How to Prepare Your House Before You Go on Vacation

Most people have watched the movie Home Alone or at least know the storyline. To summarize, a family goes away for Christmas vacation, and two robbers scope out the house and decide to break in and steal everything. However, the family forgets their youngest son, who spends his days pranking the robbers and keeping them at bay. While this makes for an amusing movie plot, being in this situation in reality is not what anyone wants – especially when they are out of the country. Now, if you’re wondering how to prepare your house before you go on vacation this winter, read on!

While the likelihood of you forgetting one of your children at home when you leave for a winter vacation is next to none, the chances of someone breaking into your home while you’re away is not out of the realm of possibility. We’ve compiled a list of ways to keep your house safe while you travel to warmer temperatures during the winter months.

How to Prepare Your House Before You Go on Vacation

Snowbirds will be quick to tell you that going away for a weekend or even a week is nothing compared to leaving for months at a time. Preparing your home for an extended absence is vital to ensure that everything remains status quo while you are gone. We will detail some key things below, including turning off water valves, adjusting your thermostat, and having someone check on your home regularly.

Turning off the Water

Turning off water valves while you leave for the winter is one of the most important things and should be kept at the top of your list of things to do before you go. Water is one of the biggest threats to your home, and even just a tiny leak can cause thousands of dollars in damage. In the winter months, the risk of your pipes freezing is real, and when pipes freeze, they eventually burst, and this isn’t something you’ll want to come back to after your vacation. Before leaving, we suggest turning off any water valves you can, including outdoor taps and laundry. Some people even turn off the entire water supply to the house before slipping away for the winter. Others prefer to keep some water flowing and have the person checking in on their home flush the toilets and drains occasionally to prevent odours from coming up the drain.

Turn Down the Heat

There’s no point in keeping an empty home warm and toasty, but you still need to keep the heat on while you’re away. This will prevent your indoor pipes from freezing and condensation from building up inside your electronics. Turn the heat down, but not off.

Pause Unnecessary Utilities

Some of your utilities like cable and internet can be paused while you’re away for a small, one-time fee. If you’re planning to go away for just a couple of weeks, this may not make sense, but pausing these utilities can save you hundreds of dollars if you’ll be away for a few months. That saved money is sure to come in handy while on vacation!

Find a Trustworthy Neighbour to Keep Watch

Having eyes and ears on your home while you’re away can make you feel much more comfortable leaving your home empty for weeks or months. This is where having great neighbours pays off. Ask or hire someone to bring in the mail, turn on lights occasionally and shovel the snow to make your home look lived-in and less inviting to thieves. Have them look around for anything out of the ordinary and immediately bring it to your attention.

You should also be aware that your home insurance terms may require you to have someone check on your home regularly if you are away for more than a few days. For example, some insurance companies will not cover pipes that burst during your absence, unless a competent person checks on the interior of your home every few days.

Leverage Technology While You’re Away

Thankfully we have the technology to give you some peace of mind while away. Installing security lights and cameras outside the entrances to your home is a great way to ensure that your house is kept safe. Most security cameras can be viewed using a smartphone, and these apps can also control lights giving you the ability to turn lights on and off while you’re away, further giving off the illusion that someone is home. An alarm system is also a great idea to keep your home safe from intruders.

Many Canadians head south for the winter months. Now that working remotely is so popular, it is expected that the number of “snowbirds” may increase, and the term will no longer be reserved for those who have retired. If you’re planning to escape the harsh Canadian winters in favour of a warmer climate, follow these tips on how to prepare your house before you go on vacation, so you can relax and enjoy yourself worry-free.

 

Courtesy of REMAX.ca

The Top Benefits of Buying and Selling Your Home in the Winter

Opinions are split as to whether buying and selling a home in the winter is the best time or not. In the post-coronavirus world, plenty of conventions and traditions have been turned upside down. Deciding if you should erect a for sale sign in your snow-filled yard or venture out in cold conditions to find your dream home? There are some factors to consider, working in favour of taking the leap into home ownership during the winter.

We have compiled a list of the top benefits of buying and selling your home in the winter:

Buying

#1 Fewer Bidding Wars in the Winter

Historically, there is less competition among homebuyers during the winter months. Unless the sun is shining and the temperatures are above normal, not everyone is willing to endure the wrath of Old Man Winter. Moreover, winter is not always the most convenient time to acquire a new property. The buzzing holiday season often has homebuyers distracted, and families may be apprehensive about moving to a new neighbourhood in the middle of the school year.

#2 Faster Mortgage Closings

It may seem counterintuitive, but the winter months might offer quicker service during months. Because sales activity is typically a bit slower between November and February, service professionals within the industry may be faster since they aren’t as busy.

Mortgage closings, home inspections, contracting services, and legal documentation – everything that is involved with buying a home can be quicker than if it were done in the middle of the spring or summer.

#3 Is Everything Cheaper?

Statistically, since the winter months tend to see lower volumes of activity within the real estate market, sellers are more likely to list their home at a fair price, or priced to sell! Without overinflated prices, and the decreased likelihood of a bidding war, you’re more apt to score a good deal on your purchased property in the winter home-buying season.

Further, since real estate is an essential industry, many industries that support buying and selling a home are readily available. The market slowdown in the winter may make some services less expensive since there isn’t as much activity. Whether it’s moving companies or contractors, some are willing to negotiate in order to drum up business during the winter season.

#4 Seasonal Bonuses

‘Tis the season for bonuses from your workplace. It might be a bit different in 2020, but many companies hand out respectable bonuses to their staff to show their appreciation for a job well done. This cash injection is great for homebuyers who may allocate it directly toward their down payment if they are browsing for a home in the winter.

Selling

#1 Winter Spawns Serious Buyers

If somebody is willing to travel through a Canadian winter to visit an open house, it is more than likely you have a serious buyer on your hands. It is easy to attract a few dozen people to your property on a gorgeous spring day, but are they genuine about their interest?

Winter separates window shoppers from dedicated customers.

#2 Less Competition!

The reduced competition during the winter season is a plus for buyers and sellers alike. With fewer properties available on the market, you’re more likely to sell your home quickly (as long as demand is there!) with favourable terms.

#3 Highlight Your Home’s Energy Efficiency

How efficient is your home? If you are like most modern households, you have invested in your home’s energy efficiency to cut down on your utility bills. What better time to show off this incredible investment than during the winter, when your hydro bill is typically higher. This could not only add thousands to your home’s value, but it could be a selling feature for homebuyers.

Got a hot tub or a fireplace? These will be extra favourable features for winter buyers who will naturally be looking for homes that offer cozy warmth.

Winter is in the Air

Any time the birds start chirping, the days become longer, and the temperatures begin warming up, for-sale signs pop up on yards everywhere.

While this is part of the reason that more homeowners sell their properties between March and September, plenty of real estate agents and industry experts regularly champion the winter as a great time to be both a buyer and seller.

 

Courtesy of REMAX.ca

Upgrading Your Home Office

Proper organization and storage are key to a productive home office. Upgrading your home office can be a visual cue, inspiring you to increase your productivity and improve your general workflow.

Innovative renovations that boost your home office aesthetic and practicality, while bringing you closer to your work, can help you reach new heights. If you have a hybrid work schedule or are working from home, you can easily incorporate these six ideas into your existing decor.

6 Ways to Upgrade Your Home Office

Upgrade Your Lighting with Different Bulbs

Workplace lighting could be subpar if the space were designed to be something other than an office from the start. A well-lit home office has both natural and artificial lighting options, such as task lighting for illuminating specific work surfaces and ambient lighting for the entire room.

Consider a desk lamp that can be adjusted in height and produce different colour temperatures for your workplace. Researchers have found that exposure to warmer (more yellow) light encourages inventiveness, while exposure to more relaxed (bluer) light improves focus. Studies have found that one’s environment can affect their productivity.

Upgrade Your Workstation

Organize your desk so that everything you need is within easy reach. You need a large enough desk to keep everything handy and drawers or shelves to stow items you don’t use daily. You should be able to access your computer’s essentials, such as the printer, mouse, speakers, and any supplementary materials you might need, without having to move around too much. Less-used items should be stored further away so that you only have to shift position or get up when needed. It’s also helpful to have a sliding base for the mouse and keyboard and a raised platform for the screen.

Utilize Large External Monitors to Prevent Screen Clutter

For most people, the screen of their laptop or desktop computer isn’t enough. According to one study, a second monitor has increased productivity by as much as 30 percent. Choose a second monitor with a legible display to avoid headaches and eye strain. An additional rule of thumb is that the larger the monitor, the better it will serve you because it will reduce the need to scroll.

Find An Ergonomic, Comfortable Chair

If you’re sitting correctly, you won’t just be less likely to develop health problems; you’ll be able to avoid the temptation to constantly shift positions or get up to stretch for more extended periods. When selecting an office chair, it’s essential to look for one that supports your lower back by conforming to the shape of your spine, has a wide range of height adjustments, and can be swivelled to accommodate easy access. Ensure that your knees and elbows are at a 90-degree angle, that the armrests adequately support your forearms, and that the chair is soft enough to ensure proper posture.

Utilize Wall Space for Planning Purposes

Although we do a lot of documenting, planning and getting ideas on our computers, there are other places where we do so. The need for physical intervention is often inevitable. Consider a whiteboard or low-cost magnetic bulletin board that can be hung and used for keeping current to-do lists, project information, and motivational images close at hand.

Plants As a Stress Reliever

Even if you only have room for one tiny plant on your desk, it will go a long way toward reducing stress levels and motivating you to keep things neat. In case that isn’t enough to convince you, research has shown that having plants around at work can boost efficiency. Plants are a great way to bring natural texture and colour into your home office. Fake plants today are so lifelike and require no watering or sunlight.

Making Productivity-Improving Upgrades to Your Home Office

Before COVID-19, many people who worked from home used the dining room table or some other makeshift surface as their desk. The shift to remote work caused by the pandemic has highlighted just how important it is to have a dedicated home office.

Now that many employers are accommodating work from home, it makes financial sense to upgrade your workspace so you can work comfortably, concentrate, and get things done. A dinner-table workspace is no longer enough as a long-term solution. In any case, it’s wise to improve your home office’s infrastructure. Improve your efficiency, orderliness, and everything in between with the new office furnishings that come out every year.

Courtesy of REMAX.ca

Explore the Neighbourhood Before You Buy

The quality of the surrounding community is a significant factor in determining whether you will be happy in your new home. While choosing a neighbourhood and forming an accurate impression of it is tough until you actually live there, preliminary research on the area can reduce the likelihood of suffering from buyer’s remorse down the road. So, how can you ensure that you’re well-informed? Here are five strategies for investigating a neighbourhood before you buy.

Choosing a Neighbourhood: Journey of Discovery

To determine whether the area is ideal for you, it is best to pay multiple visits. Listen for things like planes, trains and automobiles as you wander the neighbourhood. Living near places that frequently generate loud noises is probably not a good idea if you have a low tolerance for such sounds.

You should consider the condition of nearby houses as well. A neighbourhood may not be in good shape if many homes are on the market and the fences, yards, and windows all look neglected. Conducting a daytime and nighttime exploration, as well as weekday and weekend visits, are all recommended.

Reach Out to The Neighbours

Talking to locals can be an excellent strategy for gaining insight into a community. Keep your eyes peeled for possible encounters with your future neighbours so you can introduce yourself. Inquire whether they recommend the area to you and your loved ones. A good way to find out if you’d like to move there is to talk to people who already live there.

Check The Prevalence of Crime in a Given Area

There are several factors to consider before purchasing a home, but one of the most important is the local crime rate. Although there is usually some level of criminal activity in every area, some places are considerably safer than others. If the neighbourhood you’re looking at has a low crime rate, you’re likely to feel safer.

It can also be a good idea to check crime maps of the area you’re looking at by doing a quick search on Google. In addition, you can get in touch with the local police for further assistance in finding this information, such as the Toronto neighbourhood crime maps, which show the number of crimes per 10,000 residents.

Examine Recent Changes in Property Values

Considering property value trends is not crucial if you are a renter, but it is essential if you are considering purchasing a home. Before you buy there, you need to know if home prices in the area are rising, stagnant, or falling. Knowing these tendencies is helpful. Also, you can extrapolate information about a neighbourhood’s public amenities funding from the property tax rates there.

It’s important to remember that property values aren’t indicative of a neighbourhood’s desirability and that affordable housing doesn’t mean a place is terrible to live in. However, they are essential to investigate when learning about a community, especially if you plan to make a long-term investment there.

Try Out Your Commute

The commute you endure every day can significantly affect your happiness. While a quick Google Maps search can give you a general idea of your commute and how long it might take, nothing beats experiencing it for yourself, whether you’re travelling by car, foot, bike or public transportation. In addition, the best time to test your commute is when you would typically be on your way to or from work.

Buying the Perfect Home in An Ideal Neighbourhood

It’s just as critical to locate a desirable community as it is to find the ideal dwelling. You can improve a house, but a neighbourhood’s characteristics are much more challenging to alter. Don’t rush into buying a home; instead, take your time to learn about the community and get a feel for the area.

Your RE/MAX real estate agent is another great way to learn the ins and outs of a neighbourhood you are considering moving to. Our expertise and experience in local communities mean we can share insights that you may not be able to find on your own. Reach out to us today, and get a head start on choosing the right home for your family in the right neighbourhood!

Courtesy of REMAX.ca

Staging Your Home During The Holidays

One of the biggest questions that tends to arise in the months leading up to the holidays, is whether or not people should decorate their homes for the holidays while trying to sell. This is an interesting topic, as some people prefer to see what homes look like when decorated, while other people prefer to see the space without the distraction of decorations.

We reached out to our RE/MAX Influencers – a panel of RE/MAX Sales Associates from across Canada – who provided some insight and tips into how you should go about staging your home during the holiday season.

Try to Take Photos Beforehand

One great tip that was offered up by the RE/MAX Influencers was to, if possible, have the listing photos of your home taken before decorating. This will allow potential buyers the chance to see your space both with and without decorations, and also will keep the listing photos from looking outdated if your home is still on the market in the months after the holidays.

Keep it Simple & Generic

Another tip that was provided by the Influencer panel is to keep your decorations simple and generic. While you may normally go full out with decorating for the holidays, try to keep the décor simple if you’re trying to sell. This will help keep your home from looking too cluttered and will allow potential buyers to see where their own decorations might fit if they are thinking of making an offer.

Keeping your décor generic will also help prospective buyers to envision themselves in your home, as not everyone celebrates the same holidays. Keeping things simple and generic will allow your home to be viewed as being festive and cozy, while also being approachable to potential buyers.

Some examples of simple, generic décor could be adding things like throw blankets on the end of beds or adding a festive wreath to the front door.

Tuck Personal Items Away

While it may be tempting to pull out festive family photos from past holiday seasons and put them on display, it may not be the best idea if you’re trying to sell during the holidays. By tucking personal items away, as mentioned above, you allow potential buyers to see themselves in the space, without being distracted by personal items that belong to the current owner.

One Influencer made a great comment, suggesting that if you have a Christmas tree decorated only place “fake” wrapped boxes under the tree and remove any tree ornaments that may hold value and sentiment to keep them safe and help protect your privacy.

Don’t Overcrowd the Space

When decorating for the holidays, it can be tempting to go all out with décor. It is important to keep space in mind when decorating, so you aren’t blocking any key viewpoints or restricting access to parts of your home that potential buyers may be trying to look at.

If you typically decorate with a large, bushy Christmas tree, consider getting something that is slimmer to help make your space appear more spacious.

Keep it Classic Outside

When staging your home for the holiday season, many people only think of the indoor spaces. The outdoor curb appeal matters too! You may love putting out your festive holiday inflatable decorations every year, but consider keeping those tucked away for the time being if you are actively showing your home during the holiday season, as they may not be everyone’s ideal décor options.

The RE/MAX Influencers suggest keeping outdoor lighting simple and classic by using white/yellow bulbs and string lights to keep your outdoor décor simple, while also looking sophisticated and classy. Consider utilizing any pillars or railings on the front step/porch by wrapping them with string lights and a garland, or putting down a holiday-themed doormat to help welcome prospective buyers to your home.

Courtesy of REMAX.ca

Top 8 Winter Home Energy Solutions

Energy bills can get dramatically high, especially during Canada’s cold winter months. There are steps you can take to conserve energy and save some money at the same time. Below are our top eight Winter Home Energy Solutions.

8 – Turn Down the Temperature

When you’re away from your house for a few days, you don’t need to keep the heat cranked up. By reducing the temperature when you’re out of the house, you can save money on heating costs.

Another idea is to add an extra blanket on your bed and reduce the temperature by a couple of degrees at night.

7 – Seal Unwanted Leaks

Caulking and sealing leaks will insulate your home better, which will save you money in the long run.

You’ll want to make sure you’re buying the correct type of caulk, depending on what specifically needs to be sealed, and whether it is interior or exterior.

6 – Replace Furnace Filters

It’s a good idea to keep your furnace properly adjusted with annual maintenance.

This will include cleaning or replacing your filters every couple of months to improve efficiency.

5 – Save Money on Water

There are several ways you minimize water consumption. Low-flow shower heads and smaller toilets will minimize water output.

You’ll also want to make sure you fix any leaky taps that might be constantly wasting water.

4 – Update Old Appliances

Refrigerators, freezers, dishwashers and washing machines that are a couple of decades old may be using significantly more energy than newer models.

Sometimes the investment in a new major appliance will save you money in the long run.

3 – Use an Area Rug

We like to be barefoot in our own space, but when our feet are cold, so is the rest of our body.

Consider purchasing an area rug for rooms in your home that have cold floors.

2 – Unplug Electronics

Electronics that are plugged in still use energy, even when you’re not using them.

By unplugging electronics and small appliances when you’re not using them, you will ensure that there is not additional energy being used up.

1 – Switch Lights Off

One of the simplest ways to reduce your energy use is by flicking off lights when you leave a room.

It’s also a good idea to switch to energy-efficient lighting.

Courtesy of REMAX.ca

Can I Be Denied a Mortgage After Pre-Approval?

If you are in the market for a new home and have already been pre-approved for a mortgage, you might think you’re in the clear. However, this is not always the case. There are several reasons a mortgage can be denied after pre-approval, and you must understand what causes it to happen to ensure your mortgage will be approved.

Reasons a Mortgage Can Be Denied After Pre-Approval

There are a number of reasons that a mortgage can be denied even after the prospective applicant has received pre-approval. Here are a few of the more common reasons:

Change of employment – One of the requirements for being approved for most mortgages is steady employment. If you have changed jobs and are still in the probationary period with your new employer, this can negatively impact your mortgage approval, although exceptions may be made in some cases, like if the job change is within the same field. The length of time you are required to be with an employer varies, but typically it is at least six months.

A poor credit report – You do not need perfect credit to be approved for a mortgage, but there is a minimum requirement for your credit score (and for most lenders it is a minimum score of 650). If you have been pre-approved but then acquire new debt or miss debt payments, this will hit your credit score and can potentially knock it down enough that you may not be approved.

Additional debts – Related to your credit score, taking on large debts when trying to get a mortgage is not a good idea. Hold off on buying that new car or applying for a line of credit until your mortgage deal officially closes and you have the keys in hand.

Changes in loan requirements – It is possible that after pre-approval, a lender or mortgage product may experience changes to their requirements and guidelines that result in you being denied the mortgage. These may include changes in debt-to-income policies, the savings required of the buyer, or a mortgage insurance premium increase.

Appraisal issues – In some cases, the mortgage pre-approval for an applicant is subject to a satisfactory bank appraisal. If there are issues with the appraisal, the mortgage application could be denied.

What To Do If Your Mortgage Has Been Denied

Luckily you don’t have to give up if your mortgage application has been denied. There are several things you can do to improve your financial situation and increase your chances of being approved:

Improve your credit score – Raising your credit score is the most reliable way to convince lenders to give you a mortgage, since it shows you can make payments on time.

Pay down debt – If your debt-to-income ratio is too high, pay down some of your debt to lower the ratio. A consolidation loan could help speed up the process if some of the debt comes from credit cards or other high-interest sources.

Add income – Like paying down debt, adding income will help improve your debt-to-income ratio.

Increase the down payment – By saving more money for a down payment, you will decrease the mortgage amount and the risk to the lender. As a result, they will be more likely to approve you for a mortgage.

Get a co-signer – If you have unreliable credit, you could try getting someone to co-sign your mortgage application. This person must have a good credit history and agree to pay your mortgage if you can’t. However, many people refuse because it is a high risk to them.

How to Ensure Your Mortgage is Approved

It is never a good feeling to be left wondering whether your mortgage application will be approved. There are a few things you can do to help ensure that you are not denied, including:

  • Don’t take on any additional debts like vehicles, student loans or lines of credit
  • Don’t make any large deposits into your bank accounts without having proof of their source, and don’t make any large withdrawals
  • Continue to save money and make loan payments on time

It can be devastating to learn that, despite being pre-approved for a mortgage, you can’t get financing to purchase the house you want. There are several reasons this can happen, so be sure to consult with your mortgage lender if this occurs so that you can take the necessary steps to remedy your situation and get your mortgage approved as soon as possible.

Courtesy of REMAX.ca

10 Real Estate Terms You Need to Know

When buying or selling a home, you’re going to encounter all the terminology that goes along with it. Many of these words and phrases are not common knowledge, and having a basic understanding of the ones used most often can make the process less daunting. Let’s look at a few real estate terms to know:

Adjustable-rate mortgage – There are two main types of mortgages. An adjustable-rate mortgage has an interest rate and mortgage payment that vary according to market conditions. It is less predictable than a fixed-rate mortgage but can potentially have very low-interest rates at times.

 Fixed-rate mortgage – Fixed-rate mortgages are more predictable. They have an interest rate and mortgage payment that remain the same throughout the term and do not fluctuate according to market conditions.

Mortgage pre-approval – A mortgage pre-approval is a process that involves you as the homebuyer and a lender. Homebuyers will fill out an application detailing various aspects of their finances, including income, assets, and credit history. The lender will then review it to determine the debt-to-income ratio and the amount they are willing to lend to the homebuyer. This is not the same as a mortgage approval.

Appraisal – An appraisal is a process of determining the value of a particular property so that a lending institution can determine how much they are willing to loan. In Canada, an appraisal can only be done by a member of the Appraisal Institute of Canada or the Canadian National Association of Real Estate Appraisers. An appraisal is different than a market evaluation, which is what a real estate agent will give you as an idea of the property’s worth.

Offer/Counteroffer/Backup offer – Here’s where we get to the nitty-gritty. An offer to purchase sets out the terms with which you agree to buy the home and is a legally binding contract between the seller and the buyer. However, there are different kinds of offers.

A counteroffer occurs when the seller of the property does not accept the offer you extend and makes changes to it, such as the price or the date, making the original offer invalid. A counteroffer will have a time limit within which a buyer may accept or reject it.

A backup offer happens when a buyer is interested in purchasing a property that already has another offer in process with someone else. If the original offer falls through for any reason, the backup offer will be next in line to purchase the property. There can only be one backup offer on a property at any time.

Principal – The principal is the amount you borrow from a lending institution. It does not include the down payment that you would have contributed, and it does not include interest. Your mortgage payments will always be applied toward the interest first, so you need to consider that when budgeting for a mortgage payment. The interest is typically calculated on a daily basis, but you will pay it with your monthly mortgage payment.

Debt-to-income ratio – Also known as DTI, the debt-to-income ratio is a number that is determined by the buyer’s total debt, plus the monthly house payment, divided by the gross monthly income and multiplied by 100. The resulting number helps lenders determine the amount of risk they are taking with a particular buyer. Lenders typically look for less than 28 per cent of the total monthly income spent on housing, and less than 36 per cent contributed to debt payments.

Mortgage loan insurance – If your equity or down payment on the property is below 20 per cent, you will be required to purchase mortgage loan insurance. Offered by CMHC, Genworth, and Canada Guaranty, mortgage insurance protects the lender against losses if you fail to pay your mortgage.

Equity – Equity is the difference between the market value of your property and what you still owe on it. If you sell a property at a profit, then equity is the amount you will receive after paying off the mortgage.

Closing Costs – Closing costs are those associated with the actual purchase of the home and not with the value of the house itself. They can include legal fees, realtor commissions, lawyer fees, and land transfer fees. These are all due on the closing date once the purchase of the property is finalized.

Real estate lingo can be confusing sometimes, but if you look up some of the terms ahead of time, you will be well on your way to understanding what is going on when you purchase your home.

Courtesy of REMAX.ca

How Much Will It Cost to Buy a House?

You’ve likely heard people lauding the benefits of home ownership. Canadian real estate has historically seen solid long-term gains, which bodes well for existing homeowners and those who plan to buy and keep the place for the long term. There are several other benefits of owning a home, including a roof over your head, a place to plant roots, pride of ownership, and a part of retirement planning. However, as with all investments, there is that initial cost of owning a house in Canada, and unlike other investment vehicles, a home also comes with ongoing expenses. So, down to the nitty-gritty: How much will it cost to buy a house?

Here’s How Much Will It Cost to Buy a House:

The price of the home and the services associated with the purchase are all relative to the type of property, its age/condition, and its location, so do your research to ensure it remains a good investment. A real estate agent can outline what you can expect to pay and maybe some unexpected expenses. In the meantime, here’s a list of hidden costs to factor into your budget.

Deposit

Depending on the price of a home and the market conditions, you should factor an up-front deposit into the cost of buying a home. You’re expected to pay a deposit when you make an offer on a home.

The deposit is a security measure to ensure you don’t lose the home to another interested buyer. The deposit also assures the seller that you’re serious about the purchase. If you are required to pay a deposit, it will become part of your down payment once you have purchased the home—it comes off the home’s purchase price. There’s no standard deposit amount, as it varies between provinces. But your real estate agent can advise you based on the home’s asking price and the market conditions.

Down Payment

In Canada, the minimum down payment on a home depends on the purchase price. If the house is below $500,000, the minimum down payment will be five per cent. If the price is from $500,000-$999,999, the down payment is five per cent on the first $500,000 and 10 per cent on the remaining amount.

While five per cent is the minimum down payment, anything below 20 per cent is considered a high-ratio mortgage and requires mortgage loan insurance. To avoid this, you’ll need a down payment of 20 per cent or more. This insurance is paid in a lump sum or added to your mortgage and included in your payments.

Land Transfer Tax

When you buy a home, you are required to pay a land transfer tax on closing to the territory or province where you are buying. This tax is based on the amount paid for the property, as well as the remaining amount on any mortgage or debt assumed as part of the arrangement to buy it.

The cost will vary depending on your municipality, the size of the land, and other factors. Alberta, Saskatchewan, and parts of Nova Scotia do not have Land Transfer Tax at all, while other provinces use a tiered system—meaning, the higher the purchase price, the higher the percentage you pay. Homebuyers in Toronto are hit with a double whammy, having to pay a municipal land transfer tax on top of the provincial land transfer tax.

Appraisal Fee

An appraisal is essential for the buyer. It lets the lender know they are providing a mortgage for a legitimate price and that you are paying fair market value for the home.

A property appraisal will typically cost in the ballpark of $300, but can vary depending on the appraiser and your location. However, this is an essential step, saving you from borrowing more than you need to, and preventing lenders from giving you too much.

Home Inspection

Though it is not required, a home inspection is recommended in the home-buying process, helping you avoid many potential pitfalls. In hot real estate markets, many homebuyers will waive a home inspection from their conditions. It is a wise investment, helping you avoid costly repairs and renovation. A failed home inspection could be a negotiating factor or a deal-breaker.

A home inspection will generally cost an average of $500 depending on the size, age, and condition of the home, but it’s well worth the spend for the peace of mind you’ll have.

Property/Home Insurance

Most lenders will require you to have enough home insurance to cover the total cost of the property. Lenders will ask for proof of insurance before providing the funds to purchase the home.

While property insurance is likely already something you have factored into your budget, it’s important to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen. The more coverage you add to your home insurance, the higher the annual premiums.

Mortgage Insurance

Your lender will most likely offer you mortgage life insurance. If you pass away while the policy is valid, the insurance company will pay out what you owe the lender, ensuring that your family can remain in your home without making any payments.

An alternative to mortgage insurance is factoring your mortgage into the payout of your life insurance policy. This way, your beneficiaries get the money directly and can pay your mortgage lender, unlike mortgage insurance, where the payout goes to the lender first. Talk to your financial advisor about which option works better for you and your family.

Mortgage insurance is not to be confused with mortgage loan insurance, which protects the lender against mortgage default. Mortgage loan insurance is required if your down payment is less than 20 per cent of the purchase price. Premiums for this type of insurance range from 0.6 per cent to about 4.5 per cent.

Lawyer Fees

A real estate lawyer or notary is required to complete the purchase of a home. They prepare and review all legal documents, with the agreement of purchase and mortgage as the primary documents. Additionally, they ensure there are no previous claims on the property to help provide you with a clean title to the property.

The fee you will be charged by your lawyer will vary depending on the person representing you and must be paid upon closing. Ask your real estate agent for advice, as they likely have a preferred trusted lawyer they can refer you to.

Title Insurance

Title insurance is a one-time fee that protects from losses related to the property title or ownership. Though not required, it protects you from unknown title defects, existing liens on the property, structural encroachment issues, title fraud, and errors in surveys and public records. Talk to your lawyer about title insurance and if it benefits you.

Property Taxes

Property tax is billed annually and it is expressed as a dollar rate for every $1,000 estimated to be the market value of your property. The tax is paid on property owned by an individual or an entity and is one of three taxes a household pays in Canada, the others being sales tax and income tax.

When you’re looking at homes to purchase, your real estate agent will be able to tell you what the property tax was for previous years. This information will allow you to plan for this ongoing expense.

Maintenance and Energy Costs

Potentially your largest ongoing homeowner expense, these costs include lawn care/ yard work, professional services, additions/upgrades, and the cost of keeping the house running year-round. Ensure that you factor these costs on top of your mortgage and property taxes when determining if you can afford a home.

Moving Expenses

It’s easy to forget about the small things when moving, but it’s important to remember they can add up quickly! Consider the cost of cable, Internet, electricity, natural gas, and other utility installations. Don’t forget about movers, a moving truck, and feeding your friends who are helping out!

Land Survey

A land survey is a legal document that evaluates your home’s boundaries. Though it is not a requirement to sell your house in most jurisdictions, it will establish trust, outlining the size of the property and defining future possibilities of expansion. The cost of the survey depends on how much work is involved and the time of year, but you can expect to pay at least $1000.

Time to Create a Budget

Now that you have a better idea of the cost to buy a home, it’s time to hit the books to find out how much these services will cost in your area. Make a list, create a budget, and get started!

Courtesy of REMAX.ca

What Happens When a Buyer Backs Out of a Real Estate Deal?

When housing markets begin to cool after record highs, some homebuyers get cold feet. Imagine you buy a home for $1.2 million. When it comes time to close after you have signed your purchase agreement, you notice a comparable home down the street sells for $855,000. What happens when a buyer backs out of a real estate deal?

Some homebuyers choose to walk away when it comes to closing day, despite agreeing to purchase the property. Another common scenario occurs when a homebuyer backs out after overbidding in a hot market and going over budget. Once it comes time to close, the bank completes an appraisal and refuses the entire mortgage amount. The homebuyers need to come up with hundreds of thousands of dollars to close. They walk away because they don’t have the money, despite signing an agreement to purchase.

No matter the scenario, walking away at closing after you sign a purchase agreement can have significant legal and financial consequences.

When you back out of the deal, it will cost you. You instantly forfeit the deposit you submitted with your offer. You are also at risk of being sued by the seller for money they have lost on the sale of their home. Understanding the purchase agreement and adding conditions to protect you from unforeseen circumstances is essential.

Understanding your Agreement of Purchase and Sale

An Agreement of Purchase and Sale is a firm and binding deal that allows the buyer and seller to proceed with the sale. It outlines the terms and conditions of your home purchase. As a legal agreement, backing out comes with serious consequences.

Once the buyer and seller sign a purchase agreement, it becomes legally binding. Typically, the buyer provides a deposit of around five per cent of the purchase price to show the seller that they will honour their agreement and complete the purchase. Backing out of the deal after signing the contract and paying the deposit means you do not get that money back.

Are there legal ways to back out of a real estate deal?

There are a few legal ways to back out of a deal. The first is if the sale was conditional and the conditions were not met. It could result from a significant issue in the home inspection, a low appraisal, or the inability of the buyer to sell their current home. Regardless of the reason, the deal dies automatically if the conditions are not fulfilled.

Additionally, an agreement could become null and void for reasons outside the contract’s conditions. Common issues that can end a deal are a lien on the home, substantial damage to the property before closing, or if the buyer can prove that the seller knowingly misrepresented the property in a significant way (however, misrepresentation can be hard to prove in court).

The risks of backing out of a deal at closing

Buyer’s remorse is not part of real estate. Once the buyer and seller have signed the purchase agreement and the conditions have been satisfied, both parties must abide by the contract. There is typically not much leeway to cancel a real estate purchase.

Buyers may feel that they overpaid, or their financial circumstances have changed, but those reasons may not justify the potential consequences of walking away.

If the buyer walks away, they may forfeit their deposit and could be sued by the seller for loss in the value of their property on resale.

If the seller eventually sells their home for a lower price, they may sue for the difference in price. Let’s say there was an agreement to purchase the house for $850,000. The closing day comes, and the buyers back out. The home then goes back on the market. The best offer is $700,000. The home buyers that backed out on closing day now must make up the money the sellers lost. In this case, that is $150,000.

This nightmare scenario has played out. In Gamoff v. Hu, the buyers lost their $30,000 deposit, and they were ordered by the Ontario Superior Court of Justice to pay $470,000 in the lost value after they backed out.

You may also be responsible for the seller’s legal fees, mortgage carrying costs, and any other losses the seller suffered.

How to avoid the risks of backing out at closing?

With the help of legal representation, there are a few things that you can do to protect yourself from these circumstances. Consult with your lawyer before signing an Agreement of Purchase and Sale to determine if there are terms to add that will protect you, as the buyer.

Setting the right contingencies within the contract is the best way to protect yourself from some of the most common issues home buyers encounter.

With a low inventory and rising competition for homes across Canada, it may be tempting to waive any conditions, especially when competing against multiple offers. Discuss the situation with your lawyer, consult a financial advisor and consider getting a mortgage pre-approval, to help ensure that you add the right conditions to your Agreement of Purchase and Sale before signing on the dotted line.

Courtesy of REMAX.ca

Menu