Brampton Real Estate Agent – Tony Brayley

How To Buy A House

This is a question I hear  frequently. There is a certain amount of mystery to the person who has never bought before and the process can even seem intimidating. Unfortunately, there isn’t a simple one sentence answer for this question (unless the answer is something like “Just call Tony Brayley, he’ll hook you up! Lol).  So, my goal with this article is to outline, explain and get you to finish reading with the confidence that you know where to start and what to expect with each step of the process. While there are a lot of details and things to be aware of, it isn’t as scary as some may think. Firstly, having the right people in your corner is absolutely essential and will make how to buy a house much smoother and painless.

Who Do I Need?

Realtor - I put the realtor first, as the realtor is usually your guide with the process. He will/can connect you with all the other people you will need to compete the home buying process. Also, the realtor will help you locate the home you want to live in, negotiate the offer to purchase and assist you with any other parts necessary in buying a home.

Mortgage Broker / Bank – Fairly self-explanatory but for clarity’s sake, this is how you will get your mortgage (Assuming you will need one, and 99.99% of buyers do need a mortgage.). You can use a bank. You just call up your favorite bank, book an appointment and tell them you want to buy a house and therefore want to get pre-approved.  Personally, I would go to a mortgage broker.  A trusted mortgage broker is invaluable. They represent many banks and shop the rates for you. Often times, the banks will compete for your business, via the mortgage broker. You end up with the best deal, usually. At the time of writing this article, there is a deal not available to mortgage brokers. I wrote an article about this, entitled Mortgage Rates Canada. Some folks have this notion that you have to pay a mortgage broker for their services. Rule of Thumb: If you qualify using the banks criteria, you don’t have to pay anything to the mortgage broker, as he/she  collects a finder’s fee from the lending institution that you end up getting your mortgage from.

Building Inspector – Once the “Agreement of Purchase and Sale” has been negotiated, there will be conditions that need to be fulfilled. One of those conditions will be upon a building inspection being done on the home. Get the right inspector. I’ve been on building inspections that were, in my opinion, a joke.  Read about building inspections, in this other article I wrote, entitled Home Inspection Brampton.

Lawyer – Most lawyers offer a similar service to home buyers. In a nutshell, they prepare all your closing documents, do the appropriate searches on the title of your property (to make sure there are no liens etc.), take care of the handling of monies between the bank, yourself, the other lawyer and the real estate company. They get your title insurance policy and any other legal aspects to purchasing a home.  Get a good lawyer who will explain things properly and be there for you in case things go awry. It doesn’t happen often but it’s comforting to know you’ve got someone good in your corner, just in case!

Insurance Broker / Company – You will need insurance on your new home and it’s contents (unless you buy a condo, then it’s just contents insurance). Get an insurance broker or deal with the insurance company directly. Much like the mortgage broker, the insurance broker will shop the rates for you, usually finding you the best deal.

Moving Company – Most first-time buyers end up moving into their first home with the help of family and friends, as money is a bit tight at this stage of their lives. Having said that, some people do get movers. Get the right movers. Look for a reputable name, ask friends for a referral or your realtor. Make sure the movers have the proper insurance (in case they bust your stuff!) Also, make sure you’re their first move of the day, not the second. If you’re first, then the actual guys carrying your stuff around, are fresh and not tired from a previous move. Remember, you pay by the hour. Why pay extra because the tired guys couldn’t move so fast?

Well Company – Obviously, you only need a well company if you buy a house with a well. Otherwise known as a country property. In the city everyone is on municipal water. I suppose there could be the oddball with a well in the city, but I haven’t seen it in our area here in Brampton. The well company will test for the recovery rate of the well, to make sure there is enough water for normal family use.

First Step: Mortgage Pre-Qualification

For a new buyer, it is so tempting to start looking for a home on the internet or newspapers, start to call realtors, saying “I would like to see this home on 123 Anystreet Ave and also this other home at 456 Main Street, etc. etc….” The process of looking and dreaming with your partner about all the possibilities of the various homes, is exciting and somewhat romantic. However it is definitely putting the cart before the horse and almost certainly will lead to much frustration and disappointment.

With that said, the first thing you should do is talk to your mortgage broker and get your mortgage pre-approval in place. You will then know exactly how much you can spend and also, you will have secured an interest rate for yourself. Rates do fluctuate and so locking in a rate for a few months will give you some peace of mind. I won’t go into too much detail here about the qualifying process. Very quickly, however, the bank will want to see proof of income, proof of down payment (Showing a history of saving the down payment or a gift letter – minimum of 5% of purchase price. If you can reach 20% down, you can avoid the CMHC fees.), proof of employment which shows a record of steady employment. Lastly, your credit report. Hopefully you have a good report. It will make things less challenging to get a mortgage, if your credit score is high.

Finding A Home

Now that you know you can get a mortgage and how much you can spend, tell your realtor what your wants and needs are and see how close the realtor can match properties to your wish-list. Remember that compromise is a realistic term, when shopping for a home. It’s usually impossible to get every single item on the wish-list. Make sure your realtor really knows the turf. Especially when buying in a town like Brampton. There are many things to consider when buying a home in Brampton. From ethnic diversity to styles of homes (including homes with aluminum wiring, etc.), to the areas where there is more crime vs. a calmer and safer area. This is a huge purchase! Know who you’re dealing with, knows their stuff!

If you see homes of interest online or in the newspapers, let your realtor know about them. Don’t call the agent who has the listing, if you already have a realtor you are dealing with. It isn’t fair to the listing agent to show a home to someone who has no intention of dealing with them. Get your realtor to earn his money. Let him/her show the home to you. I do this all the time with my buyers.

Your realtor may put you on the prospect-match service. Basically, any new listings that are published, get emailed to you once a day. You are always on top of anything new this way!

Making The Offer

Once you’ve found the home you want to buy, it’s time to put pen to paper. Your realtor should show you the recent sales in the area, so your offer is an educated one. Make sure to have the appropriate conditions in the offer. Common condtions include a mortgage condition, a building inspection condition and if you’re buying a condo, a condition on getting a status certificate looked over by your lawyer.

Note: If you’d like more clarification on any of these points on how to buy a house, I am always available to meet and explain further how all this works and what to look out for! Just call me (905) 451-2390 or (905) 867-9440.

The above list of conditions is by no means an exhaustive list, but they are the most common ones a new buyer will need to use. Make note of all the dates of the various conditions as these dates have to be met on time or you risk nullifying the Agreement of Purchase and Sale.  Once all of the conditions have been satisfied, then you’re onto the next step.

Final Details

Home Insurance – We are now in the home-stretch of the home buying process. At this point you are basically attending to the details. You will arrange your house insurance, through your insurance broker or insurance company. This is fairly straight forward. They will ask you a series of questions about the home. If there are questions that you can’t answer, contact your realtor and they can guide you.

Utilities – Make sure to call the utility companies to set up your own accounts. There’s the gas company, water, hydro and the other optional ones. Telephone, cable or satellite, security company (if you’re so inclined) and internet covers most of the optional services. Each municipality will have their own companies for each utility and service.

Movers – You will now arrange your movers, if you are using a moving company. Make sure to get quotes and verify their insurance coverage and their policy for broken items. Ask them how many people will be their to physically move your stuff and tell them you want to be the first move of the day.

Note: If you’re not getting movers, then you still need to line up your help, buddy’s or family etc. Don’t wait til the last moment. It could be disastrous if you do!

Lawyer – Time to finalize things with the lawyer. At this point, the lawyer already has a copy of your agreement and possibly the waivers too. It depends how efficient your realtor is or how efficient you are, lol. I send a copy to the lawyer, of each part of the paperwork as it occurs. This way he/she is right up to speed on the progress of the transaction. You will meet with the lawyer prior to closing, sign piles of paperwork, bring in the balance of the down payment and sit tight tight, patiently waiting til the closing date (once you’re at the stage of bringing in the down payment, you’re only 2 or 3 days away from the closing date).

Closing Day – This day is somewhat ambiguous. What we know for sure, is that this is the day you’re supposed to get your keys and move into the home. The unsure part is the time frame for this. The Agreement of Purchase and Sale says the Seller has until 6:00 pm. Sometimes the Seller is out before this time and, unfortunately, I’ve seen it go over that (not that common though). You will get your keys at some point on the closing day. Usually in the afternoon at some point.

If you’re coming from a rental, try and make the closing date a few days before your lease-agreement is up, so you have a few days to move in. It will be way less stressful for you and you’ll be able to do a couple of little fix-ups or painting etc., without furniture being in the home. If you plan the closing correctly, you’ll thank yourself! (You might even thank me, for giving you this advice )

Final Comments

While the article did end up being larger than I originally planned, it still doesn’t cover all the details fully. There’s just too much for one sitting. The little things that aren’t here, are basically numbers. The calculation for land transfer tax, the exact ratios the banks use to qualify you, the CMHC Fees and the exact closing costs. In a few days I will make another article that covers these items. In the mean time, contact me at the numbers below, if you want to get moving on your purchase and need some further clarification.

Happy House Hunting!

Note: If you need finer details on the process of how to buy a house, call me (905) 451-2390, let’s meet and go through it all until you’re comfortable with the whole thing.