BUYING A HOME
How to Stop Renting and to Own a Home of your Own?
Buying a home is one of the biggest emotional and financial decisions you’ll make. Being a homeowner is something you can be proud of and always seems like a great idea. But ownership means – having to invest money, time, energy, and most importantly taking on added responsibilities. Home ownership gives you and your family a sense of stability and security. It’s making an investment in your future.
Benefits of Home Ownership
- Pride of ownership
- No Landlord
- Home improvements knowing that any appreciation that results will be to your benefit
- Sense of Security
- Investment in your future
First – Do you have the financial resources? You should have a minimum 5% of the purchase price of a home for the down payment, but ideally even more.
Second – Do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before having to relocate. Your job and home life should be stable
Buyers Guide
From choosing the type of home best suited to your needs up to the day of moving:
- Consider having a buyer’s agent
- Get prequalified for a mortgage
- Decide what mortgage payments you are comfortable with
- Learn what properties sell for, focus on one location and housing type
- Wait for the right house to make an offer, be prepared to negotiate
Location, Location, Location…
- How far will you be commuting and what is the traffic like? Factor cost of fuel.
- Where will your children attend school and how will they commute?
- Are there recreational facilities and parks close by?
- Are you close to family and friends?
- Is safety or high crime an issue?
- Is the property close to an obstacle or negative influence? (i.e. an apartment building, shopping center, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project).
- Access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals.
- Adjacent undeveloped land – what is proposed for this or other green space?
- Heavy traffic can be noise nuisance and hazard for children
- Distance from unit to amenities, parking, walkways, road, public transit
- Does the neighbourhood reflect positively on the value of the condo and your lifestyle choice?
- Does this neighbourhood, for any reason, have a poor reputation?
- Is the future economic climate for the area good? Are businesses moving in? Is there government investment?
- Are people moving in or out of the neighbourhood? What is there age income level, family size?
- Are there plans of this neighbourhood that you may be unaware of (i.e. future highway, a commercial development or a new housing development) that will provide competition on resale?
Noise and Privacy
- Proximity to highways, driveways, parking lots, playgrounds, trains.
- Proximity to elevators, garbage disposal, fire exits, heating and air conditioners.
- How well is the building soundproofed.
- Visit at different times/weekends to check noise levels and activity.
Questions to Ask When Assessing Home Features
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- Do you need several bedrooms, more than one bathroom, space for home office, a two car garage?
- Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
- Do you plan to have children? Downtown suburbs? Proximity to recreation or work?
- Do you need a substantial backyard? Pets?
- Is there adequate storage space?
- Will any re-modelling require making the home move-in ready for you?
What service providers (cable, Internet, telephone, Satellite) are available in the area, and are the house completely wired for each? Can you hear me now – how good is the cell phone reception?
- How much are the yearly property taxes?
- How much do utilities run each month? Does the house use gas or electric for the furnace, water heater, and appliances?
- How old are the major appliances, and which are included in the house?
- Have there been any major repairs to the house, and if so, when were they completed? For example, how old is the roof? Has water ever damaged the basement or foundation?
- Ever had problems with insects, such as termites and spiders, or rodents? Older homes need to be carefully examined – Windows may need caulking or new sashes, bathroom tiles may need grouting, home may need rewiring (planning on a hot tub or sauna?), a new hot water, or a new furnace.
COST OF HOME BUYING
* Actual amounts may vary
| Real Property Report (Survey) Fee | ($500 – $700) The Seller is usually responsible for the R.P.R. It confirms the property’s boundaries and makes sure there are no problems called “encroachments” |
| Inspection Fee | ($400) A professional inspection of your home is often recommended. This cost can vary, as smaller apartments cost less, and larger homes cost more. |
| Interest Adjustment | If your mortgage is not funded at the time of month your payments are scheduled for there will be an adjustment. Unlike renting, usually you will get a month grace that is your payment will not start until you have been in your home for a month. Usually over 95% of a mortgage payment is interest that has built -up over the previous month. Payments are made on accrued interest and therefore not made in advance. |
| Home Insurance | ($300-$500/year) There are several potential types of home insurance depending on your specific requirements. Call your insurance broker for a quote. |
| Legal Fees | ($300 to $1,200) Legal fees vary dependent on the price of your new home & whether you are placing a mortgage or not. |
| Utility Costs | ($150-$300/month) Be sure to budget for heating, electricity and water. Deposits may need to be made. |
| Moving Company | (Varies widely depending on distance and service) |
| Canada Mortgage & Housing Corp.(CMHC) | Mortgage insurance for the bank is added to your mortgage balance if you have less than 20% down payment. This can be up to 1.25% to 4.25% of the mortgage amount. |
| Property Tax Adjustment | Calgary property taxes are based on the calendar year from January 1st to December 31st of each year and are due on or before June 30th of that year. The City offers a T.I.P.P. program (tax installment payment plan) so you can make monthly payments directly. If previous owner was using TIPP you can take the account over. If not you will have to arrange for an account to be set up. Usually you need to call before November to make arrangements for the following year. If TIPP is not an option, taxes will be adjusted on a per-diem basis by lawyer. |
| Miscellaneous | Don’t forget costs for initial renovations if needed. Monthly maintenance and /or condominium fees. |
After the Deal is Done
| 1. Arrange for mortgage financing
2. Arrange for a Home Inspection 3. Give notice to your landlord 4. Hire a mover 5. Start building equity in your home |
Owning VS Renting?
There is no definitive answer for buying a home versus renting. There can be a financial answer to as whether it is cheaper to buy or rent. However, other considerations such as emotional, environmental, and flexibility can sometimes outweigh decisions that may not be financially justified.
It is important to compare the advantages and disadvantages of owning and renting a home. If you are considering buying a house, one of the first decisions you need to make is whether buying a house instead of renting one is the right direction for you. Since owning a home is a “dream come true” many people simply assume that it’s always to their advantage to buy a home, and for most, it is. Take a moment to review the following table to see how your situation fits in.
What is Renting?
First and foremost, renting is not throwing money. Renting is paying for a service (a place to live) just as you are paying money for utilities. Renting keeps you flexible in your lifestyle.
What is Owning?
Financial Security: If housing prices rise, your home can provide you with some financial security due to capital appreciation.
Stability: Having a place of your own
Financial Stress: Coming up with the down payment, meeting regular mortgage payments and other ongoing costs will tie up a lot of your cash.
Maintenance: Keeping your home in good shape requires time & money.
Responsibility: You alone are responsible for payments, repairs and maintenance.
Flexibility: You can decorate or renovate your home, to meet your own family’s personal tastes and needs.
“Buying a home can mean a lot of different things – an opportunity to get the home you really want,
a dream come true, an investment for the future, an achievement to be proud of”
Home Inspection
Knowing exactly what you are buying is probably the biggest hurdle to jump in a real estate transaction. When considering what house to buy, most people focus on more subjective factors, such as whether the living room feels cozy, or whether they can picture themselves serving dinner to guests in the dining room. Essentially, most people try to gauge whether the house they’re thinking of buying will ever become a home, and while proceeding from that basis is not bad, it can cause some people to overlook other, equally important considerations when purchasing a house. Because a house is also an investment, and, because it’s difficult to look at your home as an investment, it’s important to hire a home inspector.
A home inspector is someone who is trained and equipped to examine your house and point out potential defects. They perform a visual inspection of the property and provide snapshot of the home’s condition on the day of inspection. There are lot of things that a home inspector turns up in the course of an inspection that would be impossible for most lay people to spot, including electrical and plumbing faults, poorly devised drainage systems, outmoded heating equipment, and others. Having your house inspected is a way of insuring yourself against long-term problems with your house. The last thing you want to have buyer’s-remorse about is your own home.
A good inspector will be registered with at least one recognized home inspection association, including the Alberta NACHI (Alberta Association of Certified Home Inspectors), and CanNACHI (Canadian Association of Certified Home Inspectors). A home inspector who has/his credentials in order will be happy to show you their member certificates, so don’t be afraid to ask.
So What Is Involved in Home Inspection?
A home inspector will arrive at your home (or potential home) at specified time. You should be present for the inspection, to gain the maximum benefit. The inspector will then walk you through each phase of the inspection, using a variety of tools (such as infrared imaging cameras, pinless moisture meters, and others) to determine the condition of every aspect of the house, from insulation to plumbing, wood surfaces to the ventilation, roofing to the garage and deck. Every part of the home will come under scrutiny from the home inspector, who will use all of his knowledge and expertise to give you a precise and detailed report of the home’s overall condition.
A home inspector is not just someone who protects your investment: he/she can also keep you safe by detecting levels of mold and toxicity in the home. Having your home inspected is a smart decision. If you’re worried about finding the best home inspectors in Calgary, don’t be. We’ve gone looking and found the very best home inspectors for you.
Buying a home is all about decision making, and you can only make the best decisions when you have the best information available, together with my skills and experience. For years, I really enjoy helping people buy homes, and I’ve specialized in helping home buyers make the most informed decisions they can: decisions based on location, the market, financing, a home’s condition and its real price as distinct from its sale price, which “extras” to negotiate for and more. I have every confidence I will be able to find you suitable property in the marketplace as long as we work together and maintain reasonable expectations.
Anytime you have a questions about the buying process or about any properties in particular,and if you’re considering making a move soon, or if you hear that anyone else is looking to buy a home, please contact me at 403-805-HOME(4663) or email me at admin@ursold.net.
