TYRONE M BROWN - 604 789 6373
Buying a home is one of the biggest emotional and financial decisions you’ll ever make, so prepare yourself to make a knowledgeable decision. Although buying a home almost always seems like a great idea, it is important to understand what homeownership involves. Of course, being a homeowner is something to be proud of but it also means having to invest money, time and energy and take on added responsibilities. So, before you decide to buy a home, make sure you’re ready.
HERE ARE SOME THINGS TO CONSIDER :
• Financial Security. If housing prices rise, your home can provide you with some financial security due to capital appreciation.
• Stability. Having a place of your own.
• Financial Stress. Coming up with the down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash, and can put considerable stress on your finances.
• Maintenance. Keeping your home in good shape requires time and money.
• Responsibility. You alone are responsible for payments, repairs and maintenance.
• Flexibility. You can decorate or renovate your home to meet your own family’s personal tastes and needs.
HERE ARE SOME THINGS TO CONSIDER :
• Financial Security. If housing prices rise, your home can provide you with some financial security due to capital appreciation.
• Stability. Having a place of your own.
• Financial Stress. Coming up with the down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash, and can put considerable stress on your finances.
• Maintenance. Keeping your home in good shape requires time and money.
• Responsibility. You alone are responsible for payments, repairs and maintenance.
• Flexibility. You can decorate or renovate your home to meet your own family’s personal tastes and needs.
So, you’ve decided that homeownership is right for you.
Now you need to determine if you are financially ready to buy a house. In this Step, you will find a number of simple calculations that you can do to evaluate your current financial situation, how much house you can afford and the maximum home price that you should be considering.
Test Yourself
To avoid any future surprises, you can do some financial exercises to see where you stand. They include calculating your net worth, determining your current monthly expenses and what your current monthly debt payments are. Knowing your net worth is important because you will need this information when you discuss a mortgage with your mortgage professional. Your net worth is the amount left over once you’ve subtracted your total liabilities from your total assets.
It will also give you a snapshot of your current financial situation and show you how much you can afford to put as a down payment.
Now you need to determine if you are financially ready to buy a house. In this Step, you will find a number of simple calculations that you can do to evaluate your current financial situation, how much house you can afford and the maximum home price that you should be considering.
Test Yourself
To avoid any future surprises, you can do some financial exercises to see where you stand. They include calculating your net worth, determining your current monthly expenses and what your current monthly debt payments are. Knowing your net worth is important because you will need this information when you discuss a mortgage with your mortgage professional. Your net worth is the amount left over once you’ve subtracted your total liabilities from your total assets.
It will also give you a snapshot of your current financial situation and show you how much you can afford to put as a down payment.
HOW MUCH WILL IT REALLY COST:
Once you have figured out the home price range you can afford and the type of
mortgage you qualify for, you will need to calculate all of the associated costs of the
transaction to make sure you are financially ready.
Upfront Costs :
You will need to plan ahead to cover the many upfront costs of buying a home.
Timing is important to help make sure things go smoothly.
• Mortgage Loan Insurance Premium.
If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it In full upon closing.
• Appraisal Fee. Your mortgage lender may require that the property be appraised
at your expense. An appraisal is an estimate of the value of the home. The cost is
usually between $250 and $350 and must be paid when you contract for those
services.
• Deposit. This can form part of your down payment and must be paid when you
make an Offer to Purchase. The cost varies depending on the area, but it may be
up to 5% of the purchase price. If you wish to make a down payment of 5%
and you give a deposit of 5%, then your down payment is considered to be made.
• Down Payment. With mortgage loan insurance from CMHC you can own your
home with as little as 5% down payment. At least 20% of the purchase price is usually required for a conventional mortgage.
• Estoppel Certificate Fee (Does not apply in Quebec). This applies if you are
buying a condominium or strata unit and could cost up to $100.
• Home Inspection Fee. CMHC recommends that you make a home inspection
a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally costs around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a large home or one where issues such as moisture problems, pyrite, radon gas or urea-formaldehyde are suspected.
Once you have figured out the home price range you can afford and the type of
mortgage you qualify for, you will need to calculate all of the associated costs of the
transaction to make sure you are financially ready.
Upfront Costs :
You will need to plan ahead to cover the many upfront costs of buying a home.
Timing is important to help make sure things go smoothly.
• Mortgage Loan Insurance Premium.
If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it In full upon closing.
• Appraisal Fee. Your mortgage lender may require that the property be appraised
at your expense. An appraisal is an estimate of the value of the home. The cost is
usually between $250 and $350 and must be paid when you contract for those
services.
• Deposit. This can form part of your down payment and must be paid when you
make an Offer to Purchase. The cost varies depending on the area, but it may be
up to 5% of the purchase price. If you wish to make a down payment of 5%
and you give a deposit of 5%, then your down payment is considered to be made.
• Down Payment. With mortgage loan insurance from CMHC you can own your
home with as little as 5% down payment. At least 20% of the purchase price is usually required for a conventional mortgage.
• Estoppel Certificate Fee (Does not apply in Quebec). This applies if you are
buying a condominium or strata unit and could cost up to $100.
• Home Inspection Fee. CMHC recommends that you make a home inspection
a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally costs around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a large home or one where issues such as moisture problems, pyrite, radon gas or urea-formaldehyde are suspected.
• Land Registration Fees (Sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax).
You may have to pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.
• Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on.
• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
• Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location before finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost from $1,000 to $2,000.
• Water Tests. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
• Septic Tank. If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase.
• Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer/notary will also bill you to check on the legal status of your property.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.
If you feel you cannot cover all of the upfront costs, you can ask your lender for a loan. Remember that payment for this loanamount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.
You may have to pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.
• Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on.
• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
• Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location before finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost from $1,000 to $2,000.
• Water Tests. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
• Septic Tank. If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase.
• Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer/notary will also bill you to check on the legal status of your property.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.
If you feel you cannot cover all of the upfront costs, you can ask your lender for a loan. Remember that payment for this loanamount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.
