BUYING A HOME

3 tips to get you started

1

FIGURE OUT YOUR FINANCIALS

Talk to your or mortgage broker bank to find out what mortgage you are eligible to be pre-approved for and decide how much of your savings you want to put towards a down-payment.

2

MAKE YOUR WISH LIST

Make a list of what you are looking for in your future home and then go through it to decide what is a "want" and what is an actual "need".

3

FIND YOUR REAL ESTATE AGENT

You want to ensure you have someone you trust helping you on your real estate journey. Be sure to interview some Sales Representatives until you find the right fit.

 

FIRST TIME BUYERS

What's a mortgage and how do I get one?


A mortgage is a loan which can be used for purchasing a property. The "Principal" is the amount you borrow, the "Interest" is a percentage you pay in addition to the principal and the "Amortization Period" is how long you take to pay it back. Mortgage rates can vary from one lender to another so it's a good idea to source multiple options to find out what their rates are before making a decision. You can check with each bank yourself, or consider hiring a mortgage broker who can help make the comparisons for you.




How much do I need to pay for a Down Payment?


Typically, a down payment is 5% of the total purchase price of the home. For example, if the home was $300,000, a 5% down payment would be $15,000. If you can afford to do a 20% down payment, that is ideal, because for any deals with a 19% downpayment or less, buyers have to also obtain mortgage insurance, which is an additional fee. If you have to do this, it isn't the end of the world because it's often renegotiable after 3 years. If you can afford a full 20% down payment, you can forgo the insurance, have greater borrowing power and save a bit of money in the long run.




How are property taxes calculated?


This is a complex question, but generally property tax is calculated based on the size of your property, the quality of your home and the location. All of these factors are taken into account by the government and then homeowners are charged a percentage of the total as property tax. This percentage fluxuates from year to year, but typically government bodies try to regulate it so that increases are spread out over multiple years instead of sudden spikes. So if you have a really nice home, on a big lot, in the heart of the city, you will pay a higher property tax than others might. For more information visit https://www.niagararegion.ca/government/budget-taxes/prop-tax-calculator.aspx




What location should I buy in?


It really depends on the individual buyer and what they are looking for. If you're looking to move as a family, consider things such as proximity to schools and grocery stores. If you're looking for an investment property, consider rental potential. Who are your ideal tenants (students, young professionals, etc.) and then buy in a location where they would want to live (i.e. close to a university/college, near the highway for easy commuting, etc.). If you're looking for a long term investment, consider "up-and-coming" neighbourhoods where you can invest relatively inexpensively and reap the benefits many years later. There really isn't a good or bad location to buy in, it just depends on what you are looking for in a property.




Why should I use a REALTOR®?


The world of real estate can be confusing (and quite costly if you make an error when purchasing or selling a house). REALTORS® are trained professionals who are knowledgeable about their field. They are on your team 100% and will represent you to make sure you get what you want out of the transaction. They know the ins and outs of the paperwork, they are skilled negotiators and have tons of expertise to help answer the many questions you're sure to have. A lot of people think that listing a property without a Realtor will save them money in the long run because they don't have to pay a commission fee, but if even one small error is made in the documentation process, the resulting legal fees could be more than double what you would have paid in commission. Plus, REALTORS® are local specialists. It's important to hire someone who is very familiar with the neighbourhood where you are looking to buy so that they are able to let you know about any potential issues that may not be included in the listing information.




What are some pros/cons of a fixer upper?


PROS You have the opportunity to increase the value of your home by adding some sweat equity. If you can buy an inexpensive property, do some renos and bring it into the modern age, you can often sell it at quite a profit. CONS It is a lot of work. You have to be knowledgeable about home renovations and be prepared to take on a long-term project. It's important to ensure that you do renovations properly (with building permits and everything up to code) or else it can cost you in fines and secondary renovations.




What should I know to avoid becoming "House Poor"?


Know your numbers. Make sure that you know exactly how much of a mortgage you can handle, how much of a down payment you can make, and how much your closing costs will add up to. Ensure that when you are figuring out your monthly payments, that you are taking into account utilities and property taxes, rather than just your mortgage principal and interest payments. Once you know your numbers, make sure you communicate that to your REALTOR® so that they can show you viable options in your price range. It's easy to be tempted by the shiny allure of stunning homes, but always make sure you keep an eye on the price tag and stay in budget to aviod becoming house poor.




How do I climb the "Real Estate Ladder"?


The biggest thing to climbing the ladder is just to get on it. Housing prices will only continue to increase, so the best time to get into the real estate game, is now. Buying your first property and becoming a home owner is the first step, and from there it is a matter of saving up and hiring a trustworthy REALTOR® who can watch the market and let you know when to sell/buy.




I like renting because the landlord takes care of everything for me. Why would I want to buy my own place and have to cut the grass myself?


That's a good question. The convenience of a landlord is something that is certainly hard to give up, but becoming a home owner has it's benefits too. Aside from the pride of ownership that you'll feel, you also have a huge financial gain. Instead of rent money going out of your pocket each month never to be seen again, you are putting it towards a mortgage for something that you own. By owning instead of renting, you can eventually recoup those funds as well as the percentage of profit gained during your years of ownership.




I don't think I'll ever actually be able to afford home ownership. Any tips?


Make saving a priority. The real estate market is getting tougher to break into as prices continue to rise, yet wages stay relatively the same. So start off by choosing to make a committment to yourself and your future by making saving for a down payment a top priority in your life. Sit down, create a budget and find areas where you can trim your spending. Put that extra money into your piggy bank for that future down payment. Cutting back on a coffee a day from Timmies and other luxuries will be worth it when you're sitting in your own home, brewing a pot of coffee in your very own kitchen. The second step is to act on your intentions and buy a house. Once you have enough saved up for the down payment, don't hesitate to start actively looking, get pre-approved for a mortgage and put in an offer when you find a place you love. Housing prices typically increase at a standard rate of 4% per year, so waiting to buy only means the price tag will be higher and potentially out of reach. Buying as soon as you are financially able to is a wise course of action.




When is the "Right" time to buy?


The real estate market definitely has seasons and they all have their pros and cons for buying. In the winter months the market is slower. This is good because it means less competition for properties and you could better negotiate the sale prices. This also means that there is less to choose from. In the summer, spring and fall the market picks back up. This means that there are many more property opportunities to consider, however, more people are looking which could result in competition or bidding wars.





 

EXPERIENCED BUYERS

When should I consider upsizing/downsizing?


When your current home isn't working for your lifestyle any more. If you're wandering around empty rooms wondering why you have so much space you never use, it's time to look for something smaller. If you're tripping over your family members, belongings and dying for a little elbow room, it's time to upsize. Life changes, be sure that your home fits your current needs.




What are some things I can do to make sure my home sells for top dollar?


It depends how far you're willing to go. Updating elements of the home such as electrical, furnace, A/C, roof, etc. can greatly increase the value of a home when it hits the market. However, these can sometimes be costly undertakings. If you have the resources to do these kinds of updates, buyers are sure to love the property, but there are also lots of smaller things that you can do to help increase the value of your home. Simply re-painting and staging the space can go a long way to helping buyers envision themselves living in that home. Plus, doing a bit of yard work out front, planting a few flowers, trimming the hedges, etc., can really help amp up your curb appeal. If you're thinking about selling your current home to buy a new one, it's always a good idea to discuss with your REALTOR® some strategies and upgrades that you might want to do to the home before going live with your listing.




What are some things to look for if I'm considering buying an income property?


Are you going to live in the home and rent it or is it strictly for rental purposes?
If you're going to live in the home as well, you will want to make sure that you look for properties with separate entrances and apartments that meet rental codes and regulations.
What is your price range? You want to make sure that if you're buying an income property, you're able to afford it. Always be sure to take into account the possibility of vacancies. Even if you get great tenants, there will unavoidably be some months where you may not have anyone renting. You will need to make sure that if you have a streak of bad luck and aren't able to find a renter for whatever reason, that it won't break your bank to be carrying the mortgage until a new renter is found. Location, location, location.
This is really a personal choice, but it's typically a good idea to own an investment property nearby where you live. This is simply because as a landlord, you need to be in close proximity to respond to any emergency issues (burst pipes, heating issues, etc.). That's not to say you can only invest in your home town, many people do own investment properties in other cities or even countries, but if you are going to invest from a distance, you need to make sure to have an excellent property manager on your team who is nearby the income property and on call 24/7 to respond on your behalf in case of emergencies.




What do I need to know if I want to be a landlord?


You need to know the rules and regulations. Being a landlord is a big responsibility and it's good to do your research before bringing any renters into a property that you own. The Landlord-Tenant Board (LTB) website has tons of information about what's involved with being a landlord as well as standardized rental leases and tenant notifications which you can download and use free of charge. Other than being well-versed in the rules and regulations of the rental world, the other big thing to remember is to be selective when choosing a tenant. Take the time to interview potential renters, check references and go over what is expected of the tenants who rent from you. Once you have signed on the dotted line, you are in a binding contract, so it's important to do your due diligence to ensure you have secured a good tenant.




Why should I use a REALTOR®?


The world of real estate can be confusing (and quite costly if you make an error when purchasing or selling a house). REALTORS® are trained professionals who are knowledgeable about their field. They are on your team 100% and will represent you to make sure you get what you want out of the transaction. They know the ins and outs of the paperwork, they are skilled negotiators and have tons of expertise to help answer the many questions you're sure to have. A lot of people think that listing a property without a Realtor will save them money in the long run because they don't have to pay a commission fee, but if even one small error is made in the documentation process, the resulting legal fees could be more than double what you would have paid in commission. Plus, REALTORS® are local specialists. It's important to hire someone who is very familiar with the neighbourhood where you are looking to buy so that they are able to let you know about any potential issues that may not be included in the listing information.




What are some pros/cons of a fixer upper?


PROS You have the opportunity to increase the value of your home by adding some sweat equity. If you can buy an inexpensive property, do some renos and bring it into the modern age, you can often sell it at quite a profit. CONS It is a lot of work. You have to be knowledgable about home renovations and be prepared to take on a long-term project. It's important to ensure that you do renovations properly (with building permits and everything up to code) or else it can cost you in fines and secondary renovations.




What should I know to avoid becoming "House Poor"?


Know your numbers. Make sure that you know exactly how much of a mortgage you can handle, how much of a down payment you can make, and how much your closing costs will add up to. Ensure that when you are figuring out your monthly payments, that you are taking into account utilities and property taxes, rather than just your mortgage principal and interest payments. Once you know your numbers, make sure you communicate that to your REALTOR® so that they can show you viable options in your price range. It's easy to be tempted by the shiny allure of stunning homes, but always make sure you keep an eye on the price tag and stay in budget to aviod becoming house poor.




How do I find good tenants for my income property?


Advertise and interview. Think about who your ideal tenant would be (a student, a young professional, etc.) and then try to target your advertising to places where they would see it (a college campus housing board, kijiji, etc.). Once you get some interest, don't feel pressured to sign with the first tenant that comes along. Take the time to interview all interested parties. Ask for a reference from a previous landlord if possible to find out if they have a good history of paying rent on time and taking care of the property. Doing your due diligence up front will help save you a lot of headache later.




My parents are moving in with us. What should I look for in an in-law suite?


Having your parents or in-laws move in with you can be a wonderful but also challenging situation. There are many reasons parents move in with their children, so whether it be for financial reasons, health reasons, or by choice, the important thing to remember is that with two families merging into one home, there needs to be respect for one another and respect of privacy. A move like this is certainly an adjustment period for everyone, so you need to have your private space and so do your parents/in-laws. Ideal in-law suites have a separate entrance, separate kitchen and private bed/bath facilities, but also have a large enough space that when the kids or grandkids want to hang out with the parents/grandparents, they can. Just keep in mind that even if you're buying the house, your parents/in-laws still have a valid opinion and should have a say in the final decision since they are going to be living there too and everyone needs to love it.





 

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