COMPLETE HOME-BUYER’S GUIDE FOR CANADIANS

COMPLETE HOME-BUYER'S GUIDE FOR CANADIANS

Geraldine Santiago, BA

With Alma Pasic, Frank Dodich, and Hilde Deprez

Self-Counsel Press

(a division of)

International Self-Counsel Press Ltd.

Canada

USA

Copyright ? 2003 by International Self-Counsel Press Ltd.

All rights reserved.

No part of this book may be reproduced or transmitted in any form by any means -- graphic, electronic, or mechanical -- without permission in writing from the publisher, except by a reviewer who may quote brief passages in a review. Any request for photocopying, recording, taping, or information storage and retrieval systems of any part of this book shall be directed in writing to the Canadian Copyright Licensing Agency, 6 Adelaide Street E., Suite 900, Toronto, Ontario, M5C 1H6.

Self-Counsel Press acknowledges the financial support of the Government of Canada through the Book Publishing Industry Development Program (bpidp) for our publishing activities.

Printed in Canada.

First edition: 2003; Reprinted 2004

National Library of Canada Cataloguing in Publication Data

Santiago, Geraldine Complete home-buyers guide for Canadians/Geraldine Santiago.

(Self-counsel reference series) ISBN 1-55180-438-7

1. House buying--Canada. I. Title. II. Series. HD 1379.S26 2003 643'.12'0971 C2003-910801-5 Sample 5: Agreement of Purchase and Sale by the Nova Scotia Association of Realtors (NSAR) is used by permission. Sample 7: Summary Appraisal Report by Macintosh Appraisal Ltd. is used by permission. Sampe 8: Abbreviated Building Inspection Report by Frank's Building Inspection Ltd. is used by permission. The text on pages 26 to 27 entitled "What is my relationship with a real estate agent?" from Buying a Home in British Columbia provided by the Real Estate Council of British Columbia is used by permission. The text on page 48 regarding Article 2 and Article 4, Standards of Business Practices by the Canadian Real Estate Association (CREA) is used by permission. The text on pages 79 to 81 regarding grow houses and oil tanks from the Grow House and Oil Tank booklets provided by the Canadian Real Estate Association (CREA) is used by permission.

Self-Counsel Press (a division of)

International Self-Counsel Press Ltd.

1481 Charlotte Road North Vancouver, BC V7J 1H1

Canada

1704 N. State Street Bellingham, WA 98225

USA

CONTENTS

NOTICE TO READERS

ACKNOWLEDGEMENTS

FOREWORD

1 GETTING FINANCING What Is a Mortgage? What are the types of mortgage loans? Amortization Period Term A Pre-Approved Mortgage and Its Advantages What documents do I need to provide to a lender? Understanding Where You Stand with the Lender Criteria for the self-employed or those earning commissions Changing jobs History of bankruptcy Credit Report Acquiring a co-signer or guarantor Minimum age to purchase a home Calculating affordable mortgage payments

k

ix xi xiii 1 1 3 5 6 6 7 8 8 8 8 8 9 9 9

iii

Correlation between interest rates and borrowing capacity

9

Lenders might not look at your income and other financial obligations

10

Where Do I Get a Mortgage?

10

The Difference between a Bank's Mortgage Specialist

and an Independent Mortgage Broker

10

Letter of commitment

11

Down Payment

12

How much of a down payment do I need to buy a home?

12

Can I use the money in my RRSP to make a down payment?

13

Can I take out a loan to cover the down payment?

13

Purchasing property with only a small down payment

13

What Do I Need to Know about the Housing Market?

14

2 SEARCHING FOR A HOME

17

What Types of Housing Structures Are Available?

18

Factors to Consider When Looking for a New Home

19

Community

19

Neighbourhood

19

Transportation

20

Dwelling

21

Schools

21

New Home Warranties

21

Resale homes and new home warranties

22

Pros and Cons of Resale or Older Homes

23

The Difference between Freehold and Leasehold Interests in Land

23

Co-ownership

24

What Is the Best Time of Year to Buy a Home?

24

How long does it take to find a house?

25

Real Estate Agents

25

Responsibilities of the realtor

25

What is my relationship with a real estate agent?

26

The exclusive buyer's agent contract

28

What time-saving technological services are available from a realtor?

28

Can I "switch" real estate agents?

30

iv Complete home-buyer's guide for Canadians

Homes for Sale by Owner Landlord and Tenants

Purchasing a home with a tenant in an unauthorized accommodation Your landlord offered to sell you the property you are renting Choosing Your Team of Professionals Do realtors provide referrals to other professionals? A Realtor's Commission and Allowable Bonuses Who pays for the realtor's commission? What do realtors do to earn their commission? Are realtors allowed to receive bonuses or other gifts from financial institutions? Where Do I Start Looking for Properties? What is a hot sheet? Pricing the Property What is a fair price when I'm placing an offer? Pricing properties per square foot How sellers price their homes What to Look for When Viewing Properties Seller's motivation Prior offers Property condition Moving dates Restrictions Health, safety, and environmental concerns Zoning Land title search City assessment Fixtures and chattels Area Documentation to Review before Purchasing a Condominium Protecting Your Legal Interests

3 MAKING AN OFFER What Should the Offer to Purchase Include?

30 31 31 32 33 34 34 34 35

35 37 37 38 38 39 39 39 40 40 40 40 41 42 45 46 46 46 46 47 48

51 51

Contents v

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