First Time Home Buyers Guide

First Time Homebuyer's guide for BC, Canada

 

1.    Introduction

 

If you are new to the buying market, it can be somewhat confusing unless you have the professionals on your side. With the use of this guide, first time home buyers will be able to find their way through the housing market maze in BC.  How do I identify the home I want?  How do I locate it?  How do I know which price is right to pay for it?  Am I  entitled to a rebate, as a first time home buyer?  And what do I need to do after an offer has been accepted? The guide will help you to find all the information you need to help you make the perfect choice.

 

This guide will also give you a general overview of buying a new home in BC, bearing in mind the different demographics, crime rate, prices, and reputation of the area where you may be looking for your first home. It's not always easy, and this guide has been written with you in mind, taking you through the stages that will help you make informed decisions and save money in the process.  Everything you need to consider is here, to ensure that the decision you make is one that will work for your budget, as well as your housing needs.

 

Let’s get started!

 

How to Get Started?

 

The first thing you should do is know exactly what you want. You should have a fair idea of what is affordable to you, which is why it’s important to make a checklist. This list should effectively give the first time home buyer an idea of what's acceptable and what is not. For example, do you need any of the following services within the area where you want to buy a property?

 

  • Skytrain, buses

  • Hospitals

  • Schools

  • Entertainment

  • Shopping facilities

  • Town or country?

  • Live or rent?

 

This is just a basic checklist of items, but there will be more as you get started in your search.  In addition, it might be best to list these items in the order in which they are most important to you; not every area will have all of these services available all in one location, so you may have to make significant choices based on what is most important.  For example, if you choose to live in a small town, be aware that schools, entertainment and shopping facilities may be further away than in larger urban areas.  Or, if transferring to a new area as the result of a job transfer, decide which neighbourhood makes the most sense in terms of a sensible daily commute, without sacrificing too much in the availability of close-by amenities.

 

As you make the checklist, further items may pop into your head that are related to these main ones; write them down and consider where they fit in the overall list. Knowing where you want your geographical location to be helps you to save time, though stretching the geographical area a little may take you into areas where your money can go a bit further. However, if you are considering buying in an area you are unfamiliar with, then you will need to draw a line that gives you a search circle which may be acceptable to you. Always visit potential neighbourhoods; not just the specific houses you may be looking at but also the immediate area within at least a ten-block radius, so that you are fully comfortable with where you will be living and what is provided in that community. 

 

Property Basics

The checklist of a first time home buyer should include things that are shown below, and only you can answer these questions:

 

  • How many bedrooms do you need?  Remember to keep in mind future changes to your family (the addition of or moving out of children, other family members, retirement plans, etc.).

  • Do you need a single or double garage? Is there nearby parking for additional cars?

  • Renovated or TLC needed?

  • How big is the living area?

  • Is there a room that can be adapted into a home office, if needed?

  • How big should the lot size be?

  • What kind of backyard, if any, is there? Garden?  Swimming pool?  BBQ pit?

  • Is there an attic/basement of adequate size and easy access?

  • Do you need a secondary suite in the basement (mortgage helper)?

  • What services are essential to you?

  • Are there members of the household who will have special needs? If so, what kinds of upgrades may be required to accommodate them?

 

By using the checklist system, you save yourself a lot of disappointment and a lot of looking at homes that don't fit your specific criteria. You should also give your  REALTOR® an idea of exactly what it is that you are looking to purchase. If you can give specifics, this saves you an awful lot of time viewing unsuitable properties; your REALTOR® can help you weed out the homes which don’t fit your criteria, and direct you to properties that are tailored to your living needs which also match your stated budget.

 

When you are a first time home buyer, you need to think about how long you may be living on that property. For example, if you are a young couple, it might be short-sighted to buy a new home with one bedroom if you are thinking of having children.  While it may last you until you do have kids, wouldn't it be wiser to stretch the budget a little to be in a home that will still be viable for several years?  If you already have children when looking to buy, then you may want to consider looking at the geographical areas of the best schools and parks.  Conversely, if you already have teenagers that will be moving away soon, you may soon find yourself with more rooms than you need. Also keep in mind what you may need if you have a pet, or are thinking about getting one (the type of pet will determine what you are looking for in this area). Thinking in the long-term will spare you a lot of hassle later; sometimes a lot of time and money will be saved if you plan in advance.

 

2.  The Ideal Price Tag

 

Determining the budget you can afford when it comes to buying a home is much more than what amount you can reserve for a monthly payment. It means adding up your total income each month and subtracting the monthly expenses. You should create a sheet that lists good estimates for things such as rent, insurance, car payments, groceries, utilities and other varied costs.  A lot of people don’t realize how far the cost of living goes up, after the purchase of a home.  Houses require constant maintenance, from lawns and yards to pipes and paint work, all of which should be factored into an estimate of your monthly expenses.  How comfortable are you on your current budget? If things feel a little stretched when you look your finances over, then you will need to aim ultimately for a mortgage payment that is slightly lower than what you pay in rent currently; the general rule is that your housing expenses should not exceed more than a third of your gross monthly income. Again, planning ahead for total monthly expenses will save you a lot of unexpected heartache later on; while it may be difficult to estimate how much home maintenance costs will be, checking with friends and family who already own a home is usually a good way to gauge what your estimated expenses will amount to.

 

Your total monthly debt should also not exceed more than 40% of your gross monthly income.  Monthly debt may include car loans, student loans, credit card payments, and other credit lines that you currently owe.  Take a hard look at your finances and make sure that your total accrued debt, plus housing expenses, does not exceed 40%.  If it does exceed this number, you may want to look for ways to minimize or consolidate your debt first, before looking into home ownership—mortgage lenders will also be looking at your debt history, so make sure it is in order.  Get a report of your credit history, and look for ways to improve your score. Learning to manage your finances now will also be an invaluable skill once you own a home, when your living expenses will increase further.


Often, what you can afford will be a major factor in determining which area and which size home you end up living in, but don’t let that stop you from thinking your dream home is out of range.  A thorough search of neighbourhoods and homes will often reveal bargains that you can take advantage of; at the same time, beware of homes whose price tag seems ‘too good to be true’—when checking out such homes, be sure to look for factors that might have brought the cost down (ie. proximity to an earthquake fault line, or a recent rash of crimes in the district) and then make a decision on whether or not these risks outweigh the cheaper price tag or not.  Also, remember that this is your first home purchase, which will not necessarily be your last—it doesn’t have to be picture-perfect, so much as accommodating to your most pressing current needs.

 

What is a Mortgage Pre-Approval?

A mortgage pre-approval is when a lender takes all of your information and creates a letter that can be used to show sellers that you can afford a home that is listed for a set amount of money, at a fixed interest rate. They are usually good for up to 90 days and can prove helpful in getting the home you need right away.  When you meet with the lender, be sure and have all of your personal information ready including identification, proof of income, assets, debts, credit history, and job history.  The lender will then determine what mortgage amount is right for you; although a pre-approved mortgage is (in spite of its name) not a guarantee of mortgage approval, it can be very useful in the eventual approval process, as well as giving you an idea of what range of home affordability you should be looking at. 

 

Fixed vs. Variable Rate Mortgages

The biggest difference in a fixed and variable rate mortgage is the final amount you will end up paying in interest. Fixed rate mortgages offer a fixed rate of interest for the entire length of the mortgage. Variable rates are based on market fluctuations and can start small, but there is a danger of rates creeping up over the life of the mortgage. They are a great way to get an initial mortgage if you have some credit problems, but you should plan to refinance to a fixed rate whenever possible, or a sudden change in your mortgage’s interest rate may come as a shock—while your basic monthly payment may not change, the amount of that payment used to pay off the interest will increase.

 

In addition, there is a ‘protected variable rate’, which is a variable interest rate that has a maximum cap on it, so that even if the market does go above that number, you will not pay an interest rate any higher than the cap.  This is often an appealing alternative for those who want something in-between a fixed and variable rate.

 

Open vs. Closed Mortgages

An open mortgage allows you to pay off your home in part or in full at any time without penalties, and also allows for a renegotiation of the mortgage rate.  A closed mortgage comes at a much lower interest rate and is therefore more popular with home buyers, but does not offer the above stated advantages of an open mortgage—the owner must pay a fixed monthly rate without the ability to change or renegotiate that option.  Again, the type of mortgage you choose should be carefully considered, with long-term planning in mind.  A REALTOR® can also help first time home buyers make the right decision.

 

Amortization

Amortization is simply a fancy word which describes the amount of time it will take the total mortgage to be repaid. The average amortization is 25 years; if it takes longer to pay off, your monthly payments will be lower, but the interest will be higher.  The length of time is often determined by the lender using factors such as your credit history and score, which is another reason why it’s good to make sure that you are in good credit standing before you being the process of getting a mortgage.

 

Broker vs. Bank                                                                                                                                                                                               

You can get a home mortgage from either a broker or a bank. There will be a greater demand for your current banking history and credit worthiness from your bank.  By contrast, a mortgage broker specifically deals with home loans and usually has products that can help most credit situations.  The broker will charge a fee, but it is often worth it for those with less-than-optimal credit histories.

 

How Much is a Down Payment?

While it is possible to buy a home with as little as 5% down, the amount of your down payment will determine whether you'll have a conventional mortgage or an insured, high-ratio mortgage.

 

§  Conventional mortgage: means your down payment is at least 20% of the purchase price.

 

§  High-ratio mortgage: means your down payment is less than 20% of the purchase price, with some as little as 5% of the purchase price. If you decide on a high-ratio mortgage, your lender will require you to have mortgage loan insurance.  Therefore, going with this option means you should take it into account as another expense, when calculating projected home expenses. 

 

§  It is important when looking at your ability to finance a home purchase, to keep in mind how much you can afford for a down payment.  You will want to pay as much down as you can, so you don’t have to pay as much in interest.  As most people struggle to make a down payment on a home, it’s good to start saving for it as soon as you possibly can.  Lenders look favorably on those who are willing to pay a higher down payment, and often an initial deposit of the down payment (usually around 5% of the total) is required early in the buying process, with the full payment completed on closing day.

 

 

What is Mortgage Insurance?

High ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada, or Canada Guaranty, and require you to pay an insurance premium. Ask your mortgage advisor for more information.  The insurance premium will depend on the amount you are borrowing and the percentage of your down payment (Usually, mortgage default insurance premiums range between 0.5% and 2.75% of your total mortgage amount). It also can be added to the principal balance and paid off as part of your mortgage, or paid off in a lump sum at the time of purchase (may be subject to provincial sales tax which cannot be added to mortgage amount).

Appraisal Fees

Sometimes mortgage lenders will require you to pay a fee for the appraisal of the home.  The appraisal will cover three main areas: the physical condition of the home, the price of comparable homes in the area, and current housing market conditions.  Appraisals are good because they will let you know how much the property is actually worth, and ensure that you are paying a fair price for it. Appraisers are often recommended through your REALTOR®, and you will pay the fee directly to them for their services.

Closing Costs

Closing costs are the costs of doing a title search, inspection of the property after making an offer, appraisal for mortgage (covered above), certificate of location, notary services, land registration fees, water tests, pre-paid property taxes, and property insurance.  A lawyer will be necessary to review all contracts and make sure the property doesn’t have any outstanding liens or work orders; legal fees are usually paid on the closing day.  While all of these various fees may seem overwhelming at first, you can negotiate to have at least part of this cost picked up by the seller of the home or paid by a mortgage advisor. Real estate services for buyers are usually free.


Moving Costs

Even after closing costs are taken into account, be sure and factor in the cost of moving in and occupying your new home, which may involve more than you think.  These will include:

·         Transportation costs: if you hire a mover to transport your furniture and other items.  Even moving the items yourself will incur costs (packaging materials, gas).

·         Service connection costs: to set up electricity, gas, telephone, TV, wi-fi, etc.

·         Appliance costs, should the home not come with a washer/dryer, microwave, vacuum, etc., or should you wish to replace those appliances with your own.

·         Lawn/garden equipment: lawnmowers, snow-cleaners, hoses, and other items needed for the proper maintenance of your lawn and backyard.  Also, if you plan on hiring someone to do housework for you, factor that in.

·         Renovations: if you are planning to replace wallpaper, floor tiles/carpeting, paint, etc. Even if you wait to do this kind of work, you should still keep it in mind as a future expense.

·         Repairs: it’s best to have an inspector thoroughly check the home before purchase, so there are no nasty surprises.  If however you plan on making any repairs yourself, factor that into the cost.

·         Heating/Cooling: most modern homes come with central heating and air-conditioning, but if your home does not and you wish to install them—or you wish to buy portable heaters and air conditioners—be sure and factor that in to the cost.

 

Warranties

Some homes may already come with a warranty provided by the builder; it’s good to look over these closely to see what is covered, and for how long. New home warranties are provided by both provincial governments and private services, which can be gone over with your lawyer and/or REALTOR®. The internet is also a good source for home warranty information.  Looking over this information now, and deciding which is right for you, may save you quite a bit of expense later down the road.

 

First Time Home Buyer Rebate

 

There are instances in which first time home buyers can qualify for and receive a rebate.

To qualify for a full exemption, at the time the property is registered you must:

 

·         be a Canadian citizen or permanent resident

·         have lived in B.C. for 12 consecutive months immediately before the date you register the property, or filed at least 2 income tax returns as a B.C. resident in the last 6 years

·         have never owned an interest in a principal residence anywhere in the world at any time 

·         have never received a first time home buyers' exemption or refund

and the property must:

·         be located in B.C.

·         only be used as your principal residence

·         have a fair market value of:

o    $425,000 or less if registered on or before February 18, 2014, or

o    $475,000 or less if registered on or after February 19, 2014

·         be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption from the tax if the property:

·         has a fair market value less than:

o    $450,000 if registered on or before February 18, 2014, or

o    $500,000 if registered on or after February 19, 2014

·         is larger than 0.5 hectares

·         has another building on the property other than the principal residence

Find out the amount of your exemption if you qualify.

If you don’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refund of the tax. To apply for a refund, call (250) 387-0604.

 

To apply for the First Time Home Buyers' Program you need to complete the First Time Home Buyers' Property Transfer Tax Return when you or your legal professional register the property transfer. After you have applied, you must meet additional requirements during the first year you own the property to keep the tax exemption.

 

Find out more about that here.

 

3.   The Perfect Property

 

The outside of your desired home is just as important as floor space, storage and all of the interior wants and needs. It can make all of the difference in price, location and continued maintenance fees. If you have settled on a particular area that you feel you have to live in, then you may need to switch from a single family home to a condo or townhouse, depending on what is available and at what cost.  Each option has its advantages and disadvantages, so consider your options carefully before making a decision. 

 

Apartment vs. Townhouse vs. House

Each provides a different value for the owner. The singular home is prized for separate living from a community of people, whereas townhouses and apartments are contained within a shared area and structure. Apartments or condos can be inside a multi-level building, but townhouses are usually connected in community rows.  Therefore, townhouses often offer a greater sense of privacy than apartments, although they also require greater maintenance (though usually not as much as single family homes).  In addition, there are stacked townhouses which are basically two-story homes stacked on top of each other. 

 

A semi-detached singular home is connected on one side to another home, providing a bit less privacy than a singular home, but more than a townhouse.  There are other housing options as well including duplexes, link homes, modular homes, and mobile homes, although these are far less frequent; still, one style may be exactly what you’re looking for so it doesn’t hurt to check out every option.

 

What is the better investment?

According to statistics from Real Estate Board of Greater Vancouver and Fraser Valley Real Estate Board for the last 5-10 years, prices for single family houses are growing much faster than prices for apartments and townhouses. These conditions may change, but at the moment single family houses are the best investment. 

 

What are the main differences?

There are generally a lot of fees associated with association dues to cover maintenance and amenities with apartments and townhouses. From time to time strata council can issue a special levy for fixing bigger issues like an old roof, or to change piping in the whole complex. The singular home does not have these association dues, but the taxes are usually higher, and you have to provide your own maintenance for property upkeep. Estimating maintenance costs for a singular home and comparing them to association dues of apartments and townhouses is a good idea. 

 

New vs. Resale Homes

New homes are just that—brand new, up-to-date, never-lived-in places that are likely to sport modern architecture and not require too much in the way of repairs or renovations.  You will often have a greater choice in choosing the exterior and interior décor, but you will also have to cover that cost.  A resale home is previously lived-in and often comes with fully landscaped lawns and backyards, wallpaper, flooring, etc., but also might require more repair/renovation work.  Once again, it will be up to you to weigh the benefits and costs of each option, according to your needs and means.

 

Using Your List

If you are looking for specific areas, numbers of bedrooms or numbers of bathrooms, then you need to use EstateBlock.com to help find the perfect property. Take the list you created earlier and input the information and see what is available in your price range. You can save the search results and even have new listings emailed to you automatically. With EstateBlock it is now much easier as a first time home buyer, to find the home that suits your individual requirements.

 

Narrow Down the Perfect Location

What are the specific details that make certain areas desirable to you? If you have children then good schools, low crime and family entertainment will be significant. If you will have to commute to work and don’t have (or don’t plan on using) a car, a proximity to trains and buses will be essential.  If you are planning to retire, other needs will be taken into account—perhaps seclusion is desired, or access to services for senior citizens.  All of these details have to be balanced to meet your budget.  It’s important not to take this element of the home buying choice lightly—location often has a lot to do with the homeowner’s well-being, and sometimes it’s worth sacrificing some minor items on your wish list in favour of the overall beauty and convenience of a great location. 

 

Crime and Demographic Numbers

You may think you have found the perfect neighbourhood, but is it safe? What is the breakdown of income, nationality, ages, education, and rental properties, and does it have a family-friendly community orientation? You can use a heat map quickly to see the breakdown of this information per neighbourhood on Estateblock.com.  Keep in mind that crime and demographic numbers can change from year to year, so you may want to look at trends over time—the less volatile the numbers, the more stable the area.  Also, word of mouth often tells you what statistics sometimes cannot; speak to friends and family to find out what they may know about a particular area.  If you know someone who lives in a prospective area, visit them and get a sense of their day-to-day living.  Combining the stats with personal observation is often the best means of gauging the relative safety and ‘feel’ of a neighbourhood.

 

Schools

Every home in British Columbia is assigned to one elementary school and one secondary school. Some of these are good, and some are not as good. You can use another heat map on Estateblock.com to find out if the schools are considered good in the area you are looking for a home.  Once again, word of mouth is also a good source of additional information. If there are no good schools in the area in which you wish to live, homeschooling is another option to look into.

 

Public Transit

If you are taking public transportation, it will be necessary to use the EstateBlock search to locate homes near train and bus stations.  Just click on Skytrain station on the map view and you can filter homes 250m, 500m, or 1km away from Skytrain station. Also, if you are planning to use your car, make sure that there is convenient parking both in your neighbourhood and in the places you will be regularly going (work, shopping areas, etc.).  Be sure and plan your routes carefully and keep in mind which are the fastest and most reliable; there are now a number of convenient smartphone apps which help people find the nearest bus or train, measure traffic conditions, and so on. 

 

Community Amenities

EstateBlock also offers an amenity map that can help you search for homes that are near shopping, libraries, doctor offices, restaurants, banks and grocery stores. Find an affordable home right in the middle of it all!  Amenities are often an essential factor in the final decision of choosing a home, as many people want to live within shopping, eating, and entertainment areas that are within close distance.  On the other hand, others may prefer more seclusion, or a happy medium between seclusion and at least a fairly close proximity to amenities. Using the EstateBlock map will help you decide on what areas offer a lifestyle compatible to your needs. 

 

Safety

Even if crime rates are low in the area you choose, safety is always a top priority, especially if you have children.  Make sure that there is adequate street lighting, pedestrian walkways, prominent street lights and signs, and nearby places to go in case of an emergency.  Proximity to a good hospital may be of importance to you.  Some neighbourhoods have private security watches, but if yours does not, there may be a local neighbourhood community watch—be sure and inquire about these things, if you want to be on the safe side.

 

 

4.  Visiting, Choosing and Buying

 

At some point, you will want and need to go view the property. EstateBlock makes it easy. All you have to do is click “go see this home”, and an agent will contact you right away. The REALTOR® will show you as many of the properties as you wish to see. The services are free, as the seller pays a commission to a REALTOR® for bringing buyers to the properties.  These are essential things to keep in mind, once you spend time visiting prospective homes:

 

·         Visit as many homes as you can.  The more homes you visit, the more you are likely to fnd the right one for you.  Snapping up the first home you see just because it might initially look promising, may mean you miss an even better prospect.  Of course, you may not always have the luxury of time to look at as many homes as you wish, but no matter how much or how little time you have, be sure to look at as many homes as you possibly can. 

·         Take lots of pictures, and keep detailed records on what you see. You’re not always going to remember every detail of every home, so record what you like and don’t like about the place: how many items on your ‘wish’ checklist does it have?  What needs renovating?  What are the utility costs (and don’t be afraid to ask)?  What are the property taxes?  How long has the previous owner lived there? What additions/modifications to the home have already been made?  What kind of upkeep does the lawn or backyard require?  All of these questions should be asked during a visit, and written or noted somewhere so that you can later take the time to cross-compare with the other homes you’ve seen.  Try to give a name to all the properties that you’ve visited, as that might help you remember them.

·         Visit certain properties that you like, more than once.  Visit during different times of the day or evening, looking at areas you might have missed before; in addition, exploring the immediate neighborhood—including a visit to the neighbors—will help ensure that there are not unpleasant surprises in store for you later!  The more often you see a property, the more you may find you are attracted to it, or the more cracks will begin to appear in the façade. 

·         Check the home’s energy rating.  Newer Canadian homes will have an assigned energy rating, which tracks how efficiently the home uses energy.  A rating sticker next to the electrical panel will give you a number; the higher the number, the better the rating and the more efficient the home.  Energy-efficient homes, besides being ‘greener’ for the environment will save you a signficant amount in bills.  Fators affecting a homes energy rating may include insulation (walls, windows), upgraded technology, and green technology (solar panels, wind turbines, etc.—see the “net-zero energy” section in part 5 of this guide, for more details). Even if your home doesn’t come with green additions, you may want to consider adding them if you can, as it really will make a difference in your power bill.

 

If you get out there and seriously look around, you will find the right property for you. Now, how do you seal the deal when you find the right one?

 

Check back with your mortgage lender

 

You need to make sure that you can truly afford this property.  Go over your finances with your lender one more time, factoring in the specifics of the home you have chosen; they will help you decide if the purchase is feasible.  This is another step which requires very close attention to detail; you don’t want to find out later that you couldn’t afford what you just bought!!

 

Perform a property background check

You EstateBlock REALTOR® will get information on the sales history, assessment value, property disclosure statement, renovations history, age of roof, furnace or water heater, whether it is a distressed property sale or new construction and has an added GST fee. If you use an EstateBlock REALTOR®. you will get a package that contains all of this information and more.

 

Comparative Market Analysis

Do not overpay for your home. An EstateBlock REALTOR® will do a complete Comparative Market Analysis to show what homes of comparable value are selling for in the neighbourhood where you are considering a home purchase.  This should be one of the first things you do after you’ve chosen a prospective home, so that if the market analysis comes back with a different price than what is being offered, you can either start negotiating for a better deal, or move on to looking for another home that is better reflective of market trends.

 

Make an offer

Your EstateBlock REALTOR® will write up an Offer To Purchase to be submitted to the seller. He will include “subjects” to protect you in case the mortgage is not accepted, there are problems found during the home inspection, or there are issues with the documents for the property. You have roughly 2 weeks to dispense with the subjects after an offer is accepted.

 

The Offer To Purchase is the key legal document by which you will buy your home, so it’s extremely important to make sure it is filled out properly and in order.  The offer will include your name, the price you are willing to pay, what items in the home are included in your offer, your deposit amount, an offer for a closing day to take possession (generally 30-90 days after an agreement is reached), and a date your offer will expire.  Your REALTOR® will go over each of these items with you, to ensure an offer that sounds fair and reasonable to the seller.

 

Negotiations

There are a lot of things that can be negotiated. The price is the primary item, but other factors may also involve when you can move in, what stays on the property, and anything major that needs to be fixed.  There are one of three possible outcomes: 1) the seller accepts your offer, and a deal is made. 2) the seller presents a counter-offer, which leads to another counter-offer on your side, until a final agreement on price and other pertinent conditions is reached.  3) the seller presents a counter-offer, and the bargaining process begins as in outcome #2, except that this time neither of you can come to an agreement, and your initial deposit is returned.  Although you can in fact be in charge of your own negotiations, the REALTOR® almost always does this, and in fact this is one of the main functions of their job.  These negotiations are often delicate and require patience, so most buyers are glad to leave the headache of this process over to their  REALTOR®.

 

Accepted offer and Mortgage Approval

Once the seller accepts an offer, the documents move from the REALTOR® to the mortgage company. Your mortgage agent may require an appraisal that has to be paid by you or the mortgage lender.  This typically costs between $150 to $300.  A land survey and title insurance may also be asked for. Expect a wait of 1 to 2 weeks for the mortgage to be approved.

 

Inspection

EstateBlock recommends using a high-tech property inspection service. They will have better equipment and can easily detect problems with mold, foundation, roof and insulation. It costs in the neighbourhood of $400 - $600 but can give you some great negotiation material. It is not helpful for ordinary wear and tear problems, but it can do wonders in getting furnaces fixed or roofs repaired.

 

Subjects Removal

It is important that you are sure you are going ahead with the purchase of a home before you remove the subjects. If you end up walking away, you can be sued for the whole property price or at least lose a deposit. Make sure you have a mortgage approval, the documents are in order, you have a deposit, and the home has passed inspection first before removing subjects.

 

Deposit

You will need to provide a bank draft to the REALTOR® for the agreed upon deposit amount, usually 5% of the home price, at the time of subjects removal. The deposit ends up being a part of the actual down payment on closing day.

 

Notary

Depending on the type of property the cost of professional notary services will be around $950 - $1200. Ask your mortgage agent to recommend a quality notary service or attorney to do this.

 

Insurance

Begin getting quotes for property insurance. You will need to have this at closing.

 

Completion/Closing Day

The completion or closing date is when the title legally transfers to the new owner, after the lender has given the mortgage loan to your lawyer.  The rest of the down payment is also given on this day (minus the amount already deposited), and the home is now registered in the buyer’s name.  This is scheduled to happen 1 to 3 weeks after the subject removal.

 

Moving in

Unless there have been other arrangements, your EstateBlock REALTOR® will give you keys on the day after closing. You will want to walk through the property and make sure everything is the way you remember it.  Contact your REALTOR® if there are problems.

 

These are the most important things to keep in mind when deciding how to best move your things into the new home:

 

·         Choose the right moving company.  Keep in mind budget concerns, and compare for the best deals.  Always have the mover come into your home to make an estimate on what the final fee will entail.

·         Insure your belongings.  Property insurances may cover goods in transit, and some moving companies also offer insurance.  Just to be on the safe side, you may want to transport highly personal or expensive valuables yourself, if you can. 

·         Keep an inventory of what you are moving, so that once the items are moved, you can compare with the movers and ensure that everything is there. Plan ahead as much as you can, and make sure to leave any special instructions in a clear manner for the movers, so there is no miscommunication (ie. if something needs special packing, make sure to let them know)

 

Adjustments Date

This coincides with your move in date. It is the day you accept the responsibility of all taxes, fees and bills for this property.  From now on the property is yours, and if you’ve planned ahead and taken any major (and even minor) problems, future expenses, and contingencies into account, there should be no significant surprises.  Of course, not everyone can plan for every possible eventuality, but the tips in this guide should help you deal with most as they arise.

 

Change locks and garage codes

It is something you will want to do the same day before you move in your new home, since you have no idea who has the codes or copies of the keys.

 

5.    Tips After The Move-In: How To Stay Afloat

 

Now that you’re all moved in, the actual day-to-day process of maintaining your home and keeping up with all the new bills will be your next challenge.  Keep these guidelines in mind, in order to ensure that life in your new residence will stay rewarding, refreshing, and free of worry.

 

Mortgage Payments

If you and your lender have done your homework correctly, your mortgage payment should be a third or less of your gross monthly income, which means that you should be able to make payments on time.  Mortgage payments are generally offered monthly, bi-weekly, or weekly, but it is important to try and always pay on time.  One way to do this is to have at least a few months’ worth of payments in savings, should any kind of emergency (loss of work, unexpected expenses) arise.   Autopayments taken directly from your account will help you avoid being late; late payments often result in late fees, a lower credit rating, and (if persistent) possible delinquency and foreclosure.  Lenders are sometimes flexible with payments, however, so if you do run into unexpected trouble, discussing the situation with them may be able to offer a solution.

 

Home Maintenance

Often what many home buyers find an unexpected burden, is the cost of maintaining their home.  Homes naturally age and as they do, everything from paint to piping can become dilapidated and in need of repair.  Resale homes will be especially in need of renovation, but even brand-new buildings will need upkeep, and you will hopefully have already planned for maintenance costs in your initial budgeting for the home.  Here are a few things to keep in mind regarding home maintenance:

 

·         Emergencies can and do happen.  Fire, flooding, termite invasions, bedbugs, alien invasion—whatever it is, you’ll need to save up for it.  Having a rainy day fund, on top of your emergency mortgage backup, will keep any one of these nasty eventualities from bankrupting you.  Even saving a few dollars from your paycheck each month will add up and ensure that you will be self-covered, in case your property insurance will not cover everything.

·         Unfortunately, Canada is not known for its mild weather, and the extremity of its weather occurrences will also take a toll.  Even if no emergencies occur, regular wear-and-tear will happen to roofs, ceilings, basements, kitchens, and bathrooms.  Plumbing will break down and need repair.  The nice part about this is, unlike a termite invasion, these are expected eventualities that you can plan for well in advance. 

·         In order to alert you should an emergency arise, your home should be outfitted with precautionary safety features including smoke alarms, fire extinguishers, and CO detectors. These will all need to be regularly checked to make sure they are in excellent operating condition—your life may one day depend on them.  It’s easy to check all three of these at once, at least once a year.

·         A list of emergency contacts (friends, family, hospitals, schools, and the local police station) is good to have close at hand. Print it out and have it posted by your bedside or on your fridge. 

 

Home Upgrades

There may come a time when you will wish to make improvements to your home.  Home upgrades can accommodate major lifestyle changes, and/or increase the value of your property.  It is important to avoid certain common mistakes people make when upgrading their home, however:

 

·         Whatever happens, don’t go overboard.  One of the worst mistakes a homeowner can make, is making so many upgrades that they stick out like a sore thumb compared to the original design of the house, or compared to other houses in the neighbourhood. Whenever you make any basic change to your home, ask yourself whether a potential future buyer will find it as appealing as you do.

·         Changes to kitchens and bathrooms will help the most to increase your home’s value.  Again, however, keep the renovations simple and clean, nothing too personalized unless you are not planning to sell your home anytime soon.  Adding in a nice shade of wallpaper or wooden floors is usually popular, and of course renovating the electrical and piping systems will greatly increase your home’s appeal.

·         Landscaping improvements can also make a big difference.  How your home looks on the outside makes the biggest impression, and a well-manicured or expressive garden that the eye lingers upon, can often be the tipping point in a sale for some buyers. 

·         Improving the energy efficiency of your home will also make it an attractive prospect, besides saving you a bundle on energy costs.  Get your home rated and then visit Natural Resources Canada to find out what improvements can be made to increase that rating.  It’s one of the best things you can do for your home—but why stop there?  In the next section, see how you can retrofit your home for what is called “net-zero” energy.

 

Heating Systems

 

As British Columbia sits within a cold climate, homes in the area can end up spending up to two-thirds of their energy bill on heating.  There are, generally speaking, three kinds of heating system options available for the home: forced’ air heating, electric or ‘hydronic’ heating.  Forced air heating refers to gas, oil, or propane furnace heating that is then distributed through the duct system of the home. Electric heating refers to Electric baseboards,  Hydronic heating refers to a hot water heating system.  Forced heating is by far the most common form of heating, although hydronic heating has been increasing in popularity lately. The kind of heating you have in your home can make a big difference in your energy bill. 

 

Reducing your home’s overall energy consumption, and therefore your energy bill, can involve a number of steps.  Upgrading to a much tighter insulation of walls and windows, adding air barriers, adding strategic vegetation, and placing roof overhangs will all reduce the amount of heat gain in summer and heat loss in winter, keeping your home at an even temperature that will require less power to make comfortable.

 

Fluctuations in fuel costs over the years have meant that the kind of fuel you use to heat your home, doesn’t matter as much as the kind of equipment you install.  If your furnace or heating boiler is more than 15 years old, getting it replaced with a newer model will save you significantly in energy costs, as modern equipment has become much more fuel-efficient in recent years.  There are certain standards, known as the AFUE (annual fuel utilization efficiency) which are applied to all energy systems in the home, which must be met.  Check with the Heating, Refrigeration, and Air Conditioning Institute of Canada to find out the rating on any heating or air conditioning system—the higher the rating, the more efficient the system.

 

In order to ensure that your heating system is installed for maximum efficiency, it’s important to hire a heating contractor to take a look at your home’s size and architecture to figure out which size system is necessary.  If you’ve already replaced the insulation in your home or made other upgrades, you may require a smaller (and less expensive) heating system.  An ECM (electrical) motor is also quieter and more efficient than the more common PCS motors used to power ‘forced-air’ furnaces.


One option available to homeowners, the expense of which has gone down in recent years due to advances in technology, is known as ‘zoning’, in which different areas of the home are maintained at different temperature levels.  Plastic piping has also become more popular as a means of ventilation, as opposed to a traditional chimney.  All piping must conform to regulatory standard, however. 


If all of the above means are taken into consideration, one’s energy efficiency will rise and heating costs can be significantly lowered.

 

Conclusion

 

Buying a home for the first time can be made simpler by taking the time to follow this guide.  The step-by-step guide in this book was created to help new buyers to find their future home quickly. Here are the steps once more:

 

·         First, know what you want as this will help you not to waste your time or the realtor’s time.

·         Do your research well.  Use the search capabilities of EstateBlock to find the perfect home.

·         Next, you should leverage the available resources you have at your disposal when buying your first home.

·         Make sure you have a realistic budget to buy the home you really want.

·         Apply for a loan from a bank  or mortgage lender to see how much you will qualify to buy your first home.

·         You should get a REALTOR® through EstateBlock to make getting that dream home of yours a possibility.

·         Make sure the process of buying goes smoothly, right through closing day (with the keys to your new home).

·         Learn to manage living in your home smoothly and efficiently. 

 

These are the steps that will help you stay successful as first-time home buyer in Canada.