WELCOME and CONGRATULATIONS on making the decision to buy a home!

You might have heard that buying a home can be overwhelming. Which is exactly why Buyingblock.com was created. As homebuyers ourselves, we decided to take on the project of making it a simpler and more enjoyable experience. Buying a home should be one of the best experiences of your life! It is our intent to make this happen.

Buyingblock.com can help you with each and every step of buying a home including securing a mortgage, finding a realtor, hiring a lawyer, enlisting a moving company, getting your home phone/internet/cable and more. Or, you can simply choose Buyingblock.com for whatever step you need help with.

Your experience is so important to us! We will engage you after each step to ensure you are satisfied. Please be open with your feedback as we look forward to finding out where we can improve for future customers.

Hopefully, the advice below will help you get a head start. The approach outlined is not necessarily the only approach to home buying, but it’s what we consider the best approach.

First Step: What Property can you afford?

The first step to buying your home is getting a sense of what property you can afford.

If you don’t have the cash, a mortgage will be required. A mortgage is simply a loan secured by a property.

Lenders make their decision on giving you a mortgage based on the following criteria:

a. Credit. A credit report will need to be obtained which indicates how responsible you have been in handling your credit (i.e. Visa card, student loan or line of credit).

b. Employment stability. Having a stable job (two years or more) offers banks peace of mind that you can continue to make your mortgage payments. If you have been at your employment less than 2 years, the lender will then look at the length of time you have been in the industry (i.e. graphic design, teaching, etc.).

c. Income. The ability to service your monthly debt is paramount to a mortgage decision. Lenders look at how much monthly debt your monthly income will service. The ratio is commonly referred to as GDS or TDS (your monthly debt divided by your monthly income).

By filling out our preapproval, we will respond immediately with your range of affordability. These numbers assume you have a good credit report, manageable debt load and employment stability.

Second Step: Credit Report and Mortgage Preapproval

On your go ahead, we will proceed with obtaining a credit report and then shopping your needs to a number of banks and lenders to get you the best terms (interest rate and flexibility). Expect a response within 48 hours unless it is a peak time for mortgages.

Third Step: Your Mortgage Options

It is now a good time to discuss your mortgage options either in person, over the telephone or via the net. A few decisions need to be made:

1. Determine the amortization (the length of time to repay your mortgage). The longer the amortization, the lower your mortgage payments but the amount of interest you will pay by the time you pay off your mortgage increases. The maximum amortization is 40 years. For first time homebuyers, we recommend a longer amortization initially just to make life more affordable and comfortable. Once income increases, payments can be increased to reduce your amortization period.

2. The mortgage term defines what your rate of interest will be for a defined period of time. There are various terms from 6 months to 10 years. Your choice will also be between fixed (interest rate and payments remain the same for the term), open (you can make additional payments or if your like, pay off your mortgage at anytime without penalty) and variable (the interest rate varies with the Prime Rate). We will walk you through the advantages and disadvantages of each.

3.The amount of down payment. Traditionally, you would have to save a significant amount for a down payment. Often this was a difficult task considering the price of real estate. Assuming you qualify, you are no longer required to make a down payment in order to purchase real estate. 100% financing at lenders’ best rates are available. Insurance (i.e. CMHC, Genworth or AIG) is required on all properties where less than a 20% down payment is made. The insurance is to protect the banks interest. Fortunately, you can add this amount to your mortgage and pay it back as part of your mortgage payment.

Fourth Step: Calculating the Costs

It is good to get a sense of the costs involved in buying a home so that you can prepare in advance. These are additional costs that you will need to cover since they cannot be added to your mortgage. As a rough estimate you can expect costs to be approximately 2% of the purchase price. The costs include the following: lawyer and disbursements ($1,400), inspection ($450), land transfer tax (in Toronto, you need to pay both a provincial and municipal tax at purchase), provincial tax on CMHC fees and adjustments (these are for utilities and property tax where the previous owner may have prepaid).

And don’t forget the costs involved with moving into your new home, such as: the set-up of telephone, Internet and cable, utility deposit if required, moving, insurance premium and mortgage payment.

Often forgotten is planning for the deposit that will be required when you make an offer to purchase a home. Deposits are a MUST as it not only secures your offer, but also shows your commitment to purchasing the property. It can range between $2,000 and $10,000. It will be applied to the property upon closing.

Fifth Step: Property Listings and Realtor

Onto the next step: defining what you are looking for in a home (# of bedrooms, area, parking, rental suite, etc.). Our search profile allows you to define your parameters. We will provide you with listings for a week that match your criteria. The number of listings and frequency will depend upon your parameters. The objective of the listings is to give you a good idea of what exists in the marketplace. At the end of the week, we will discuss what you have found and if you would like to change your parameters. We will then match you up with a realtor so that you can view some of the properties that interest you.

From the listings you will get a good idea of the marketplace. It will also allow us to better define what you’re looking for.

Remember that you may one day sell the property. Therefore, it is important for you to keep in mind not only your own interests but what will appeal to as many buyers as possible (i.e. good neighbors, safe area, close to transit, shops, parks and schools).

Sixth Step: Documents to support Mortgage Approval

The mortgage preapproval should now be in. After reviewing the terms with you, it is prudent to provide the documents required by the lender to support your application. The sooner we receive these documents, the quicker we can get the final approval from the lender allowing any conditions to be waived on your offer to purchase (if you’ve already made an offer).

These documents typically include:

- An employment letter indicating your role with the employer, your income and how long you have been employed there.

- Your most recent pay stub to confirm your income.

- Proof that you have the funds to cover your down payment and closing costs (i.e. copy of your bank/investment statement, gift letter, etc.).

- The most recent Income Tax Notice of Assessment to prove that you don’t have any outstanding taxes.

It is important to get these documents to us quickly allowing the real estate transaction to move forward (i.e. waiving the finance condition), especially if the property has multiple bids.

Seventh Step: Making an Offer

You’ve found the perfect place and have decided, through you realtor, to make an offer. Your realtor will write out the offer including various conditions that will protect you (i.e. subject to a satisfactory inspection). The offer will likely go back and forth until both parties agree to the price, terms and conditions.

You will be required to provide a deposit of between $2,000 and $10,000. Many first time homebuyers are shocked when they find about this. You have been forewarned.

You may want to consider getting your lawyer to review your offer to purchase. This is ultimately your choice, as it will involve additional costs. It is not common practice.

Eighth Step: Home Inspection

NOTE: home inspections are not mandatory for condos.

Prior to the inspection, you may want to do a bit of research on how a home works. This will help you in asking the appropriate questions to the inspector. If you have a good inspector, he or she will have answers you will need to provide to your insurance agent.

Our strong suggestion is that you join the inspector during the inspection. This will not only ensure that the inspector doesn’t miss anything but will also give you a good overview of your home and some of the improvements you may want to plan to undertake. This is also a great time to ask any questions you may have about the property. Inspectors have a wealth of information so don’t be shy in asking questions. The inspector will sit down with you after the inspection and provide a summary. Either later that day or the next day, you will be provided with a written report.

The question now becomes whether to waive the inspection condition on your offer to purchase. If you are not satisfied with the inspection, you may want to engage a contractor/renovator to find out the costs to make the required improvements. You may be able to re-negotiate the sale price if the property needs major repairs. Your realtor, with the help of the inspector, should be able to help guide you through this.

If you are satisfied with the inspection, you will need to let your realtor know so that he/she can waive the satisfactory inspection requirement. Once all conditions are waived, the purchase is considered firm.

Ninth Step: Getting a Lawyer

Next, you will want to secure a real estate lawyer. Once your offer to purchase is accepted, you or your realtor will forward a copy of your accepted offer to the lawyer.

Your lawyer will conduct a title search and check into government regulations and other legalities (i.e. taxes and utilities on the house are paid for up to date and that there are no liens on the chattels). The title search ensures that the seller does really own the home and that you can purchase it without any legal problems.

The lawyer will also facilitate the transfer of the property from the previous owner to you. A statement of adjustments will be prepared which will confirm the selling price, the amount you have to pay the seller, the balance of the down payment and adjustments. You will also owe your lawyer for legal fees, which include closing costs and disbursements.

The lawyer will need to know how you want to be registered on title (i.e. Joint Tenant or Tenants in Common). Your lawyer or realtor can help guide you through this.

You will be required to give a certified cheque or money order to your lawyer when you sign the final mortgage papers.

Tenth Step: Home Insurance

NOTE: Fire insurance is not mandatory for condos as the buildings usually have fire insurance, but it is recommended that you get content insurance.

Assuming you waive the inspection condition, you will now be required to get home insurance. Insurance protects you in case of fire, theft or an accident caused to a visitor should the visitor sue you. Your home insurance will also protect you against liability for accidental damage to someone else’s property. The monthly payment is called a premium.

Most insurers charge a lower premium if you have fire and theft alarms (even better if they are monitored).

You are required to have this insurance for the day you take possession of your home as it ultimately protects the lender.

Eleventh Step: Signing the Mortgage Documents

Some time before the closing (between 1-3 days), you will need to visit your lawyer who will get you to sign all of the appropriate documents.

You will need to provide a certified cheque for the down payment, the adjusted amount (after prepaid property taxes and utilities are factored in) and the land transfer taxes, if applicable. Your lawyer will provide you with the exact amount prior to the meeting. You will also need to pay the lawyer’s fees.

Remember, all parties on the Agreement of Purchase and Sale must bring 2 pieces of government issued identification.

Twelfth Step: Closing Day

On the big day – the closing – the lawyer will facilitate the sale of the property. After receiving the required documents from the seller’s lawyer, he will complete all documents and manage the disbursements. Your lender will provide the mortgage money to your lawyer. Your lawyer pays the seller and registers the home in your name.

You will be called by your lawyer to pick up the deed and keys to your new home.

NOW you can pop open the champagne bottle and turn up the music!