Buying Edmonton Real Estate - Edmonton Realtor Kristyna Tsoy
Buying process
As a potential buyer, you should be aware that you are about to make a decision that will affect your life for many years to come. Here are some things you should know when buying a home:
Contact a Mortgage Professional
Mortgage brokers are licensed professionals who facilitate the mortgage application process between borrowers and lender(s). Mortgage brokers will look for a mortgage that suits your needs. Most mortgage brokers are paid commission by the lender, so their services don’t cost you anything. They can also offer you advice on the lending process and can help you understand what you can afford.
Your Mortgage
Getting pre-qualified or pre-approved for a mortgage will show sellers that you are serious about buying. You will also be able to focus your property search based on your pre-qualification.
The lender may provide a pre-approval letter confirming the mortgage amount and financial terms. However, you should be aware that neither a pre-approval nor a pre-qualification are seen as absolute loan commitments. Your lenders will still need to look at the property appraisal, verify financial information and re-check your credit before agreeing to make a loan.
Costs
Beyond the purchase price, there are other costs involved in buying a home. The purchase price includes the mortgage, the down payment and the deposit which accompanies the Purchase Contract. Unless otherwise agreed in writing, the purchase price includes any applicable GST.
When you write an offer on a property, you are asked to include a deposit as a sign of good faith for the seller. This money, which is part of the down payment, is held in trust by the seller’s brokerage and will go toward the purchase price. If the transaction falls through prior to the conditions being satisfied or waived, the deposit is normally returned to you. However, this depends on your reasonable efforts to satisfy your offer conditions.
In addition to the mortgage, consider the amount you can afford as a down payment. Unless you have a certain percentage of the purchase price as a down payment, you will be required by law to insure your mortgage. Financing that typically exceeds 80% of the value of the property is referred to as a high-ratio mortgage, and requires insurance. This insurance protects the lender should you not make the payments on the mortgage and the property goes into foreclosure. Insuring your mortgage will cost several thousand dollars and is usually added to your mortgage.
In addition to the mortgage and the down payment, you also need to consider your closing costs which include, for example, legal fees for the transaction and mortgage, registration of your mortgage at Alberta Land Titles, property tax adjustments, moving costs, utility deposits, etc. You may also consider title insurance.
Buyers need to be aware that the purchase and sale of property may have tax implications. It is the responsibility of the seller to seek expert advice (e.g. an accountant) regarding the applicability of GST on the sale of their property. However, if you are purchasing a new home (home to be built or one that has never been occupied), you as the buyer are responsible to pay the GST. The amount owing varies depending on the price of the property and you may be eligible for a GST rebate. Builder may ask, or offer, to have the buyer assign the GST rebate to them and reflect this in the Purchase Contract. You can speak to your builder, industry member or real estate lawyer if you gave any questions.
Contact a Lawyer
You will need to involve a lawyer for such items as title transfer and mortgage registration. Property title transfers between sellers and buyers must be recorded at Alberta Land Titles to protect the new owners. All documents will be signed in the lawyer’s office before the possession date. Select a lawyer early in the selling process and consult him or her if you have any legal questions.
Timing
Time is important. When an offer is made, the Purchase Contract will include a variety of deadlines, from how long the offer is open for consideration to the number of days you have to satisfy any conditions (e.g. home inspection, financing, etc.). If you are currently renting, review your lease to help you determine a suitable possession date. These dates are important to monitor and your industry member can help you coordinate the multiple timelines.
