The process of finding a property that suits you in every way is not easy. In fact it could be frustrating, confusing and de-motivating. But it doesn’t have to be.
BEFORE YOU SEARCH
The best way to ensure that your search is stress – free and productive is to prepare yourself for it ahead of time. You may want to answer the following questions to better analyze your current situation, needs and wants:
What are your reasons for considering a move? (ie. Financial/employment changes, lifestyle/family changes, etc.)
How much funds do you or will you have available for a down payment?
What is your realistic expectation of a price range in which you’d make your purchase?
How much time do you have to find a property?
Do you need to sell your existing property, are you a first time buyer or are you looking for an investment?
What specific requirements do you have for the property you seek?
What location/area do you prefer?
Once you have sketched a draft of your financial situation and an idea for the property you are looking for, it will be easier to narrow your search down to specific areas and timelines.
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GETTING PRE-APPROVED
Pre-approval means that you, as a buyer have qualified in advance for a mortgage of “x” dollars contingent upon the lender approving the property. Many financial institutions offer pre-approved mortgages, with your interest rate guaranteed not to rise for a certain period of time. A lender can explain to you what specific loan programs are available and most suitable for you and can help you understand your budgetary restrictions by carefully analyzing your current income and credit history. Getting pre-approved is a great way to know your mortgage limit, which allows you to narrow down your search to the properties you can realistically afford. It also gives you a peace of mind that you will not fall into a trap of denial or rejection by lenders when you find your dream property.
The MULTIPLE LISTING SERVICE OR “MLS”
The MLS system is a cooperative listing service which is available only to licensed real estate agents and which is operated by your local real estate board. Using the MLS, your agent is able to provide you with a detailed list of available properties that are closest in criteria to your desired one, thereby saving you time and headaches. He/she is also able to provide you with a daily report of new properties listed for sale to keep you up to date.
Mortgage Info
YOUR DOWN PAYMENT
A minimum cash down payment from your own resources is required because mortgage lenders won’t advance the entire purchase price of a property. Your minimum down payment would normally be 10%, however, a recent government program has lowered the minimum to 5% for qualified first time buyers. Another temporary program allows first time buyers to use funds from their RRSP for their down payment.
It’s to your advantage to aim for a down payment of 25% or more, so you’ll qualify for a conventional mortgage and avoid paying the mortgage insurance premium. The larger your down payment, the easier it will be to arrange a mortgage and carry it comfortably. The smaller your loan, the lower your interest expense will be, and the more equity you will have in your home. Equity is equal to the value of your home minus the amount of your mortgage.
