The Home Buying Process
October 30, 2012 | Posted by: Laurie Anne Faulkner
Determine what type of home suits your situation
A good starting point is to think about the type of home that is right for you. There are a lot of choices out there, from condo apartments, to condo or freehold townhouses, to semi-detached or detached homes. Another choice would be a re-sale home versus a new home. Each of these types of homes has its own advantages and disadvantages, and you will have to consider how any home fits within your lifestyle. Another consideration is the neighbourhood and its amenities.
Connect with a mortgage professional
A mortgage professional can take a look at your financial situation and discuss your borrowing needs and home ownership goals. We will discuss all your home purchasing costs including down payment and closing costs so there are no surprises. A mortgage broker will introduce you to a full range of mortgage products, interest rate options, and strategies to pay off your mortgage more quickly.
The home financing process usually starts with the broker obtaining a mortgage pre-approval for a client. With a pre-approval, you’ll know your price range before searching for a home, and you’ll also get a rate-hold which can protect you in case interest rates increase during a set period usually anywhere from 60 to 120 days. Having a pre-approval letter also shows sellers you are serious about buying their home.
Connect with a real estate agent
A Realtor can help you locate suitable homes in your pre-determined price range. The house hunt is an exciting time as you narrow down the choices to homes that you would like to make an offer on. A mortgage broker may be able to assist you in finding a Realtor.
Make an offer
How much you offer for a given home will depend on the asking price, recent real estate market trends, comparable sales in the area and other factors. Keep in mind that your offer could be accepted, rejected or countered. You may be the only buyer, or you may have to bid against others. At this point your mortgage broker would submit the necessary paperwork for loan approval. Even though you have been pre-approved be sure to make your offer conditional to obtaining financing.
Get a property appraisal
Your lender will require a home appraisal to make sure the home is worth the price you’ve agreed to pay and is thus suitable as security for a mortgage. If the home appraises at a value equal or greater to your loan amount, your mortgage lender will then be in a position to approve the loan. If you are applying for a high ratio loan, the mortgage insurer will arrange for the property valuation which may or may not involve a physical appraisal.
Get a pre-purchase home inspection
Get an inspection of the property you intend to buy as soon as possible after the sellers accept your offer, and make the transaction contingent on the inspection. That way, if the inspector finds a problem with the property, you have a legal way out of the contract. A pre-purchase home inspection can add peace of mind and make a difficult decision much easier.
Final walk through
The final walk through typically takes place a day or two before closing. This is your opportunity to go through the house to make sure all discrepancies found during the inspection have been fixed (if that was part of the agreement).
Closing is the process that transfers legal ownership of the home from seller to buyer. In most cases, your lender will provide the mortgage funds to your lawyer or notary, who will pay the vendor, register the home in your name, and provide you with a deed to the property. This is the final step before you are handed the keys.
Of course, the home buying process is more complicated that this outline of main steps, and your Mortgage Broker and Realtor can guide you throughout the process. When it comes to a smooth home buying transaction, it pays to have the right professionals on your side.