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Home Buying Process
Wondering how to choose a real estate agent? Select a builder? Make an offer? Learn the ins and outs of the home buying process:
Check Out the Neighbourhood
Before you begin looking at houses, narrow in on your chosen location. Take a drive or walk through prospective neighbourhoods, talk to local residents and make note of these items:
- Are the homes in your general price range?
- Does the style of architecture, age of the homes and
layout of the community appeal to you?
- Is there good access to public transit and major
roads?
- Are public facilities – parks, roads and sidewalks –
in good condition?
- Is there access to the amenities that are important to
you?
- Are you close to family and friends?
- Are there medical facilities in the area?
- How do the municipal taxes compare to those in other
areas?
- Does the area have the potential to increase in
value/popularity?
- Are there any bylaws or development plans that could affect the desirability of the neighbourhood?
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Establish a Good Credit Rating
Having a good credit rating can often make it easier for you to get a mortgage:
- Use your credit cards wisely and make payments every
month, even if it's just the minimum amount.
- Pay any loans and monthly bills on time.
- Check your credit rating before you apply for a mortgage by calling your local credit bureau.
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Talk to a Mortgage Lender
Arrange your mortgage financing before you start looking for a home. With a Pre-Arranged Mortgage, you can determine how much you can borrow, the interest rate and your payments. That way, you can shop with confidence for a home within your price range.
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Investigate the Marketplace
Start by reading the newspaper classified and real estate sections to see where the homes that fit your budget and lifestyle are located. Begin thinking about the features you're looking for and the neighbourhood amenities you like.
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Work with a Lawyer or Notary
Buying a home is a big commitment, and a qualified real estate lawyer can help ensure your rights and interests are fully protected. Choose a lawyer early, and consider having him or her review every document before you sign it. (In the province of Quebec, a notary is used instead of a lawyer.)
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Choose a Real Estate Agent
Talk to a few agents to find one that suits your personality. You can meet them at open houses or real estate offices, or through referrals from friends and family. Remember that the agent's fee is paid by the person selling the property, and not by you, the buyer.
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Select a Builder
Home buyers sometimes buy directly from a builder. Look in the weekend newspapers for ads for builders working in the areas you are interested in, or get a list of builders from your local Home Builders' Association. Visit the builders' sales office and model homes and ask about new-home warranties and after-sale service. Talk to several builders, and some of their previous customers, before making a decision.
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Make an Offer to Purchase
Once you've found the home you want, your real estate agent can draft your offer to purchase. It's a good idea to have your lawyer review your offer to ensure your interests are protected.
The offer should include the price you're offering, a closing date and the specific "conditions" you want included, such as being able to first arrange suitable financing, or having the home inspected before the offer is finalized. Your offer should also list the items you want to buy along with the home (e.g. appliances, light fixtures, window coverings, etc.).
Your agent will present the offer to the seller ("vendor"), along with your deposit cheque. The amount of your deposit is flexible, and will be held in trust and applied to your down payment when the deal "closes."
Don't be surprised if the seller doesn't accept your original offer. Everything is negotiable, so expect some bargaining.
Once both parties are satisfied and your offer is accepted, it becomes a binding contract between you and the seller. If you are buying from a builder, the offer will include a breakdown of items included in the purchase price such as taxes, deposit schedule, etc.
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Arrange a Mortgage
If you already have a pre-arranged mortgage, you only have to present your signed offer to have your mortgage approved. If you don't have a pre-arranged mortgage, look into the types of mortgages and options available.
Be prepared to supply your lender with a copy of the signed offer and some personal information, including:
- The amount and source of your down payment.
- Employment details.
- Proof of income.
- Monthly expenses.
- Debts and assets.
With the added responsibilities of home ownership, you should ask your lender for information about taking out life and disability insurance on your mortgage.
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Arrange a Home Inspection
Whether you're buying a new home or a resale home, consider having it inspected by an experienced, professional building inspector. Make sure you get a detailed written assessment of the condition of the property, including heating, plumbing and electrical systems, the roof, foundation, insulation, framing and windows. If your offer is conditional on a satisfactory inspection, you can change or cancel your offer if a fault is discovered.
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Complete the Transaction
To complete the transaction, BMO Bank of Montreal, your lawyer and agent or builder will do most of the work for you:
- BMO Bank of Montreal will complete the mortgage
arrangements.
- Your lawyer will carry out investigations to make sure the seller has clear title to the home, arrange a survey of the property, if necessary, and draw up the purchase and mortgage documents.
At closing, you will meet with your lawyer to sign the documents, make the down payment and cover the other closing costs. Once this is completed, you will get the keys to your new home.
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Optional Mortgage Life and Disability Protection
Mortgage Life Insurance is designed to pay off your mortgage in the event of your death so that you don't leave a financial burden to someone else. Accident & Illness Mortgage Protection is designed to make your mortgage payments if you are unable to work due to an accident or illness.
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