Step 1: Evaluate your current situation

Do you currently own a home? If so, will it be necessary to sell before making another purchase? Are you renting? How much time is left on your lease? Do you and your family plan to use the back yard? What is important about the location of your house? For example: do you want to live within ten minutes or one hour from the office?

Step 2: Make a list of features that are important to you

Write down desirable locations you would consider, an acceptable price range, number of bedrooms and bathrooms, balcony, parking and any other amenities that the building might offer such as a gym, pool or concierge. Be specific. It is unlikely that you will find a condo that offers every feature you desire, however, without a wish list, it will be more difficult to recognize a home which meets your expectations.

Step 3: Pre-qualify for a mortgage loan

Don’t waste hours searching for a home that is not in your price range! Save time and money by pre-qualifying for a loan whether you’re buying for the first time or the tenth time. The process is simple. A lender will ask you basic questions concerning your history, run a credit report, and determine your buying power. You can even get pre-approved for a loan! Imagine for a moment, if, when we initially draft your offer for the home you select, you are already approved for the loan IN ADVANCE! That’s a powerful negotiating tool!

The “Win-Win” Advantage of Pre-Approval Could Save You Thousands of Dollars!
We all know that interest rates move up and down. When you get pre-approved for a mortgage, the rate you are approved for is locked-in for a minimum of three months. When it comes time to purchase your home, if the rates have gone up, you get the lower rate you were approved at. If the rates go down, you get the current, lower rate. No matter what happens, you always get the best rate. Over the term of a typical mortgage, you can save thousands by being pre-approved and locking-in early. As an added bonus, you won’t waste time looking at homes that are out of your price range.

Arranging a mortgage & pre-approval
 

• You will need a down payment on your purchase. This can be as low as 5% of the purchase price.
• You will require adequate income to support the mortgage repayment schedule, plus other monthly expenses including insurance, taxes and utilities.

Financial qualifying criteria
There are two basic criteria to determine the maximum amount you can spend on housing. The first is your down payment. Down payments can come from one of the following forms: your own resources; gifted to you; or from the sale of an existing property.

The second criterion is total income (combined). Most lenders use similar guidelines of 32% GDS and 40% TDS. That is, 32% of your gross income, without any debt is the maximum you can spend on shelter payments. The maximum total financial obligations you can have must not exceed 40% of your gross income.

To Calculate GDS (Gross Debt Service):

 
To Calculate TDS (Total Debt Service): 

Mortgage Options
 

1. Conventional Mortgage: a loan for up to 80% of the purchase price or appraised value of a property, therefore requiring a minimum 20% down payment.
2. High Ratio Mortgage: A loan greater than 80% but less than 95% of the purchase price or appraised value of the property, whichever is less, is called a high ratio mortgage. High ratio mortgages must be insured through CMHC (Canada Mortgage and Housing Corporation) or GE (General Electric Mortgage Insurance Corporation). These insurers guarantee the risk of lending to homebuyers who need a high ratio mortgage. The borrower on behalf of the lender pays an insurance premium to CMHC or GE to protect the lender in the event that the mortgage is not paid.

 
The insurance premium is calculated as a percentage of the mortgage amount, depending on the loan to value and may be added to the mortgage amount or paid separately. The premiums are as follows:

 **Other high ratio financing costs include a CMHC or a GE application fee of $165.00 – $185.00, which includes an appraisal. (PST applicable in Ontario).

Our Recommendation
The best advice we can give you regarding your financing is this: go to your lender (Bank, Mortgage Broker, etc.) and get a written pre-approval for a mortgage with a specified time frame (the longer, the better). Why?
1. You will know exactly what you are qualified to purchase; and
2. You can make an offer on a property with confidence that financing will not be a problem and have better negotiating power.
Your written pre-approval guarantees you the rate negotiated at the time of the approval for at least 90 days (varies from lender to lender).

4: Provide information to the Farquhar Team

A counseling session is held to discuss your needs. We look for homes that match your criteria and start you on a special “Home Finder” program. We also discuss what is really important to you and give you advice based on our experience. If you spend a little time up front with a proper game plan – will save you a lot of time and money in the future. The seller pays for buyer’s agent services so you will owe us nothing.
Some buyers like to leave their name and needs with four or five different agents in hopes of getting more time spent on their search for a home. But, since the buyer is not committed to one real estate professional, no one real estate professional will be committed to them and nobody will really be giving 100% or working in their best interests. The best way to get what you want with the least amount of time and energy is to choose a buyer’s agent through a counseling session, choosing the one that you feel understands your needs and will best represent you in your real estate transactions.

Step 5: Viewing homes

There are several things to keep in mind when evaluating homes. First of all, keep the best three choices in mind and disregard the others. This will limit the confusion and frustration that is often felt by buyers who search for a home without a dedicated buyer’s agent. Sometimes, you may find the perfect home on your first time out. If you are clear in what you are looking for in a home during the initial counseling session, your buyer’s agent will have narrowed down the field to homes that match your requirements and tastes. Don’t be afraid to make an offer if you feel a particular home is what you want.

Step 6: Making an offer

Once you have decided on a home that best suits your needs, we determine the fair market value of the home by examining past home sales in the area. We will write the contract for you including any addendums and disclosures. A cheque written by you for a percentage of the offering price is deposited into the listing broker’s trust account. If the offer is accepted by the Sellers, 100% of this deposit goes towards the purchase of the home during closing. If the offer is not accepted, the cheque is returned to you.
More details on “making an offer.

Step 7: Finalizing an Agreement to Purchase

Searching for the perfect home is the fun part. After the deal is done and all parties have signed the agreement, the paperwork and closing details begin. There may be a home inspection, review of documents, mortgage arrangements We will be responsible for making sure each of the steps to closing are all done completely on time and in an orderly manner. Our team will make arrangements to have any repairs completed, will recommend reliable local service providers, and ensure all parties to the transaction (including lawyers, mortgage brokers) are all kept up to date with your file so that there will be no surprises when the closing date arrives.

Step 8: Closing day and beyond

About two days prior to closing, you will see your lawyer and deliver a certified cheque covering your down payment, land transfer tax, lawyer’s fees and any adjustments made to utilities and taxes. Then, on closing day, you will receive a call from the lawyer’s office letting you know the keys are ready to be picked up. That’s it the funds have been transferred and you now officially own your new home! Our entire team will be on call during your closing day to ensure everything runs smoothly and promptly. Don’t hesitate to contact us if you have any questions or problems. After closing, we stay in touch to make sure you are still enjoying your new home as much as when you first got the keys.