proof your Buying Decision

When purchasing a property the down payment and mortgage payments aren't the only expenses involved. You also have to consider closing costs such as property transfer tax, home inspections, property appraisals, and legal fees to name a few. It’s a good idea to think about the total costs of purchasing a home along with any potential plans you have in the future that may impact your finances. 

5. Think Long Term and be Patient 

If you’re looking to purchase a property as your primary residence, don’t worry about the short-term trends. Instead, focus on making sure you purchase a home that aligns with your finances, and that has desirable features that will appreciate over time. 

Written by Daniel Zhao REALTOR®

I strive to provide the most relevant information possible to help my clients succeed and achieve all of their real estate goals.

If you ever have any questions or concerns feel free to contact me anytime. 

hello@danielzhao.ca
www.findpropertiesvan.ca
778-984-4818

Home prices in Greater Vancouver continue their decline for an eight-month as buyers and sellers are both hesitant to enter the market. 

Although there has been an uptick in sales this month, there's not much to suggest that the market is turning around.

The chief economists from both RBC and CIBC have voiced their opinion that we are not going to see a real estate crash. However, it is likely we are going to see the market continue to slowly decline until at least the spring of 2023. 

The inflation rate for October 2022 has just been released and inflation remains at 6.9% just like in September 2022. The Bank of Canada has stated that they will be mostly looking at CPI core inflation which has also remained unchanged at 6.2%. 

It is now clear that inflation is going to be a long-term problem that won't be addressed anytime soon. With core inflation remaining persistent, the Bank of Canada will find it difficult to lower interest rates anytime soon. The next interest announcement is scheduled for December 7th, 2022 with a predicted 0.25-0.5% hike.

Inflation Rate October 2022

Housing supply and new listings are at an all-time long, with most sellers holding off and hoping for a more bullish market in spring.

I believe that we won't see a flood of buyer demand in Spring, especially with core inflation proving so persistent. Instead, we will enter a new market where buyers get comfortable with these higher rates and sellers slowly come to terms with reality and lower their asking prices. 

Written by Daniel Zhao REALTOR®

I strive to provide the most relevant information possible to help my clients succeed and achieve all of their real estate goals.

If you ever have any questions or concerns feel free to contact me anytime. 

hello@danielzhao.ca
www.findpropertiesvan.ca
778-984-4818

How are Rising Interest Rates Impacting the Real Estate Market?

What I am seeing in the real estate market right now is that people are starting to slow down on their buying and their mortgage applications. This is largely due to the rising interest rates, and it will largely be interest rates that determine exactly what happens in the real estate market in the next few months.

As we see higher interest rates buyers will start getting squeezed. Whether, from a mortgage qualification standpoint or from the price they can afford, buyers will have significantly less buying power. For every 1% increase in interest rate, purchasing power will be decreased by around 9-10%. If inflation continues to rise, the real estate market is going to have to come down to where the buyers are.

Why Cheaper Real Estate Prices Can Potentially Cost You More

If you’re a home buyer, let's say you were able to purchase a home next year for 5% lower than you can buy right now, but you have to pay a 1% higher interest rate, well in effect you will actually pay in total five percent more for the house if would have purchased the house at a lower interest rate but higher price a year ago. 

Trying to time the market and hit lower prices isn’t necessarily a good idea especially if you’re planning to get a mortgage. If interest rates go up by 2%, housing prices have to come down by 19-20% for you to be getting the same price. In the same sense, if mortgage rates come down, buyer demand will increase dramatically and housing prices will again rise.

Do Your Due Diligence

As a buyer, you really have to look at the total numbers and not just the short term prices, instead of just saying I’m going to wait a year to see if I can get a better deal, try to figure out how much you think housing prices are going to come down, and how much you think interest rates are going to go up. What you will see is that the interest rate quite often will have a bigger impact on the price of the house, than what the actual reduction in price will be. 

Richmond continues to see a decline in residential home sales with a 46.6% decrease in September 2022 in comparison to September 2021. 

Home buyers today are exercising more caution in response to rising interest rates, inflation, and recession concerns. The Bank of Canada plans to increase interest rates by another 0.5-0.75% before the end of 2022. The Richmond HPI Benchmark Price for all property types is down -1.0% in August and -5.9% in the last 3 months.

Downward pressure on home prices usually occurs when the sales-to-active listing ratio dips below 12% (buyer's market), while home prices experience upward pressure when the ratio passes 20% (seller's market) over a sustained period of time.

Listings in Richmond are up by +20.0% for detached homes, +22.4% for townhouses and +26.6% for apartments in September compared to August 2022. In contrast sales in Richmond have decreased by -5.4% for detached homes, -12.5% for townhouses, and -5.7% for apartments. 

The current real estate market has become very illiquid. There are huge discrepancies between what sellers are asking for and what buyers are willing to pay. With inflation sitting at 7% this month, it is unlikely that interest rates will come down before inflation reaches a more acceptable number.

As inventory continues to build, buyers will have more choices and control over the market. Sellers will slowly realize that they have to lower their asking prices if they want to remain competitive. 

Richmond continues to see a decline in residential home sales with a 40.7 percent decrease in August 2022 in comparison to August 2021. 

Home buyers today are exercising more caution in response to rising interest rates, inflation, and recession concerns. The Richmond HPI Benchmark Price for all property types is down -1.7 % in August and -4.5% in the last 3 months.

As buyer demand and buying power continues to decrease due to rising interest rates, it is highly likely we continue to see further real estate price declines in the coming months. 

Downward pressure on home prices usually occurs when the sales-to-active listing ratio dips below 12%, while home prices experience upward pressure when the ratio passes 20% over a sustained period of time.

Listings in Richmond are down by 17.2% for detached homes, 17.4% for townhouses and 5.3% for apartments in August compared to July 2022. In contrast sales in Richmond have actually increased in August compared to July. If new listings continue to decrease and actual sales continue to increase it will become more and more difficult for prices to fall further. 

Strata Housing More Than Condos

Strata are usually associated with condos or condominiums but there are many different types of strata housing such as townhouses, duplexes, and even single-family homes on a bare land strata subdivision. 

What defines a strata isn’t the building type or size, instead, it's based on the legal nature of its creation. When the developer files a strata plan at the Land Title Office, a strata corporation is formed. A strata development can then be divided into separately owned units called “strata lots” based on the strata plan which divides a building or parcel of land into individually owned parcels. The parcels not owned by a single individual will be called common property which each strata lot owner will own a percentage. This allows individual owners to own their personal lots along with a share of the common property.  This means that every individual owner is also a member of the STRATA CORPORATION. 

Types of Stratas

Freehold Strata

Stratas can either be freehold or leasehold. In the case of a freehold strata development, the individual owners hold a fee simple title to their personal strata lots. A fee simple title grants the owner of the property exclusive rights on the property, which means they own the property completely and without any limitations or conditions aside from taxation, zoning or building restrictions. A fee simple title is the highest form of land ownership recognized in Canada. Having a freehold strata means that you have the right to sell the property whenever you want, as you exclusively own your strata lot. 

Leasehold Strata

In a leasehold strata development, you don’t own the property, instead, you hold a leasehold interest of the strata lots for a specific term, usually 50 or 100 years. Instead of being an owner, you are technically a tenant. However, you will still be registered on title and are treated as owners under the strata corporation. When you decide to sell your leasehold strata, you are selling your leasehold interest in the strata lot to the next leasehold buyer. 

Leasehold strata developments aren't very common, however, if dealing with a leasehold development you must be extra careful to fully understand what you are buying into. The market value of leasehold strata is usually much less compared to freehold strata lots. 

Strata Lot Owners Rights

Freehold strata owners own the strata lot defined in the strata plan. The strata lots boundaries are usually at the center of walls, ceilings, and floors. This means that freehold strata lot owners have the full right to change and renovate their personal strata lot if it doesn’t affect the common property.

Strata owners also share a percentage of the common property and common assets of the strata corporation based on the unit entitlement as tenants in common

Some of the major rights of strata lot owners include:

- the right to vote at the general meeting

-obtain certain records from the strata council

-directing the actions of the strata council by majority vote

-limiting the power of the strata council

-seeking court action to prevent unfair acts of the strata corporation. 

Strata Lot Owners Responsibilities

Some of the major responsibilities and rules strata lot owners must follow are:

-strata lot owners are responsible for paying for their regular strata fees based on their unit entitlement. 

-responsible for maintaining and repairing their personal strata lot, and limited common property. 

-comply with the bylaws and rules of the strata corporation

-reasonably use the property as not to make a nuisance to others

-pay special levies to the strata corporation if they have been approved 

Strata Corporation and the Strata Council 

A strata corporation is a legal entity created through a strata plan in which all the strata lot owners act as a single entity. This means that the strata corporation can enter contracts, hire, and be sued like a normal person. 

The strata corporation is responsible for managing and maintaining the common property and assets of the strata development on behalf of you, the owners. The owners will also elect an executive body for the strata corporation called the strata council. Any owner can be elected into the strata council as a representative of all the strata lot owners. The role of the strata council is to act as the managing body of the strata corporation to make sure it operates smoothly on behalf of the owners. It is common for the strata council to hire a property manager to assist the strata corporation. 

These responsibilities of the strata corporation include:

-preparing, and managing various records such as depreciation reports

-holding general meetings

-maintaining and repairing the common property

-maintaining funds 

-paying common expenses

-preparing budgets

-obtaining property insurance

Strata Bylaws and Rules

All strata corporations must have bylaws and may or may not have certain rules. All the bylaws apply to the owners, tenants, and people visiting the strata. Bylaws can cover both personal strata lots and. Bylaws are created to control, manage, and maintain the well-being of the strata lots along with the common areas. 

Every strata uses the Standard Bylaws developed by the provincial government as the default. However, stratas often deviate a little bit from the default bylaws to better reflect the values and opinions of the owners. The most common changes from the standard bylaws include pet restrictions, rental restrictions, and strata lot renovation restrictions (written approval from the strata council for major renovations). 

Rules differ from bylaws by the fact that rules can’t govern the use of strata lots, only bylaws can govern the use of strata lots. Instead, rules are used to control the use, safety, and maintenance of common property and assets. 

Strata Fees

Since all owners share the common property as tenants in common, each strata lot owner must pay strata fees to cover the budget for the common expenses in running a strata corporation. Strata fees and the annual budget are approved by a majority vote each year at the annual general meeting. Strata fees are usually paid monthly and will include contributions to both the operating fund and the contingency reserve fund. Strata fees are calculated by dividing the expenditures of the strata corporation among all the strata lots based on unit entitlement. 

Unit Entitlement

Unit entitlement is a number given to each strata lot that determines how much of the common property and assets belong to them. This number in residential buildings is usually determined by the habitable area of a strata lot. This means that a large condo will have a higher unit entitlement and must pay higher strata fees compared to a smaller condo. 

Operating Fund

The operating fund is used for commonly shared expenses that happen once a year or more. This includes landscaping, cleaning, property management, yearly insurance, and minor maintenance. 

Contingency Fund

The contingency fund is used for common expenses that occur less than once a year. This includes potential upgrades and repairs to the roof, elevator, or road repaving. The needs of the contingency fund are usually known beforehand by the required yearly depreciation report. The depreciation report helps strata owners plan and pay for repairs over a 30 year time period. 

Special Levies 

A special levy must be approved by a majority approval by at least ¾ of all the strata corporation owners. Once the special levy is approved, each strata owner is charged with an additional one-time fee along with their normal strata fees. A special levy is only used for a shared common expense when the expenditure isn’t included or anticipated in the annual budget or if there are insufficient funds in the contingency fund to pay for it. Special levies are commonly used to pay for unexpected damage to the roof, the plumbing system, windows, and major leaks.

Strata properties are a popular real estate choice for many in B.C. for the security, amenities, location, and lifestyle they can provide. Buying a condo can be a great option, whether you’re a first-time home buyer, just starting a family, or looking to downsize to something more manageable. However, condo living isn’t for everyone, personal preference, practicality, and affordability are just some of the factors that will play a role in your decision. Let’s look at the pros and cons of living in a freehold strata condo in B.C.

What is a Strata?

In strata housing, the owners own their own strata lot along with their individual share of the common property. In condos and townhouses, the strata lot most often ends at the center of the walls, floors, and ceilings, but each strata plan of a condominium or townhouse will show the exact boundaries of your own personal lot. 

What is considered strata common property? 

Any part of the land and buildings shown on the strata plan that is not part of your personal strata lot is considered common property. For example, the common property typically includes elevators, hallways, amenities, and exteriors such as the roof. Common property is owned collectively by all the owners as tenants in common. 

Pros of Living in a Strata Condo

1. Location

One of the major reasons for choosing a condo over a house is the potential choices in location. If you want to live in downtown Vancouver or a high-density commercial area, buying a detached property at an affordable price is next to impossible. Condos however are a much more affordable option for those that want to live close to work. Commuting from primary residential areas to work can take 40 to 60 mins during rush hour. Living close to work can not only save you a lot of time in your daily morning and evening commutes but can also save you thousands of dollars each year in fuel and car maintenance costs. 

2. Transportation

TomTom’s Traffic index looked at 416 urban areas in 57 countries. Vancouver is ranked 40th place worldwide for worst traffic and the worst traffic in Canada when it comes to congestion. Similar to the first benefit in living in a strata condo, living in a condo usually provides you with better transportation options such as the Skytrain instead of being stuck in bumper-to-bumper traffic every morning. Strata condos are also usually built in major urban centers giving you the option to walk to your favorite restaurants, grocery stores, and entertainment.

3. Lifestyle

A mid-sized condo is perfect for those who want to downsize or are just looking to get into the real estate market for the first time. If you're the type who doesn’t like to spend much time at home and instead enjoy spending your evenings outside trying out new restaurants and bars then a condo matches your lifestyle much more than a detached property. A smaller space also provides more freedom for individuals who want to spend more time traveling. At the end of the day finding the perfect type of property is about finding a property that matches your lifestyle. 

4. Low Maintenance 

If you live in a detached property you understand how much time it requires to maintain your house. A few examples of home maintenance and repairs of a normal detached property include roof cleaning, furnace, and air conditioning maintenance, snow removal, landscaping, gardening, and gutter maintenance. One of the biggest benefits of living in a strata condo is that other people maintain the property for you. If you're in poor health, busy with work, or just don’t want to deal with house chores every week, living in a strata condo provides you peace of mind and freedom from repairs and maintenance.

5. Amenities

The amenities in most modern condo properties are amazing and mostly out of reach of detached property owners. Most modern condos offer features like gyms, pools, yoga studios, BBQ areas, community/party rooms, study rooms, and underground car wash stations. 

6. Security

Most strata condos offer a mix of security tools that reassures even the most anxious homeowner. Strata condos usually have concierges, 24/7 neighborhood security, buzzer locks that only take you to registered floors, and cameras around the entire property. In addition, living in such close proximity to many others usually deters any potential criminal activity from happening. 

7. Affordability

Strata condos are priced lower than single-family homes as one would expect. The simple truth is there are far fewer detached homes compared to condos. Although condos are usually considered an entry-level property type, many individuals that could afford a single-family home actually prefer condo living. Strata condos also provide buyers with the opportunity to get onto the property ladder as either a permanent home or a stepping stone towards a single-family home. 

8. Homeowners Share Costs

Just like any property, maintenance and repairs are essential as the age of property increases. An average roof needs to be replaced after around 20 years, having shared costs make it cheaper than repairing a property alone.  

9. Appreciation

Strata condos were originally built as a cheap alternative to single-family homes. However as demand for housing continues to grow in Canada, condos have solidified themselves as an integral part of Canada’s housing market. In the past 5 years, detached properties in Greater Vancouver increased by 33% while condos in Greater Vancouver have increased by 41%. Investing in a condo in a great location with great amenities and management can be a great investment. 

10. Community 

Most condos have communal spaces, such as community rooms, study areas, patios, gardens, and gyms where residents can mingle. Unlike a single-family neighborhood where you may know your neighbors right next door, in a condo, you will constantly bump into the residents of a building. Meeting other residents at the gym or patio can be the start of a lasting friendship as you continue to see each other.

Cons of Living in a Strata Condo

1. Strata Bylaws and Restrictions

All strata corporations have bylaws and rules. Bylaws govern the maintenance, management, and control the common property. For example, the Standard Bylaws state that an owner must get approval from the strata corporation before making an alteration to common property, including limited common property. In this case, if you want to do any major renovations that affect the common property such as walls you may be restricted from doing so. Other restrictions that may affect you could be restrictions on pets, such as the restriction of certain dog breeds or a limit on the number of pets you may have. 

2. Limited Parking

Strata condos are usually built-in high-density locations that limit the amount of available parking. Most condos provide the residents with one parking spot, however, if you have more than one car it could be difficult to find additional parking. Another problem related to parking is when you want to invite friends or family over. Guest parking in condo towers is limited to one or two guests. This can be a major problem if you want to invite several friends over. 

3. Noise & Privacy

In a condo, you have neighbors on both sides of your walls. Although most new condos are built from steel and concrete and often have good soundproofing, no amount of soundproofing can completely block all sounds. You may hear a barking dog or loud stomping. If you're looking for total peace and quiet, a condo may not be the right choice for you. 

4. Lack of Personal Green Space

One of the major benefits of living in a single-family home is a private backyard. If you’re the type that likes having your morning coffee next to a rustic environment, this could be a problem living in a condo. Although most condos have a patio that can be used as a garden they are usually quite small. 

5. Mismanaged Funds 

Condo owners pay strata fees every month that goes towards community amenities, building maintenance, and cleaning services for common areas. The fees you pay go into two different funds. The operating fund is for commonly shared expenses that occur once a year or more, and the contingency reserve fund is for common expenses that occur less often than once a year or usually don't occur. 

A well-managed strata council will make sure both these funds are well balanced so that there’s enough money to meet both regular expenses as well as for long-term or emergency projects. However, if the strata council is not well managed, special assessments may be issued to every owner requesting additional funds. 

6. Cost for Unused Amenities

Having a large pool, sauna and gym are great if you use them often. However, if you rarely use any of the amenities that your condo provides you are essentially paying for services that you don’t use. 

7. Resale

There are many more options for condos than for single-family homes. This means that buyers have many more options to look at when looking to purchase a condo. When you decide to sell your condo, buyers will compare your condo with similar units in the same building which are virtually identical. In comparison no single-family home is exactly the same, each single-family home has its own unique selling point. Selling a condo can take longer than selling a single-family home and the price will be more dependent on what other units in your building are selling for. 

Final Thoughts

Should you buy a strata condo? Ultimately buying any type of home depends on your lifestyle, budget, and your goals. No two buyers are ever the same, everyone has different circumstances and obstacles. A condo can be a great option, whether you’re a first-time home buyer, just starting a family, or looking to downsize to something more manageable.

If, after weighing the pros and cons of living in a strata condo, you decide a strata condo is right for you I would love to assist you in your journey of finding your dream home. Buying a strata condo involves an in-depth analysis of the potential cash flow of a property, projection of future growth and appreciation as well as examining all the strata documents to make sure your interests are protected. 

If you have any questions about buying a strata condo in British Columbia, please don’t hesitate to contact me.

1. What is a mortgage?

A mortgage in its simplest terms is a loan to get a house. How you determine the amount of the loan is by simply taking the purchase price of the property minus the down payment. 

Purchase price - Down payment = Mortgage amount

2. Down payment & Mortgage Insurance

If your down payment amount is less than 20% you will need mortgage insurance. You can get mortgage insurance from three companies. CMH, Sagen (government financial), and Canada Guarantee. It doesn’t really matter which company you choose for your mortgage insurance as they are virtually the same and all somewhat backed by the federal government. 

If you’re putting more than a 20% down payment, you don't need mortgage insurance, but you will often find yourself having to pay for an appraisal which is around 400 dollars, however, this is in lieu of paying 5 to 10 thousand dollars in mortgage insurance premiums so it’s very much a good deal to get an appraisal rather than mortgage insurance. 

3. What is mortgage insurance for? 

Mortgage insurance is designed to protect the bank in case you default, so in other words, it’s not there to protect you but to protect the lending institution. It is also good to remember to keep the mortgage insurance in place when your mortgage comes up for renewal, as mortgage insurance makes it significantly cheaper for you to get a mortgage in the future. 

Mortgage insurance basically means lower interest rates because it's less risky for the bank. Keep in mind that the riskiest mortgage for a bank is the one that is not insured where you only put 20% down, that's why when you put 20% down, you pay a slightly higher interest rate. Interest rates get slightly better when you get to around 35% down payment point, in which interest rates start to end up being similar if you were getting an insured mortgage. 

4. Types of mortgages, which mortgage is right for you? 

There are two types of mortgage rates you can get, the first is a fixed rate for the term of the mortgage while the second is variable-rate mortgages which typically change with movements in the bank of Canada's key lending rates. You will typically pay a higher price for fixed rates as you pay a premium for security, and you also typically pay a higher penalty if you want to get out of the mortgage because you committed to maintaining the mortgage for a fixed period of time. 

A variable rate mortgage is typically priced lower, and will typically save you money over the long term. Yes, there is a risk that interest rates can increase over time, however that risk is often mitigated by the fact that there are significantly lower penalties to switch to a different lender or to pay out the mortgage. Keep in mind that when you get a 5 year fixed mortgage you are really getting a 5-year adjustable mortgage that adjusts in price every 5 years, and eventually if interest goes up you are going to renew at a higher rate anyways. So a variable rate just allows you to feel the increase more slowly over time rather than all at once with a fixed-rate mortgage. 

Statistically variable rates are almost always a better choice than a fixed-rate mortgage even though you have the sense of security with a fixed-rate mortgage, the reality is that a variable rate will save you money and the chances of your interest rate jumping significantly are very low. The amortization rate is the amount of time it will take you to pay off your mortgage in its entirety. Insured mortgages have a maximum amortization of 25 years, and uninsured mortgages have a max amortization of typically 30 years. The amortization length is what determines your payments, the longer your amortization the lower your payments. The amortization is not to be confused with the term, the term of your mortgage is the amount of time that you have a rated guarantee for you. 

5. Types of Payments

There are two types of payments that you can pay, there are non-accelerated payments (regular) and accelerated payments. Typically non-accelerated payments are monthly, or semi-monthly, although they can be weekly depending on how your lender sets them up. The accelerated payments are typically weekly or biweekly, it is important to remember to ask for accelerated weekly or biweekly payments. If you just ask for weekly or bi-weekly there is a chance you may get non-accelerated payments. The easiest way to determine if the payment is accelerated is to take the monthly payment and divide it by 2 in the case of bi-weekly payments or divide it by 4 in the case of weekly payments if your biweekly or weekly numbers add up to the total monthly payment you have an accelerated payment if it is less than it's not accelerated. I highly recommend for anybody purchasing a home they live in to take an accelerated payment structure as it will save money on interest charges over the course of the mortgage. 

6. Mortgage pre-approval 

It is always a good idea to get your mortgage pre-approval before you start searching for a home. There are two types of pre-approval processes, there is fully underwritten and there is not fully underwritten. Any app or website that tells you that you are pre-approved in less than 2 or 3 minutes, doesn’t ask for any of your pertinent documents, and spits out a number is doing a non underwritten pre-approval. This non-underwritten pre-approval is usually not worth the paper they are written on, a true underwritten pre-approval gets your job letters, and all your documents and confirms them to make sure you get a real number for what you are pre-approved for. 

I highly recommend that you get a mortgage through a mortgage broker. Mortgage brokers have more access to more products, more lenders, and have a better overall sense of the market than an individual banker. This will guarantee you get the best mortgage rates possible at the most competitive price. 

So you're thinking of buying your first home in Vancouver! Buying your first property can be an overwhelming experience, filled with excitement, anxiety, and stress. In this guide, I will break down the steps to buying your first home so you have a better understanding of what you're getting yourself into. 

1. How much can I spend? Mortgage pre-approval & finding the right mortgage broker!

Before you start shopping for homes, you need to get your finances in order, this will be a good time to figure out your credit score, and figure out roughly how much you want to put down for a down payment. In Canada, the minimum downpayment is 5% for homes that cost $500,000 or less.

Once you saved enough for a downpayment, it's time to figure out how much you can borrow. You should speak to several mortgage brokers to figure out the estimate of how much you can borrow and to get the best mortgage rate. The mortgage pre-approval is based on the information you provide so make sure to be as detailed as possible. 

2. Finding the right home for you

Now it's time to shop around and find the right home for you. It's important to get the mortgage pre-approval first to figure out the price range of properties you should look at. In this competitive market, it's important to have a clear understanding of what's important in a property for you. Make a list of things you'll need to have in a house. Ask yourself how many bedrooms, bathrooms, and space you desire. If you have a pet or host a lot of parties do you need a big kitchen or no pet restrictions? 

Once you made a list of must-haves, you should also think of different neighborhoods, future plans, and critical factors that will influence the appreciation of the value of your future home. These factors will include location, home size, usable space, age/condition, upgrades, the local market, future developments, and amenities. Throughout this home process, your realtor will help narrow your list of desirable properties to make sure you're making a great investment.

3. Making an offer on the home

Now that you've found the home you want, you have to make an offer. Most sellers price their homes a bit high, expecting that there will be some haggling involved. I will provide you with a report of comparable homes in the area and what they have sold for. Once you've made your offer, don't think it's final. The seller may make a counter-offer to which you can also counter-offer. But you don't want to go back and forth too much. Somewhere, you have to meet in the middle. Once you've agreed on a price, you'll make a deposit, which, will be held in a trust account and will form part of your down-payment.

As part of the offer we submit, we will include the necessary buyer subject clauses to make sure we fully understand what we are buying, and as an insurance policy if anything about the property doesn't match your expectations. 

Some of the most common buyer clauses are: 

• New First Mortgage A
• Buyer approving property Disclosure Statement
• Buyer inspection of Property - Buyer Satisfaction
• Fire/Property Insurance
• Buyer Satisfaction with Title
• Subject to Appraisal
• Subject to Legal Review

4. Closing on your home 

Make sure you get a home inspection before you close. It will be well worth the money spent since it ensures the property's structural soundness and good condition.

Setting the closing date that is convenient to both parties may be tricky, but can certainly be done. Remember that you may have to wait until your rental agreement runs out and the seller may have to wait until they close on their new house.

Be sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees,  and attorney fees, inspection fees. 

5. Closing Costs 

Finally, once the completion date arrives we need to settle all the closing costs before we close the transaction and transfer the title from the seller to you the buyer. Some of the most common closing costs include: 

• Property Transfer Tax: 1% of the fair market value up to $200,000, 2% of the fair market value greater than $200,000-$2,000,000.
• Goods and Services Tax (only for new homes)
• Property Tax: If the current owners have already paid the fulls year's taxes, you will have to reimburse them for your share of the year's taxes.
• Appraisal Fee
• Mortgage Applications Fee
• Mortgage Default Insurance
• Fire & Liability Insurance
• Legal Fees