Contents of Documents: 

Choosing a Realtor

Determine What You Can Afford

Calculate A Mortgage
Decide What You Need
Definitions Of Real Estate Terms
Making An Offer
Negotiations And Acceptance Of An Offer
After Acceptance - What happens next

Have The Home Inspected
Finalizing Your Financing

Removing Subjects
Deposits

Hire A Legal Professional

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Working with a Realtor and Understanding Agency

Are you being represented in the correct manner?

While it is possible to find your next home on your own, you may not realize that you can get the help of a professional sales representative.

The assistance of a professional can be a real benefit to you. Not only in the terms of knowledge and experience, but also through the ready access to home listings and market information.

If you are thinking of Buying a house in Surrey or Buying a house in Delta, choosing David West as your sales representative he will give you the highest level of service as you search for your new home. 

He will:

• Help you establish what you can afford and help you to obtain pre approved mortgage

• Help you determine your needs and the features you will want to look for in a home

• Recommend areas and neighborhoods for your consideration

• Inform you of current market conditions as you search for your new home

• Assist you with aspects of your offer to purchase

• Assist you with the details involved in the closing of a sale

Part 1   Mortgage Qualifying

• When arranging for a new mortgage, you must meet the qualifications in two instances, both the G.D.S. and the T.D.S. 
• The G.D.S. is the Gross Dept Service Ratio. 
• Approximately 30-32% of your gross yearly income will qualify for P.I.T. (Principal and Interest plus Taxes).  This is the amount of mortgage payments you are allowed (less taxes) 

EG: $45,000 Gross Yearly Income

$45,000(your gross yearly income) x .32 = $14,400 P.I.T. (principal + interest + taxes)

Now deduct the approx amount of taxes you would pay (ask your agent for tax info)

$14,400 - $1600 (approx yearly taxes) = $12,800 PI (principal + interest)

In most cases the lenders will also deduct up to $60 per month for heat and a further 50% of the monthly maintenance payment if purchasing a Condominium or Townhouse.

This figure now represents the yearly mortgage payments you would be allowed based on your income "provided you also have meet the requirements for the T.D.S. ratio."

To figure out your monthly payments allowed simply divide by 12

$12,800 divided by 12 = $1,066.66  (your monthly payment allowed is approx $1,066.66) less $60 (heat) and 50% for condo or townhouse strata fees

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Part 2   Mortgage Qualifying 

T.D.S. (Total Dept Service Ratio -includes Mortgage Payment, Taxes, Credit Card Loan, Car Payments, Maintenance Payments to Spouse, other Depts including Partial Heat Costs, Monthly Strata Fees (condo's, townhouses etc.) 

T.D.S. represents approx 38-40% of your Total Yearly Gross Income

EG: $45,000 Gross Yearly Income

$45,000 x .40 = $18,000 (Total Dept Allowed Yearly)

Based on the G.D.S. you can you can deduct the amount allowed per year. This now gives you the balance of (expenditures allowed per month) 

$18,000 (Total Dept) - $12,800 (G.D.S.) = $5,200

The $5,200 represents the Maximum Depts allowed over and above the mortgage payment per year. 

Monthly Depts allowed ($5,200 divided by 12)  = $433.33

When applying for a Mortgage and being Pre-Approved by a Lender here is a list of items also requirement.

• Record of employment and letter from employer
• Credit check
• Proof of deposit
• Always "subject to appraisals"
• An accepted copy of the Contract to Purchase and Sale

Having a Pre-Approved mortgage can save you a lot of money if the mortgage rates are going up. Most Pre-Approved mortgages will guarantee you an interest rate for up to 120 days, usually 60-90 days is more common. If the rates do go up within that specified guaranteed time frame, will still get that lower rate. If  the rates drop at any time throughout that specified time frame you will get the rate at which it dropped lowest too.

Purchasing a home involves two costs - one time costs and monthly costs. The largest one time cost is the down payment. It usually represents 5% - 25% of the total cost of the home.

In addition to the actual purchase price, there are a number of other expenses that you might be expected to pay for;

Other Expenses:

• C.M.H.C. (Canada Mortgage & Housing Cooperation) application fee if required
• Appraisal Fee
• Mortgage Broker Fees (in some cases)
• Home Inspection Fees (if required by buyer)
• Survey Certificate (required by most lenders-often available from City Hall or seller)
• Legal Fees (Lawyer or Notary Public)
• Property Purchase Tax (more info available -click here) First Time Buyers may be exempt.
• Moving expenses, hook up costs (hydro, cable, telephone etc)

Must Have Vs. Nice To Have: Tips for finding a home that fits your needs.

When contemplating the purchase of a new home, consider carefully what you must have versus what would be nice to have. "Always keep your financial resources in mind," advises the president of the Greater Vancouver Home Builders Association (GVHBA).

Decide first where you want to live. The location of your home is one of the most important factors you will want to consider. As you explore new neighborhoods and communities, you should keep these questions in mind:

• How far are you prepared to travel to work, school, and shopping?
  

• Do you prefer to be close to libraries, entertainment, recreation facilities, parks, conservation areas, and places of worship?
  

• Is there a hospital, and other medical and dental services?
  

• What are the short and long-term development plans for the neighborhood and the surrounding area?
  

Discuss your priorities, needs, and dreams with your real estate representative or builder. They can make suggestions to help you get the greatest value for your money.

Home hunters should consider the following factors before making a purchase decision:

• How many years do you plan to live in your new home?
• Do you expect the number of people living in the home to grow or decrease over the years?
• How big must your home be? (How many bedrooms and bathrooms do you need?)
• Do you plan to rent out part of the house to a boarder or a tenant?
• Examine your lifestyle. Do you need areas for formal entertainment? An eat-in kitchen? Bedrooms that are isolated from the main living area?
• Do you need a basement for storage, work, or play areas?
• Do you need parking area for one, two, or three vehicles or an additional Recreation vehicle?
• Does anyone in the household have special needs that must be addressed such as mobility challenges, or environmental sensitivities (allergies)?

With the help of David West you will have the widest possible selection of properties currently for sale.

When looking for a home, you should understand market conditions and how they will impact your search and the price you can expect to pay. David West can tell you what state the market is in at the time you are considering buying.

Adjustment Date

The day from which all calculations of interest, tax adjustments, utility bill adjustments (if applicable) are made to the credit of either the purchaser or the vendors. This usually (but not always) is the same as the possession date.

Closing

The real estate transaction's completion, when the parties involved agree that all the legal and financial obligations have been met and the deed to the property is transferred from the seller to the buyer.

Conventional Mortgage

A first mortgage issued for up to 75 percent of the properties appraised value or purchase price, which ever is lower.

Conveyance

The term used to describe the process of transferring the vendors title to the purchaser and indicates all necessary steps to complete the transfer. A conveyancing lawyer is a lawyer (or notary) responsible for the conveyance process (this is normally the purchaser's lawyer).

Counter Offer

An offer made by the vendor (seller) back to the purchaser altering one or several terms and/or conditions of the offer as originally written.

Easement

A legal right to use or cross (right of way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property. Often the municipality for access to the sanitary storm sewer piping.

High-ratio Mortgage

A mortgage that exceeds 75 percent of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation (CMHC) or a private insurer like the Mortgage Insurance Company of Canada (MICC) to protect the lender against default by the borrower who has less equity invested in the property.

Property Condition Disclosure Statement

This form enables the vendors to disclose down defects. If the vendor decides not to complete the form and does not disclose known defects, he or she will be held liable. The form also serves as a checklist for buyers enabling them to address concerns about the property's condition on the spot. This form was developed by the British Columbia Real Estate Association.

Property Transfer Tax

Payment to the provincial government for transferring the property from the seller to the purchaser. In the 1994 provincial government's budget, the PPT was eliminated for first-time buyers under certain circumstances.

Right-of-Way

Indicated on title at the Land Title Office; often for use of utilities or city municipality in order to make repairs to pipes, etc.; no permanent structure may be built on a right-of-way.

Statement of Adjustment

Closing costs in a real estate transaction which set out the sources of funds which make up the purchase price, adjustments to and from the purchase price, the final amount required from the purchaser and the amount due to the vendor. Lawyers will prepare a statement for the vendor and for the purchaser.

"Subject-to" Clause

A statement of a condition to be fulfilled before the contract will become firm and binding; must include a specific deadline for removal.

Title Search

A detailed examination of the ownership documents to ensure that there are no liens or other encumbrances on the property, and no question regarding the seller's ownership claim.

Making An Offer

When it comes to making an offer, David West can provide information on the price of similar homes that are currently on the market or have sold recently in the surrounding area. Then you'll be better prepared to make an informed decision.

On your behalf, David West will communicate your offer (also known as an "Offer to Purchase") to the seller, or the seller's representative. Your offer to purchase is a legal document which specifies the terms and conditions.

The offer can be firm or conditional. A conditional offer means that you have placed one or more conditions on the purchase, such as subject to financing or subject to a home inspection. The home is not sold until all the conditions have been met. During that time, it will be treated as though it is still on the market. A firm offer is usually preferable to the seller, because it means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.

Negotiations And Acceptance Of An Offer

Your offer to purchase will specify a time period in which the seller considers your offer (usually less than 48 hours). During that time, the seller may accept the offer, reject it, or submit a counter-offer.

A counter-offer may be in reference to the price, the closing date, or any number of variables.

An offer and counter-offer can go back and forth until both parties have agreed or one of you ends negotiations.

The Seven Elements Of An Offer

Price: Depending on the market, your own discretion and market information provided by David West, the price may be different than the seller's asking price.

Deposit: The deposit shows your good faith and will be applied against the purchase of the home when the sale closes. David West can advise you on the appropriate amount, usually a minimum of 5% - 10%.

Terms: Includes the total price of your offer as well as the financing details. You may be arranging your own financing or wish to assume the seller's mortgage.

Conditions: These might include "subject to financing" or "subject to a home inspection".

Inclusions and Exclusions: These might include appliances and certain fixtures or window coverings etc.

Completion Date: Generally the day the title is legally transferred and the transaction of funds are finalized

Possession Date: The date you actually access to or take possession of your new home. (1-3 days after completion - often a weekend)

After Acceptance - What Happens next?

After Acceptance All documents of the Contract of Purchase and Sale will be given to the buyer and seller. At this point the buyer will begin the task of fulfilling all of the conditions of the contract.

Subject to Finance: The lender (Bank, Trust Company, or Credit Union) should be notified of the purchase so they can have the financing approved as soon as possible. An Appraisal will be ordered once the Lender is satisfied with Credit Checks, Employment Records, Proof of Down payment, etc. Once the bank has given you a Commitment Letter (approving your financing) and you are satisfied, then you can remove the "Subject to Finance" clause.

Subject to Inspection: Choose a qualified inspection company to have the home inspected. It usually takes 2-3 hours to have the home inspected. A full detailed written report will be given to you once the inspection has been completed. If you are satisfied, then you can remove the "Subject to Inspection" clause.

Other clauses: Once you are satisfied with all of the subjects and they are all removed, and the deposit has been handed over to your realtor to be placed in "Trust", it is now a firm and binding contract.

Choose a Lawyer or Notary: Let your realtor know who you choose as a lawyer or notary. Your realtor will forward all of the Contract of Purchase and Sale documents that have been signed to-date. Also contact the lawyer or notary you have chosen as soon as possible. Often the lawyer or notary will not be in touch with you until 3 or 4 days prior to the completion date.

Organize Your Move: Ask your realtor for a copy of the "Moving Checklist". Make sure you contact a moving company or arrange for rental trucks far in advance to assure availability.

On Completion Date: Once the transfer of documents has taken place at the Land Title Office you will then officially be a new home owner. "Congratulations"

Possession Date: Under most circumstances, the possession time is 12 noon. Your realtor will make all the necessary arrangements ahead of time to deliver the keys to you.

Have the Home Inspected

The purchase of a home is a major financial commitment - one that you will want to protect.

Having the property pre-inspected by a qualified home inspector will give you added confidence that you have made the right decision. The inspection should cover the structural elements of the home; foundation, basement floors, insulation, walls, windows, doors, and ceilings - and the systems; heating, air conditioning, plumbing, and electrical. In older homes, the inspector should check for lead paint, asbestos, urea formaldehyde foam insulation (UFFI) and termites.

When the procedure is completed, you should receive a full written report plus estimated costs for any repairs. Most inspections take approx. 3 hours.

If you decide to have a home inspection done ask David West to add a conditional clause to your Offer to Purchase.

Finalizing Your Financing

Once you've found the home you want to purchase, there are some documents you'll probably be asked for in order to finalize your financing.

They will include:

**The real estate listing of the property. If the home is still to be built, the mortgage lender will need to see the architect's or builder's plans and details on lot size and location.

**A copy of the offer to purchase or the building contract, if this document has been prepared.

Removing Subjects

Once you have full-filled all of your conditions, such as receiving and accepting copies of the Title Search, Property Condition Disclosure Statement, perhaps a Property Inspection Report, and your bank has notified you that your financing has been "approved", then you can remove all of the subjects on an "Addendum" form which your realtor will prepare for you.

Deposits

Once all subjects have been removed from the contract the deposit must either be increased to the specified amount or the full deposit be forwarded to the Buyers Agent - held in Trust until closing date.  

Deposits are usually 5% - 10% of the purchase price. If your deposit is tied up in the equity of your home being sold, it is advisable that you pre-arrange with your lender, a demand loan or a line of credit that can be used as your deposit. 

Hire A Legal Professional

If you haven't already selected a legal professional, you'll need to represent your interests to process the legal documentation required.

David West can give you the names of legal professionals who specialize in real estate.

Your legal representative will advise you on the steps to be taken before the keys to your new home are presented to you!