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Are you ready to own your first home?
Are you paying off someone else’s mortgage each month? Would you rather be paying off your own mortgage? If the answer is yes, there are many things you need to know before you make that commitment. I have prepared this package to assist those people who are considering home ownership but would just like to know a “little bit more”, before they make the commitment.
Welcome to the world of home buying! It can be a bit overwhelming – this guide is designed to take away some of the mystery and help you understand the process involved in purchasing your first home.
As your Realtor®, my objectives are to:
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Educate you and assess your needs to prepare you for home ownership.
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Make the basic process easier to understand.
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Explain to you the pros and cons of purchasing a new or resale home.
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Introduce you to a broad range of possible homes, and arrange for you to see candidate homes.
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Get you financially ready and help you establish a Plan of Action - create a budget to save for your home purchase within your reach.
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Explain to you what government programs are available to assist first time hme buyers.
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Arrange fair deals in negotiating an offer, act as a mediator for potential conflicts, and draw up a legally binding agreement.
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Work with your goals and visions to find and help you settle into your new home in a vibrant Toronto neighborhood.
Realtors work for a commission, which is percentage of the sale price.The commission is usually paid for by the Seller, NOT the Buyer. Once you’ve selected a Realtor®, be honest in discussing your financial situation and carefully review the features you are looking for in a home. This will help the Realtor® prospect homes best suited to your needs, and it will save you a great deal of time.
Most importantly, remain loyal to the Realtor® you’ve chosen. This individual will be spending a lot of time and effort on your project and getting involved with several different Realtor® creates unnecessary and confusing duplication of effort. Buyers who deal with several Realtor® may miss out on the high level of interest and comprehensive service one is entitled to expect by being loyal to a single Realtor®
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WORKING WITH A REALTOR- AGENCY RELATIONSHIP
Buyer's Agent
A real estate company acting as a "buyer's agent" must do what is best for the buyer. A written contract, called a buyer agency agreement, establishes buyer agency. It also explains services the company will provide, establishes a fee arrangement for the Realtor's services and specifies what obligations a buyer may have. Typically, buyers will be obliged to work exclusively with that company for a period of time. Confidences a buyer shares with the buyer's agent must be kept confidential. Although confidential information about the buyer cannot be disclosed, a seller working with a buyer's agent can expect to be treated fairly and honestly.
Seller's Agent
When a real estate company is a “seller's agent,” it must do what is best for the seller of a property. A written contract, called a listing agreement, establishes seller agency. It also explains services the company will provide, establishes a fee arrangement for the Realtor's services and specifies what obligations a seller may have.
A seller's agent must tell the seller anything known about a buyer. For instance, if a seller's agent knows a buyer is willing to offer more for a property, that information must be shared with the seller. Confidences a seller shares with a seller's agent must be kept confidential from potential buyers and others. Although confidential information about the seller cannot be discussed, a buyer working with a seller's agent can expect fair and honest service from the seller's agent and disclosure of pertinent information about the property.
HOW MUCH YOU CAN AFFORD Let’s take a look at your financial situation and help determine how much you can afford. Then you can apply that knowledge to finding homes in your price range. The majority of homebuyers lack the funds required to buy a home without assistance from a bank or other financial institutions (commonly called a “lender”). So for most of us, buying our first home means combining our savings with money borrowed through a special type of borrowing arrangement called a “mortgage.” There are two types of costs in buying a home: 1.The amount of money you will need for the purchase: down payment, legal fees, taxes, closing costs and the home inspection fee. 2. The on-going costs of paying back your mortgage, along with monthly operating costs for utilities, maintenance, property taxes, and insurance. When lenders assess your ability to buy, they look at your ability to pay both types of costs in determining how much money they will lend you. Before you visit a lender, you can predetermine this amount, using the same formulas they do.
RRSP HOME BUYERS PLAN The RRSP Home Buyer’s Plan (HSP) was first introduced by the Federal Government in February 1992 to both first-time and move-up buyers. However, as of March 1994, only first-time buyers take advantage of this plan. The plan was again amended in 1999 so that people who borrowed from their RRSP’s to buy a home can do so again, as long as they haven’t owned a home in the previous five years. Buyers may withdraw up o $20,000 per individual ($40,000 per couple) from their RRSP’s interest and tax free to use towards the down payment of their first home, provided it is used as a principal residence. Contributions made to RRSP’s will not only be allowed to be directed toward a home purchase but the contribution itself, if made 90 days prior to withdrawal, will be allowed as an RRSP deduction as well. This is a double bonus to homebuyers. You can buy a home and claim the RRSP contribution as well. If you do take advantage of the plan, you have to pay back 6.66% of the amount you borrowed each year, starting in the second year after you made the withdrawal.
SAMPLE CLOSING COSTS Lawyers fees for services rendered In connection with the transaction And first mortgage (Plus GST) $550.00(approx) DISBURSEMENTS: Land Transfer Tax $2,225.00 Register Deed $ 70.70 Register Mortgage $ 70.00 Tax Certificate $ 65.00 Zoning Certificate $ 100.00 Search of Title $ 100.00 Executions $ 11.00 Couriers, Postage plus $ 250.00 Other soft costs Total Disbursements $2,891.70 Plus GST (7%) $ 17.50 Only on disbursements TOTAL FEES AND DISBURSEMENTS $3,459.20 Land transfer tax is based on a purchase price of $250,000. Please note that these figures are only a sample! They will fluctuate with each particular property. *Title insurance is extra if required. LAND TRANSFER TAX FORMULA From $50,000 to $250,000 x.01 = $ 275.00 tax From $251,000 to $400,000 x.015 = $1525.00 tax From $401,000 to $_______ x.020 = $3525.00 tax
ADDING A LAWYER TO YOUR TEAM Your lawyer will be an important participant in the home- buying process and provide a number of services including: v Ensuring that your rights and interests are protected in the drawing up of contracts. v Making sure you will have a valid title (proof of ownership) to the property and that it is described correctly in every document. v Investigate whether there are any claims registered against the property and ensure these are cleared before you take title. v Checking with the appropriate municipalities to find out if taxes are owed on the house, or (in the case of a new home), if final inspection has been completed. v Calculating the amount of Land Transfer Tax you will be required to pay when you complete the transaction, as well as any adjustments necessary to compensate the seller for prepaid fuel (in the oil tank), taxes and utility bills. v Drawing up the mortgage documents, if these are not prepared by your Lender’s lawyer. TO OWN OR NOT TO OWN Owning a home is not for everyone, and you must consider your personal needs before taking this important step. For many, home ownership is a compelling dream. Of greatest importance is working with a professional Realtor® who can answer your questions and assist in finding the right property for you. Remember that goals are dreams that can become a realty. If you need further information, please feel free to contact me anytime.
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