Inspections

  Buying a home is probably the biggest single investment you will make. A home inspection prior to making an offer will protect you and your investment.

  A qualified home inspector will give your house a thorough examination, checking the heating and cooling system, plumbing and electrical systems, the roof, attic, walls, ceilings, floors, windows, doors, foundation, basement, and visible structures of the home.

  The inspector will point out the need for major repairs, identify areas that may need attention in the near future, and explain what maintenance will be necessary to keep the house in good shape. We explain to clients that a good home inspection is as much a maintenance report on the condition of your new home in relation to other homes of similar style and age. No home inspection is perfect. But, it is not all negative. Most inspectors are more than happy to tell you about the home's good qualities as well.

  Home inspections are relatively inexpensive - typically less than $500 and requiring up to 4 hours - considering the size of the investment that you are about to make. Many people consider this a small price to pay for peace of mind.

  As your Royal LePage REALTOR® we can provide you with a list of reputable, qualified home inspectors in your area for you if you happen not to know any.

Appraisals

  An appraisal is a report containing an estimate of the value of the property. Appraisals are conducted for the purpose of mortgage lending by certified appraisers. The appraisal should not be confused with the home inspection or the market analysis. Normally an appraisal is conducted after the sale firms up and prior to closing. Speak to your mortgage professional to know more about the appraisal process.

  When you buy a home, you will be asked for a down payment, usually between 5 and 25% of the total price of the property. You might also have a number of other fees and expenses to pay.

  Some of the most common expenses are listed below. These expenses may vary:

- Mortgage application and Appraisal fee  
- Legal fees
- Legal disbursements
- Deed and/or Mortgage registration
- Property survey (sometimes provided by seller)
- Title insurance
- Land Transfer Taxes  
- Property tax adjustments  
- Fuel adjustments
- Mortgage insurance

  Land Transfer Taxes, levied on properties changing hands, are the responsibility of the purchaser.

  If you purchase a property for $370,000 in Ontario, for example, 0.5% is charged on the first $55,000; 1% is charged on $55,000 to $250,000, and 1.5% is charged on $250,000 to $400,000.

  Use the Land Transfer Tax Calculator to estimate the land transfer tax for your new property.

  Closing refers to the preparation for the transfer of ownership of a property from the seller to the buyer.

  There is no standard method for closing. In places like the USA, "round table" closings bring all parties together at the closing table. In Ontario, buyers and sellers complete the process through separate, individual appointments with their lawyer.

Closing day is the day you become the official owner of your home.

  Typically, you visit your lawyer's office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property, and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs. Often buyers and sellers make arrangment to visit their lawyer's office a few days prior to closing to lessen the burden on closing day given this is when most people are concerned with the actual move of their possessions.

  Once the mortgage and the deed for the property are officially recorded, you become the official owner of the property and your lawyer will call you to pick up the keys to your new home.

  Congratulations! You've just bought a home!

  Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you paid. Consider rounding your payment up from say $560 to $575 bi-weekly and see how much faster your mortgage is paid off.

  Paying extra amounts on your mortgage can make a big interest saving over time. When we select a mortgage company, privilege payments options are something that we look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster.

  When you require a mortgage for more than 80% of the purchase price of a property, that mortgage must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. The premium charged by these company`s decreases as the down payment increases. When you finance your property at 95%, a premium of 3.75% is added to the mortgage. By increasing the down payment to 10% of the purchase price the premium can be reduced to 2.5%. If you can put down 20%, you can avoid any additional insurance fee. Depending on your situation there are ways that you can structure this financing to avoid the CMHC or GE insurance premium.

  The options for mortgages available can be very confusing for most mortgage shoppers. Terms for mortgages vary between variable and fixed rate, 6-month terms to 10 year terms. Taking a variable or floating rate mortgage can have savings. Typically the shorter the term or guarantee of the rate, the lower the rate will be. This does not always happen, depending on the market place and the economy, but history has shown that short-term rates tend to be lower than long-term rates. The up side of variable rate is the strong potential for interest rate savings. The down side is the fact that you are accepting the interest rate risk without a guarantee. If you are considering a variable rate mortgage you need to look at your own risk tolerance, and your cash flow available to deal with potential increased payment. Considering projections of rates and where we see interest rates heading can also be important in this decision. Make sure you talk to an expert when you are making this decision.