Buying a home is one of the largest investments you’ll ever make let me guide you….

Buying a home is the largest investment most of us ever become involved in. Yet people sometimes take less time over it than they do when buying a new car. That’s because it’s unfamiliar territory to many of us. We don’t know what questions to ask. We may take things for granted, rely on others when we shouldn’t, and sometimes we later wish we had known more about the process involved.  I feel it  is important for you to understand the procedures normally involved in the purchase of a home, to recognize the significance of the documents you will encounter, and to understand the role of other people who may be involved in the transaction. Buying a home is a major event. This infomation will help you better understand the entire process.

The decision to Purchase…

Purchasing a home can be both exciting and frightening!! It isp robably one of the biggest fi nancial investments you’ll ever make. You’ll not only have to live with your decision, but also live in it, so you don’t want to make any costly mistakes. Before you start looking for your “dream” home, organize yourself by considering a few basic questions:

• What are my housing needs?

• What are the choices?

• What can I afford to spend?

Time spent answering these questions in advance may save you from frustration and disappointment during your search.

What Choices Do You Have?

 To meet the many kinds of needs that people have, a number of different housing styles and types of ownership have developed over the years. Your individual requirements and your income level will govern the housing type which is most suitable for you at the present time.

Types of Housing Structures

 Single Family, Detached Home –A detached home is one which has no common walls with any other residential structure,resting on its own land with front, rear, and side yards. It may be any size from a small, one-storey bungalow to a huge mansion.

Semi-Detached Home – A semi-detached home is two single family dwellings joined together by a common middle wall. It is sometimes called a “side-by-side” duplex.

 Duplex – A duplex is two separate dwellings which are attached either side-by-side (a semi-detached home) or one unit above the other. It is important to note that this type of structure may or may not be a strata titled property and therefore subject to the Strata Property Act or considered a Non Conforming Strata.

 Townhouse – In  British Columbia, the term “townhouse” i susually used to describe one of a group of dwellings (most often two-storey) joined together by common walls, each with its own entrance from the outside.

Apartment – An apartment is one of several dwellings (most often single storey dwellings built one above the other) joined together by common walls, each having its entrance from a common hall. The overall building containing the apartments may be from three to 33 or more storeys.

Manufactured Home – A manufactured home is a factory-built residential structure designed to be moved from one place to another, although wheels are not necessary. It is often placed on a rented space (called a “pad”) in a manufactured home park.

Leasehold – In some cases, you might purchase the right house a residential property for a long, but limited, period of time. The owner of this right of use has a type of ownership called a leasehold interest. This type of ownership is used most often for townhouses or apartments built on city-owned land. It is also used occasionally for single detached homes on farm land, on First Nation reserves, and for apartments where the owner of the freehold interest of an entire apartment block sells leasehold interests in individual apartment units to other “owners.” Leasehold interests are frequently set for periods of 99 years, but regardless of the length of the original term, you will only be able to purchase the remaining portion. Of course, the shorter the remaining portion, the less you, or the person who eventually purchases from you, will be willing to pay for the leasehold interest.

Cooperative – In the cooperative form of ownership, each owner owns a share in a company or cooperative association which, in turn, owns a property containing a number of housing units. Each shareholder is assigned one particular unit in which to reside.

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What Can You Afford?

Before you start looking for a new home, it is important that you become aware of how much you can afford to pay. This knowledge will allow you to spend your valuable time lookingproductively at homes which are within your predetermined price range. You can calculate a relatively accurate fi gure for yourself if you assemble the following information:

The cash you have saved to be used for this

• $______________________ home purchase is called the down-payment

• Plus: The amount of borrowed money

• $______________________ you are able to arrange

• Less: Closing costs and other “last minute”

• $_______________________ costs associated with a real estate purchase

• $______________________ Equals: Maximum Price

 The Down-payment

Lending institutions will usually require you to make a downpayment of at least 5% to 10% of the purchase price of the home. Lending institution policies may vary from time to time. However, as a general rule you should make your cash downpayment as large as possible. Your deposit for the real estate transaction may form part of your down-payment.

 The Borrowed Money

Almost everyone who purchases a home borrows some of the money needed to pay for it. The easiest way to determine how much money you will be able to borrow as a mortgage loan isto consult with one or more lending institutions. These lenders will apply standard tests, based on your family’s current income and debts, in order to decide the amount of moneythey will lend to you. They will ask for information about your finances and make a thorough credit check, in order to be sure you are able to repay a loan.

What is a Mortgage?

 

 

Obtaining a loan to finance the purchase of your new home will probably require you to sign a document called a mortgage. This document will set out the terms and conditions for the loan and its repayment. If you fail to meet your debt obligations, the lender may have the right to claim your home to pay off what you still owe.

 

What Types of Mortgage Loans

Are There?

 

 

All mortgage loans are of two basic types:

• A conventional mortgage loan allows borrowing up to 75% of the purchase price or the appraised value of the home, whichever is less.

• A high-ratio mortgage loan allows borrowing more than 75% of the purchase price or the appraised value of the home, whichever is less. But the borrower must pay a mortgage default insurance premium to protect the lender if payments are not made. Check with your lender to fi nd out the amount of the insurance premium.

 

What is an Amortization Period?

Typically, the size of a mortgage loan payment is calculated as if the loan payments were going to be paid over 20 or 25 years. This is called the amortization period. Each payment will repay the interest due up to the payment date along with some of the principal owed. The longer the amortization period you choose, the lower the regular payment will be. Keep in mind that the faster you repay any money borrowed by choosing a shorter amortization period, the more you reduce the total cost of borrowing.