Bonnyville Homes Blog

Looking to buy your first home? When it comes to buying a home there are a few things to consider, especially when it comes to your rights.

For one thing, potential buyers should never feel pressured to “buy” a home. Unlike the token car salesman approach, buying a home can be stressful and require a lot of consideration.

Some tactics that real estate agents may utilize is that they will let potential buyers feel the pressure of, if you don’t decide now, someone else will buy it.

Another tactic real estate agent may use is when they think a potential buyer can “afford” more they will talk about what they should put down – this is not the job of a real estate agent but a broker.

Another thing that a potential homeowner should always keep in mind when it comes to potentially buying their dream home is that they are entitled to have it inspected with their own home inspection agent. Just because a home may come with its own home inspection report, if you feel the need to have your own inspection, the real estate agent or

seller can’t deny that. Should the homeowner choose to deny a home inspection or push for one to not happen – I would advise to not move forward. If anything, be concerned that there may be some hidden underlying problems that they don’t want anyone to know about.

Buying a home is not a small decision or undertaking. It is important that all necessary precautions are taken and that as a buyer, you feel confident in making the purchase. When you have a good team behind your decision to enter the real estate market, they will have your interest in mind and protect your buying rights. Listen to your instincts but also your real estate agent when it comes to buying your dream home!

When it comes to that first home, there are a few things that need to be considered – the down payment (which is a significant factor) and the type of interest rate you want.

A down payment can range from as low as 5% upwards to 20%. It’s important to consider though, just because you put down a higher down payment, it doesn’t always make things better. Imagine putting down a down payment of 20%, and then realizing you have spent all your savings – this is what we call “house poor.” You want to avoid this situation.

Now interest rates, there are two types that as potential homeowners you may encounter – fixed or variable.

What’s the difference between the two mortgage rates?

Fixed –

With a fixed mortgage rate, this means that that interest will remain the same and not change during the loan. For example, if the interest rate that a new homeowner is qualified for is 6%, whatever 6% is of the principal loan is what they would pay monthly.

Variable –

For a homeowner who is entering the market, one thing that they will likely focus on is the mortgage rates. Sometimes the market will find itself in a situation where the mortgage rate at the moment is at a highly competitive interest – the risk? This rate may not stay the same throughout the life of the loan, making it a variable mortgage rate.

Is one better than the other?

When it comes to determining whether or not to go with a fixed or variable, consider if whether or not financially you can afford when the rates go up. Some mortgage brokers may be able to facilitate an interest rate that combines both aspects of a fixed and variable, in that you can start off with a fixed rate, but at the end of a term, it can increase to reflect the influx in the rate.

Know what your budget is monthly. If you are a bit of a risk-taker, going with a variable mortgage rate may be ideal for you; however, if you prefer to know what your budget will look like down the road, fixed it is.

Imagine going away on vacation during winter and coming back to discover a pipe has burst and resulted in flooding and damage to the home. If you don’t have home insurance, the cost involved in repairing the damage will come out of one is pocket. However, if you have home insurance, this would not be the case. You would pay a deductible and have costs covered.

What is home insurance?

Having home insurance coverage protects your home from any unforeseen damages – whether they are caused by natural disasters or pipes bursting. With having home insurance, it protects the homeowner from having to pay out of pocket on the repairs and replacements of damages.

Things covered in home insurance?

While having home insurance may provide comfort to homeowners, one must understand what is covered. Not all home insurances are designed the same. For example, depending on the city you live in, earthquake or flood damages are not always included.

What would be covered though is if there are structural damages – from windows to roofs and foundation. It is essential not just to presume that home insurance covers the home itself because it can cover the belongings of a home. This includes furniture, clothing and electronics.

Is liability coverage the same as insurance?

Liability coverage is something that helps pay for differences if not offset the costs. For example, if you are getting landscape done and the company damages your neighbour’s property. In this circumstance, rather than this coming out of one’s pocket, insurance would be able to pay for the damages.

For many people who are living in major cities such as Vancouver, Toronto, or Montreal, the thought of buying a home seems like a faraway possibility. While, for those living in Ottawa, Calgary or Halifax purchasing a home is (somewhat) within possibility. Before one makes the decision to go from renting their one-bedroom shoebox home in the sky to a more spacious townhome, there are a few things a homebuyer should be aware of. By thinking of these three questions, homebuyers can get a better sense of the market, but more importantly, they can ensure they are informed with all the tools to make the purchase of a lifetime.

What and When

The housing market (depending on your city) may feel like it’s always on the rise or that there are never enough homes or choices available. While this may feel like it at times, the reality is that there is a paradigm that shifts when it comes to the housing market. There are times where the buyers’ market is hot, and those looking to get into the market can benefit greatly; however, when it is a sellers’ market, those very people may find themselves struggling to find that perfect home, but they may also find themselves paying a lot more.

Before taking that step to looking for a home, see what the reports are saying about the housing market. Is it a buyer or a sellers’ market. If you are in a rush to move out or if you have time to ride the market out – this can help the process. Not to mention, in Canada, where the winters are long, this can sometimes be a double-edged sword. The deals may be out there; however, the home inspections may not always reveal all because of the snow.

Location, location, location

Ever go on the Realtor app and see a home and think to yourself, there is no way that home is worth that? Well, it could be that the house may not be worth what it’s being sold for, but the location is. It can be handy to do your research when entering the real estate market and know what you are willing to spend the money on. Are you ready to pay more for location and neighbourhood or are you willing to pay more for space? In Ottawa, certain districts offer million-dollar listings, while if you just cross the street, the homes are worth a fraction of the cost. The difference? One has a reputation for “being hood” while the other is much more family-friendly and up and coming.

Know the Home Inside and Out

Pictures can be deceiving, which is why it is crucial to not only visit the house (preferably more than once) but also to have it inspected by a certified home inspector. Sometimes a fresh coat of paint can cover more than a scratch, which is why it is vital to have experience on your side. The last thing you want to do after spending all your savings and investments is to find out that your “new” home actually requires hundreds and thousands of dollars in repairs and upgrades. Don’t be afraid to ask questions and don’t be scared to go back to check the house out with a fine-tooth comb.

At the end of the day, when you are looking at the real estate market and making the leap to invest, you are doing more than just buying a home. What you are doing is investing in your future and finding that place to call your own. Whether you are moving out, looking to upgrade for your growing family, take the time to ask yourself the following, and you’ll be prepared to enter the market prepared and informed.

In the market for your first home? Moving out of your parent’s basement? Or, maybe you are looking to get your toes wet in the real estate market – whatever, your real estate needs, there are a few things you should keep in mind to ensure a successful home buying experience.

Save for a down payment and then some…

Before one buys a home, it’s essential to ensure one has the finances to do so. Why? When it comes to buying a home, one of the first things to get the process rolling is having the down payment.  A down payment is the amount of bulk money that one puts down towards the purchase of the home. Typically, the down payment is anywhere between 5% to 20%. The higher the down payment, the better the interest rate on the house.

For example, looking to buy a home that is worth $500,000, but only has $25,000 in savings, this would mainly be the bare minimum of 5%. While the house that is worth half-a-million may be your dream home, it may not be the best for your budget. Determining how much to put down and whether it is worth all your savings is to speak with a mortgage broker. They would be able to provide the best advice on how much to spend or what is well within your budget.

Closing costs, land transfer, etc.,

Having the down payment is one thing; however, other costs are not always apparent until the very end or near too. For example, closing costs, lawyer fees and the land transfer. Doesn’t matter who it is, where the house is, these are fees that can add to the overall costs but also to what a person should have when it comes to buying a home. Land transfer tax varies from province to province; however, if this is your first home, some regions do offer a tax-break to recoup some of the costs.

When it comes to buying a home, the rule of thumb that is best kept in mind when ensuring one has enough money is to save anywhere up to 2% of the total home value. In the case of the half-a-million-dollar home, having an extra $10,000 set aside on top of the down payment can be a helpful safety net.

Buy and Shop Wisely

Starting the search for a home can be stressful and overwhelming. It can be even more stressful if you aren’t financially prepared or aren’t sure where you stand financially. To make the process a smooth and positive experience, consider meeting with mortgage brokers, a financial planner but also checking your credit score. Doing all these means, you are mitigating the potential of not being qualified or being able to afford that dream home.

Those who are buying a home for the first time should be aware of certain things before they purchase one. It is always better to remain cautious, especially in an industry you are not very familiar with.

• They must first be aware of their financial condition. First, look at your savings and see how much you can afford to invest in a house. Purchasing a home involves making a down payment before you can take any loan. Careful planning with your savings will tell you how much you can use for a mortgage payment. Have a look at various neighbourhoods to estimate the cost that might incur in transportation etc.
• Consider a safe budget and then start your search for a home that falls under your budget.
• Always have your pre-estimate loan approved for getting a mortgage loan. The sellers will not entertain you without seeing your potential purchasing power. Hence, contact a lender for a mortgage loan. He will see your credit history and give you a report that financial institutions use as evidence of purchase power. They will scrutinize your assets and your liabilities to see if you can still pay the loan instalments properly in time. Spend some time with people who can help you boost your credit ratings.
• Bargain for better loan mortgage. Go to a lender after thorough research. The fees charged varies from institution to institution. Different type of institution like banks, credit unions, merchant bankers, and mortgage brokers carry different rates. Once you have closed in on a  deal, get a pre-approval sanction from them.
• Just because you have got a pre-approval loan does not mean that the loans are sanctioned since other factors are involved like lender risk changes and changes in the investment market. So, keep one or more lender as a backup option.
• Once you know your sanctioned loan limit and your own savings, start looking for an agent who will help you with tasks like inspection and insurance. Make sure you get a good one as you do not have to pay anything to the realtor. The seller will take care of it.
• Search for different sites within the neighbourhood that has everything within walking distance. The farther the home is from the metropolitan, less is the cost. While purchasing away from the city center, don’t just go by the cost of the house. Instead consider other factors like commute options, hospitals, markets, and schools. Include the additional cost you might incur later and then, take an informed decision.
• Having selected a home, calculate once more. Before you finally decide to go through your budget once more, check if you have included the closing costs, transportation costs repairs, and maintenance.
• Bigger homes will need more money and you should be well equipped to take care of the rising gas bills, electricity, and other utilities.
• Once your offer is accepted, get it inspected. You can ask the seller to carry out minor repairs once you get the inspection report.

You can always buy properties through auctions and not go with traditional methods. There are certain benefits of buying a property through an auction. You can acquire it at a discount and chances are that you will face relatively less competition. The drawback is you might have only a limited knowledge of the properties and quote more than what it is really worth. You will have to get an attorney who will guide you through the paperwork and the final sale.

Properties are auctioned when the owners have not paid the mortgage for a few months. A default notice is filed by the bank and if the buyer is unable to renegotiate with the lender, the lender can put up the property for auction. These auctions are usually held by the banks. It is a slightly risky way to buy a property but if you have knowledge about the market the auction process, it is a good way.

Another type of auction is when the owner is unable to pay the property taxes. In this case, the tax authority gets hold of the property and the auction is directed by the local sheriff or the comptroller’s office. These auctions are advertised through local governments and real estate brokers on online auction websites. They do not permit or sanction an inspection of the property. You must go to the estate agents if the property is deteriorated or in a risky condition. You must have a clear understanding of the auction rules and you must check for claims, occupants, and liens before bidding. These auctions take place at the courthouses and conference rooms and sometimes, even online.

Getting All the Information

To find out about the auctions, one must communicate with the local governments or visit the websites. Local brokers can also provide information, but they may not help because they do not earn commissions on such auctions. One can work with the real estate agents, contractors, and appraisers to get an estimate or valuation of the property and even the remodelling cost. You must also be aware that these auctions can be annulled or suspended at the last minute.  You must always be ready to follow the rules of the auction. Do note that you will have to register and pay a deposit which will be about 5 to 10% of the property’s price.

These auctions generally work in two methods. The first is when the lender does not have to accept your offer even if the bidding is the highest and the second is an absolute auction in which the highest bidder wins. Most of the time, these properties are sold at less than their true value. If there is a profit, the homeowner gets it after the mortgages are paid. In order to bid at the auction, you need to bring cash, check, or money order. You will have to pay the whole amount as soon as you win, or you will not be allowed to take over the house.