Buying Masterfully
RULE #1: LOOK AND COMPARE
Your selection, to a large extent, will be determined by your lifestyle and in most cases becomes a matter of compromise. For instance, you may find an older home that needs some renovation work, but this may not necessarily fit into your budget plans or your hectic schedule. On the other hand, you may find a new home attractive but would have to spend extra money on landscaping and installing some of the amenities that may be a part of the package in an older home.
Advantages of an Older Home versus a Newer Home
With an older home, you can see exactly what you are getting - structural faults are generally easier to see and can be or have been corrected. The character of the neighbourhood is established and a variety of local services are usually available. In addition, the landscaping around the home has already been completed. There are generally fewer move-in costs because basic features like drapery tracks are already installed. Chattels - such as special lighting fixtures - are often included in the sale of an older home. A brand new home also has advantages. You have much more flexibility with a new home in customizing your decor and landscaping to suit your tastes. You get fresh, unblemished walls and you can usually choose the type of flooring, carpeting and cupboards that you want. You usually get much more storage space (such as closets) and larger rooms. In addition, today's minimum standards for plumbing, electrical, insulation and heating systems are higher than ever before.
RULE #2: LOCATION, LOCATION, LOCATION
Location is one of the most important factors in making any real estate purchase. Do you want to be within walking distance to your work? Carefully consider amenities close by such as schools, parks, and public transit. When focusing on location, you will likely want to consider other important factors like the proximity of schools, access to public transit and shopping facilities, etc. What about local coffee shops, shopping, and recreation centres? The best advice I can give is to familiarize yourself first with all the neighbourhoods in and around Vancouver. If possible, drive around. If not, go to Google maps, click on the satellite view, and zoom in to the street level view. Move around so you can get a completely accurate view as to what the neighborhood is all about.
RULE #3: IDENTIFY YOUR NEEDS AND WANTS
You need to identify your needs so that you can zero in on the home of your choice. For instance, if you and your family are outgrowing your present apartment or home, you will require something bigger and more comfortable - possibly with more bedrooms and a second bath.
In addition to your needs, you should also consider your wants - things you would like to have if you can afford them and if they are available.
Ask yourself exactly what you need in a home. How many bedrooms? Do you plan to have more children? Do you need to be always ready to leave Vancouver on a moment notice due to your job? New condos and homes offer extensive warranties and pristine conditions but you may not have mature trees or landscaping in the neighbourhood if it’s a newer one. Older condos and homes provide more space and sometimes have significant upgrades already completed. Be sure to have any resale home inspected for needed repairs or upgrading.
House-Hunting Checklist
With my access to the Multiple Listing Service® (MLS®), a co-operative listing system that offers maximum exposure of homes listed for sale, your I can draw up a customized list of homes that as closely as possible match your needs, wants and budget in the locations of your choice.
Take your lifestyle into account and the things that could enhance or detract from your daily enjoyment. Add these preferences to your needs or wants shopping list. A house-hunting checklist will help you keep track of the advantages and drawbacks of each home. Ensure the checklist includes the basic information regarding location, asking price, annual property taxes, mortgage terms and any applicable zoning restrictions.
Buying a home is a balance of many requirements such as family size, location, income and lifestyle. REALTORS® are excellent sources of advice and help in these matters. Not only do they have the experience and knowledge to make sure the choice you make will be the right one, but with access to the Multiple Listing Service® (MLS®), they can seek out suitable properties for you and provide you with a customized list of homes that meet your needs, wants and budget.
RULE #4: UNDERSTAND YOUR RESOURCES AND REQUIREMENTS
Once you have determined what it is you want and need, you'll have to find out what you can afford. The first tip is to set a maximum price range instead of just an upper price. It's not always wise to buy the most expensive home you can afford but better to aim lower in anticipation of extra costs or fluctuations in your income. I can help you determine the amount of the mortgage you can carry by calculating your debt-service ratio. The rule of thumb is that the sum of all your current loan payments (car, personal, credit card, etc.) plus your mortgage should not exceed 40 per cent of your gross income. In addition, mortgage payments and property taxes should not be more than 30 per cent of gross income.
Buying your first home may seem intimidating in the beginning, but with careful planning, a clear idea of what you want and the help of a REALTOR®, home ownership can be become a joyful reality for you and your family.
Consider Using Your RRSP’s
You may want to take advantage of the RRSP Home Buyers’ Plan. The program allows you to use your Registered Retirement Savings Plan (RRSP) contributions (up to $20,000 per person, $40,000 per couple) to buy or build a home. You must be a first-time buyer or at least not have owned a principal residence for four consecutive years in order to qualify under the plan. Remember, no income tax is deducted from these funds as long as they are repaid to an RRSP according to the government’s repayment schedule.
Different Mortgages
A number of different mortgage options are available. Under a conventional mortgage, lenders will loan you up to 75 per cent of the appraised value or purchase price of the property (whichever is lower) to a maximum set by government regulation and you must come up with the remaining 25 per cent yourself. If you don’t have the 25 per cent down payment, a high-ratio mortgage may be available that could provide most of the required funds. The proviso is that high-ratio mortgages must be insured and the cost falls to you. Check with your lending institution or mortgage broker to see whether you would be eligible for such a mortgage.
Variable-rate mortgages are usually offered for both conventional and high-ratio mortgages. If interest rates climb, you will be paying more per month in interest; if rates drop, you will be paying more off your principal. Fixed-rate mortgages, on the other hand, maintain the same rate of interest over the entire negotiated term.
Don't Forget Closing Costs When Buying a Home
Despite today's attractive mortgage rates and wide selection of affordable homes from which to choose, you should keep in mind closing costs in addition to your down payment for that dream home. These various charges can add up and for the most part they are all legally required payments in buying a property. These payments include:
- Legal fees: most legal fees include searching the title of a property, arranging a property survey if necessary, and handling other disbursements as required.
- Mortgage insurance and application fee: for any high ratio mortgage, which is any mortgage in which 75 per cent or more of the house’s purchase price.
- Property insurance: this insurance covers the replacement value of your home and its contents. Most mortgage lenders will require proof that you have this insurance before processing a mortgage.
- Home inspection: a professional home inspector knows what to look for and can confirm or add to the information you have about the home you are looking to purchase.
- Property transfer tax: this provincial tax is payable at the rate of one per cent on the first $200,000 of the fair market value and two percent on the balance. "Fair market value" is best described as the price that would be paid for a property on the open market. The actual purchase price is usually a good indicator of the fair market value. Some exemptions may apply, including for first-time homebuyers.
- GST and HST: presently, GST is payable to some degree on the purchase price on all new homes, although partial rebates are available on the purchase of most homes. Effective July 01, 2010 HST will be payable for any home costing $525,000 or more.
- Hook-ups: there may be hook-up charges required for appliances and services such as telephone, TV cable, hydro and other utilities.
- Moving costs: don't forget the basic costs involved in moving from your old place into your new home, particularly if you use a professional moving company.
RULE #5: USE A KNOWLEDGEABLE REALTOR WHO UNDERSTANDS YOU
Understanding all of the above can be daunting at best. What I can offer you is not just advice on the above topics, but step-by-step coordination and assistance with every single requirement to ensure that you are able to find your dream home, negotiate the best possible price for it, and carry through with all requirements to occupancy to ensure that your dream property becomes yours without mishaps or hiccups. If given the opportunity to assist you, this is my pledge to you.
