BUYING A HOME

Determining What You can Afford

The best way to do this is to talk with a mortgage specialist personally, they will do the calculations for you and ask all of the pertinent questions. Phone inquiries are only as accurate as the person on the other end of the line.

Taking this step will avoid disappointment later when all of the specific questions are answered. If they do not offer written pre-approval and interest rate guarantee try another institution. If they do not offer at least .5% off of the posted rates without being asked try another institution. If they do not offer to pay for the appraisal and waive your bank application fee and annual renewal fees, Call Me and I will put you in contact with the right people.

Understanding Market Conditions

The Real Estate Market is always changing. Don't rely on dated information, Call Ryck for an up to date explanation of market conditions.

Market Conditions

Characteristics

Implications

Buyers Market:

The supply of homes on the market exceeds demand.

High inventory of homes. Few buyers compared to availability. Homes on the market longer. Prices tend to drop

More time to look for a home. More negotiating leverage.

Seller's Market:

The number of buyers wanting homes exceeds the supply or number of homes on the market.

Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually increase.

May have to pay more. Make decisions quickly. Conditional offers may be rejected.

Balanced Market:

The number of homes on the market is equal to the demand or number of buyers.

Demand equals supply. Sellers accept reasonable offers. Homes sell within an acceptable time period. Prices generally stable.

More relaxed atmosphere. Reasonable number of homes to choose from.

 

The Major Elements of an Offer

1. Price

Depending on local market conditions, your opinion of value, and market information we provide you, the price you offer may be different from the seller's asking price. A well priced home should sell within 2% of list price.

2. Deposit

The deposit amount shows good faith, and will form part of your downpayment when the sale closes. Each deal is unique but we will help advise you on an appropriate amount based on a specific property and circumstances affecting the offer.

3. Terms

Includes the total price offered and the financing details. You may arrange your own financing or ask to assume the seller's mortgage, especially if it has an attractive interest rate.

4. Conditions

These might include "subject to home inspection", "subject to you obtaining financing" or "subject to you selling your property".

5. Inclusions and Exclusions

These might include appliances and certain fixtures or decorative items such as window coverings or mirrors.

6. Closing or Possession Date

Generally, the day the title of the property is legally transferred and the transaction of funds finalized unless otherwise specified.

 

Making an Offer

When the time is right we will supply current market information to assist you in deciding on a price.

Most purchasers do not make their best offer first, but caution must be exercised to insure the seller is not insulted, or you may never achieve a happy medium. Remember that these sellers are in your future home and are responsible for maintaining and cleaning it as well as deciding what to leave behind or take with them. Little items like touch-up paint, perennials in the flowerbeds, and storage shelving are usually very handy.

Your Real Estate professional will discuss the ramifications of deposits, terms, conditions, inclusions and possession to insure a smooth negotiation.

All offers must be communicated in writing to be taken seriously. 

All offers must be accompanied by a deposit as a sign of good faith to be cashed and deposited into a trust account and held until possession date.

The balance of the downpayment (cash to close) will be due and payable to your lawyer just prior to possession date.

Your Century 21 Real Estate Agent will communicate your offer to the seller's agent on your behalf and advise you of their response.

The seller may accept the offer, reject it, or submit a counter offer in reference to the price, closing date or any number of variables. By presenting a counter offer they have nullified your initial offer and you are not bound to any of the terms or conditions. You may respond as you see fit.

The offers may go back and forth until both parties agree or one ends the negotiations.

The agreement will likely contain conditions to protect you. The sale remains conditional until you have satisfied each condition. Often this will entail receiving mortgage approval and approving a home inspection. If a condition is not fulfilled, you are eligible to receive your deposit back in full. Once you have removed all of the conditions it becomes a firm sale and you are legally bound to proceed with the purchase.

A legal professional should be chosen to represent your interests and to process the legal documentation. You may wish to have them review the documents as a condition of the sale or involve them once the sale is firm and binding.

A professional home inspection by a qualified inspector can often prove very helpful in determining the condition of the home and if there are any major expenditures required in the immediate future. They may also help you identify maintenance that may be due to prolong the life of your new home.

 

Glossary of Terms

AMORTIZATION PERIOD:
The actual number of years it will take to pay back your mortgage loan.
 
APPRAISED VALUE:
An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.
 
CLOSED MORTGAGE:
A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.
 
CONDOMINIUM:
The owner has title to a single unit, as well as a share in the common elements such as elevators or surrounding land.
 
CONDOMINIUM FEE:
A common payment among owners which is allocated to pay expenses. Varies greatly with  what is included.
 
CONVENTIONAL MORTGAGE:
A mortgage loan issued for up to 80% of the property's appraised value or purchase price, whichever is less.
 
DOWN PAYMENT:
The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.
 
EQUITY:
The difference between the home's selling value and the debts against it.
 
HIGH-RATIO MORTGAGE:
A mortgage that exceeds 80% of the home's appraised value. These mortgages must be insured for payment by CMHC or Genworth.
 
INTEREST RATE:
The value charged by the lender for the use of the lender's money. Expressed as a percentage.
 
MATURITY DATE:
The end of the term, at which time you can pay off the mortgage or renew it.
 
MORTGAGEE:
The person or financial institution that lends the money.
 
MORTGAGOR:
The borrower.
 
MORTGAGE INSURANCE:
Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage (CMHC).
 
MORTGAGE LIFE INSURANCE:
Pays off the mortgage if the borrower dies.
 
OPEN MORTGAGE:
Allows partial or full payment of the principal at any time, without penalty.
 
PORTABILITY:
A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.
 
PRE-APPROVED MORTGAGE:
Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a "firm" offer when you find the right home.
 
PREPAYMENT PRIVILEGES:
Voluntary payments in addition to regular mortgage payments.
 
PRINCIPAL:
The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.
 
REFINANCING:
Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage.
 
RENEWAL:
Re-negotiation of a mortgage loan at the end of a term for a new term.
 
SECOND MORTGAGE:
Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.
 
TERM:
The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.
 
TITLE:
Legal ownership in a property.
 
VARIABLE-RATE MORTGAGE:
A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.