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The Buying Process
The Loan Process
To Buy or Not To Buy
Home Buyer’s Glossary

The Buying Process

Research what you would like in a real estate agent, check any testimonials they may have, their experience, and determine the services they offer.

Meet to discuss your needs with them. You will want to discuss your price range, areas you are interesting in purchasing a home it and any other criteria that you need for your future home. At this meeting you will discuss any pre-approvals for financing that you have obtained and the other aspects of what the buying process entails.

Once your initial meeting is over, your agent will email you homes based upon the discussed criteria. The more precise and direct you are with your agent, the more successful our search will be. You will select any homes you wish to see and have your realtor book an appointment.

Your realtor will draft the “Agreement of Purchase and Sale” for you, advising you what to include within the contract. You will determine a price, conditions, inclusions, exclusions and any conditions you would like to include in the Agreement. The Agreement will also include an “irrevocable date” which is the date that the offer is active for. The Seller will have time to determine if they want to accept, reject or sign back the offer.

ACCEPTANCE OF THE AGREEMENT: at this time you will be required to provide a deposit cheque at this time, which will be held by the Listing Brokerage, to be released on closing to the Seller’s lawyer. If you included conditions, the offer would be conditionally accepted, until such a time that the conditions are met and you provide a waiver of the conditions. Once the Sellers receive the Waiver or Notice of Fulfilment of conditions, the offer will become firm and binding and will proceed to closing. If they reject it, this means that you can resubmit a new Agreement, or chose to walk away from the property.

REJECTION OF THE AGREEMENT: this means that the Seller didn’t find the offer acceptable and chose not to deal with it altogether. At this time, you can chose to walk away from the property or resubmit a more desirable offer to the Seller.

SIGNBACK OF THE AGREEMENT: this means that the Seller found parts of the Agreement acceptable, but wanted to change the parts that they found not to their liking. At this point you will have to decide if you want to accept, reject or sign back the Agreement. Once you have received the Agreement back, you will discuss it with your Realtor and determine which action would be best.

The Loan Process

Unless you’re one of the rare few able to pay cash for your home, central to buying is finding the right lender and mortgage product. There are many different kinds of lending institution, offering a wide range of loans and special programs. In fact, you should diligently research your options and shop around for a mortgage with as much care as you take when looking for a home.

Educate Yourself About Your Options
There are myriad loan types and programs available through thousands of banks, finance companies, credit unions, and other assorted lenders.

Sincerely Examine Your Financial Situation
Together with educating yourself about your loan options, you should be asking yourself how much mortgage and down payment you can really afford. Make yourself accountable. What might you be giving up – not just every month, and also perhaps 20 years down the road – by extending yourself further? Maybe taking on a larger mortgage will pay off greatly as an investment, maybe it won’t. Be sure to weigh the risks and opportunity costs.

Your Basic Mortgage Options
Generally, there are two ways you can go: a fixed-rate mortgage with an interest rate that remains the same for the life of the loan, or a variable mortgage with a rate that adjusts up or down, depending upon economic trends.

The advantages of a fixed-rate mortgage – particularly if you lock in at a low rate – are that they protect you against the risk of rising interest rates, and their stability can also make it easier for you to plan and budget your short and long-term expenses. Their down side is that they generally have higher rates than variable rate mortgage at any given time, and by locking in you run the risk of being trapped at a relatively high rate if interest rates fall.

Apply For A Mortgage
When you meet with your chosen lender to complete the application you’ll need to provide information – if you didn’t during the pre-approval process – about your household income, job tenure and stability, assets and existing debt, and regular expenses. This may take the form of pay stubs, bank and investment statements, tax returns and other documentation. The lender will also check your credit status.

To Buy or Not To Buy

Buying your first home is a major step. There’s a lot you need to know to make the right decisions – and also to avoid making the wrong ones. And that’s particularly true in this current buyers’ market, when there are so many homes available and sellers have such diverse motivations. The good news is that if you know what you’re doing, or if you’re working with a highly-experienced REALTOR® who does, this market offers fantastic opportunities to get a great home at a great price.

Owning Versus Renting
Without question, owning a home comes with responsibilities and risks that you don’t have to worry about when you rent, such as a mortgage, taxes, homeowner’s insurance, maintenance and repairs, to name a few.

At the end of the day, it just feels good to own your own home. You can decorate it any way you like, renovate or build additions, personalize your landscaping

Do You Qualify To Own?
There’s only one way to find out: go to your bank and/or another lending institution and allow them to perform a credit check and analyze your financial situation generally.

So the bottom line is that if you are currently renting but really want to own a home, this is a fantastic time to buy. And again, you may qualify to buy and not know it. So talk to a knowledgeable, experienced REALTOR® about your options. Your REALTOR® will not only be able to guide you towards getting all the financial support you qualify for, but you’ll also get the scoop on the many and various
great real estate opportunities currently available. Not only that, but in case you didn’t know, all the work that a REALTOR® does to help you find, finance, and purchase a home won’t cost you a penny – it’s all paid for by the seller!

Home Buyer’s Glossary

Property Title – A summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.

Variable Rate Mortgage – A mortgage in which the interest rate changes over time. Agreement of Sale – Also known as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.

Amortization – The process of reducing the principal debt through a schedule of fixed payments at regular intervals of time, with an interest rate specified in a loan document.

Appraisal – A professional appraiser’s estimate of the market value of a property based on local market data and the recent sale prices
of similar properties.

Assessed Value – The value placed on a home by municipal assessors for the purposes of determining property taxes.

Closing – The final steps in the transfer of property ownership. On the Closing Date, as specified by the sales agreement, the buyer inspects and signs all the documents relating to the transaction and the final disbursements are paid. Also referred to as the Settlement.

Closing Costs – The costs to complete a real estate transaction in addition to the price of the home, to include: points, taxes, title insurance, appraisal fees and legal fees.

Counter-offer – An offer, made in response to a previous offer, that rejects all or part of it while enabling negotiations to continue towards a mutually-acceptable sales contract.

Conventional Mortgage – One that is not insured or guaranteed by the federal government.

Debt-to-Income Ratio – A ratio that measures total debt burden. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.

Down Payment – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type. Smaller down payments, less than 20%, usually requires mortgage insurance.

Deposit Cheque – A deposit given by the buyer to bind a purchase offer and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited.

Equity – The value of the property, less the loan balance and any outstanding liens or other debts against the property.

Easements – Legal right of access to use of a property by individuals or groups for specific purposes. Easements may affect property values and are sometimes part of the deed.

Fixed-Rate Mortgage – A type of mortgage loan in which the interest rate does not change during the entire term of the loan.

Home Inspection – Professional inspection of a home, paid for by the buyer, to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc.

Homeowner’s Insurance – A policy that protects you and the lender from fire or flood, a liability such as visitor injury, or damage to your personal property. Lien – A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.

Market Value – The amount a willing buyer would pay a willing seller for a home. An appraised value is an estimate of the current fair market value. Mortgage Insurance – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down.

Possession Date – The date, as specified by the sales agreement, that the buyer can move into the property. Generally, the it occurs within a couple days of the Closing Date.

Principal – The amount of money borrowed from a lender to buy a home, or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.

Title – The right to, and the ownership of, property. A Title or Deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects.

Title Insurance – Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.

Title Search – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.