Your ultimate success in buying a home depends on how well prepared you are. The following outlines the process in a series of twelve easy-to-follow steps.
1. Analyze what you really want
One of the biggest mistakes buyers make is to go into the market without a clear understanding of their needs, wants and financial capability. The first step should be self-analysis. Start with a wish list. Rank the features you want in order of priority. Consider things such as:
Feelings about your current home
Time you are willing to spend commuting
Size of accommodation you really need
Feelings about privacy and security
Importance of schools, shopping and services
Characteristics of neighbourhoods and environment
Preference for old vs contemporary vs new
Type of ownership - eg. freehold vs condo
There are a lot of choices to be made. You can save yourself time and effort by deciding on many of these issues and preferences before you start to look. But be prepared to revise you goals in light of market discoveries.
2. What you can afford ?
You will want to meet with a mortgage lender as early as you can in the process, to make sure you understand, every aspect of the loan process. One of the best strategies is to get pre-approved. It is simple to do and can save you time and money in the negotiating process.
Most lenders will approve you for an amount of loan before you have selected the actual property. Your mortgage will be approved "pending a property & appraisal".
Pre-approval makes you more comfortable knowing that you won't find your dream home only to find you are not able to arrange financing . The vendor is also more likely to deal seriously with you on the sale if he or she knows that you are qualified to finance the purchase.
You should leave your meeting with a clear understanding of:
your maximum purchase price
your complete monthly payments
an estimate of how much cash you will need
what supporting documentation you will need
3. Select a Realtor/Agent
This is probably the most important step in the process. You will need to find a professional you can like and trust. You will be confiding in him or her on a business and personal level. The agent can make the process pleasant and rewarding or frustrating and disappointing. They are key to your finding what you want in the right area, at the right price. Look for someone you feel comfortable with and who is experienced and knowledgeable. Don't be afraid to ask for references. Once you find someone you feel confident with, sign them up as a Buyer's Agent. It is important that the person you're working with is representing your interests exclusively.
4.Consult with your Agent
The next important step in the process, is a meeting with your agent to prepare each other for exactly what to expect along the way. The following are the points that should be covered and fully understood in this meeting:
Your needs and expectations. What accommodations are you looking for (bedrooms, baths, etc.), in what areas, in what price range and in what time frame.
How often you are available to look and what you expect from your agent in terms of availability & communication (e-mail, phone-daily, weekly).
Your agent should give you copies of all the paperwork you will be expected to sign throughout the process and brief explanation of each.
Your agent should explain Buyer Brokerage and why you should sign a Buyer Broker Agreement.
5. Select a Mortgage Lender
Most people, when selecting a lender, call various lending institutions to check on rates and generally go with the lender with the lowest rates. We strongly recommend that you select a lender who has been referred to you by someone who has actually gone through the entire loan process with that lending institution and loan officer. The loan officer is just as important as the lending institution. Most lenders offer the same basic mortgage programs (conventional high ratio, CMHC insured,etc), but each will usually offer their special "niche" products. For example, some lenders specialize in low down-payment loans, some specialize in loans for people with marginal credit, some specialize in loans for self-employed borrowers, etc. Your agent will know how to steer you in the right direction.
You will want to meet with the loan officer as soon as possible in the process, to go over and make sure you understand every aspect of mortgaging. One of the best strategies we can offer you, is to get "pre-approved". It is simple to do and can save you thousands in negotiations on your new home. Most lenders can get you approved for a loan even before you have selected a home. Your loan will be approved "pending a property & appraisal". Pre-approval makes you, the buyer, much more comfortable knowing that you won't find your dream home only to have the loan turned down. The sellers are also more likely to deal seriously with you on the sale if they know that you are a qualified buyer. You should leave with a clear understanding of what your complete monthly payments will be, a good estimate of how much cash you will need (from beginning to end) and what supporting documentation you will need to provide.
6. Look at Properties
This is the fun part! It is important to limit the number of homes you visit in a day. If you tour too many, they begin to run together and you can't remember one from another. It's a good idea to record notes about each property on an information sheet immediately eliminate ones that don't suite. Remember, feed-back to your agent is crucial. It's important to let your agent know which houses you like and why as well as which houses you don't like and why.
Open communication will allow your agent choose only properties that will interest you.
7. Select Your Home
Once you have located two or three homes that you really like, you're agent will do whatever research necessary to help you make your ultimate buying decision. Once you've selected one home to focus on, your agent will do a Comparative Market Analysis on that property. This involves determining "fair market value" by reporting on recent sales of similar properties in the neighborhood or area.
8. Offer and Negotiate
When making an offer on your selected property you will have to decide:
what price will you offer
how much deposit you will offer
what conditions -eg. financing, home inspection etc.- you wish to include
what chattles (personal property) you wish to include
when you wish to close (move)
When negotiating with a vendor, it's best to remember not to take anything personally. Also, try to put yourself in the seller's shoes. Figure out what's not negotiable to you and be willing to give a little on the things that aren't. A good agent should be able to give tons of advice as to how to structure your offer.
Once your offer has been presented, the vendor will either accept it, reject it, or make a counter offer. The chain of offer for acceptance can be short or prolonged It is important for all parties to focus on their real goals through this process.
9. Satisfy Conditions
If, as part of your offer, you asked for time to arrange certain things, you have what is called a conditional agreement. Offers can be conditional on mortgage approval, inspections, the receipt of acceptable home owners or condo association documentation, the sale of property and many other things. It is important that all deadlines be met and that all conditions are removed exactly the way the agreement specifies. Your agent is responsible for ensuring that these procedures are done correctly.
10. Select a Lawyer
Your lawyer will take care of all necessary legal prceedures to implement your Agreement of Purchase and Sale. The lawyer conduct a title search, prepare all necessary documentation - deeds, charges, discharges registrations etc. They complete the closing. Their function is to make sure that all the terms of your agreement are met. If a problems arises, your lawyer will represent you in any necessary proceedings.
11. Close your purchase
Several days prior to closing day you will meet with your lawyer to sign the documentation required to complete the sale. Your lawyer will explain every document to you in a satisfactory manner. Do not ever feel intimidated. If you do not understand something ... ask. You should understand everything about the legal aspects of home ownership. You will also have to present funds for whatever down payment and closing cost that you are expected to pay. You may be required to certify your cheque.
12. Move to your new home
This is the last and probably the hardest step in the home buying process! A little bit of planning and forethought, though, will make for a much smoother move. You will want to make arrangements with a moving company as soon as you can. Call at least two, to get competitive quotes. A representative will usually come to your home to analyse the weight and complexity of the physical move.
Be sure to change your address with the post office, your banks and any other correspondents at least 30 days in advance. To avoid late payments, it's a good idea to actually call and verify receipt of the address change whenever possible. Call to order your utility hook ups approximately ten days prior to your move.
By following these twelve steps, acquiring a new home should be a smooth and satisfying process
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