The Art of Homebuying

by Marcia Luke

Most people agree that buying a new home is the biggest

decision you'll ever make. So why do it alone?

Friends and family can only get you so far until

their expertise runs out. But thankfully there are professionals

trained in the art of new home buying who will help you make sure

that you get what you want.

Mortgage brokers, real estate agents, lawyers-many

negative associations are attached to these professions. But the

truth is that these professionals are a beneficial, if not necessary,

part of the new home buying process. To feel comfortable with

them, you need to know what they do, what they charge,

and how to choose the right one for your new home or

condominium search.

Commonly, the first step is to get pre-approval for a

mortgage in order to know how much you can afford and to

be ready to make your purchase. You can shop around

yourself to find out what rates and conditions banks will offer

you, or you can enlist the help of a mortgage broker, who will

put in this time and effort for you. Mortgage brokers have connections

at a variety of financial institutions and are experienced in

dealing with them. The bonus is that your bank will pay your

mortgage broker on your behalf, so this service is provided

at no cost to you.

The next person you'll likely go to is to a real estate agent.

A real estate agent will help you search for the right new home to fit your

budget, desired location, and ideal size. Real estate agents don't

cost a buyer anything (only the seller) and they have a wealth of

information at their fingertips that will help to ensure you get

the best deal possible on your new home. Anita Rapp, sales

representative at Royal LePage in Toronto, helps many people,

mostly young, first-time home buyers.

Rapp says that most of her clients find her through referrals

or open houses. She conducts a consultation to find out what the

buyer is looking for in terms of price, location, and size, three of

the most important factors in home buying. "I communicate

daily," says Rapp. "I send an email out if something appropriate

is available and then the home buyer can email back when they

see something interesting."

Rapp will also tell you that it's important to get pre-approved

before seeking the help of a real estate agent. "That's where a lot

of people make mistakes. They don't have their finances in order

first." Then Rapp goes out to visit potential homes with her

clients. "A real estate agent has the right information and asks

the right questions. It doesn't cost you anything to have an

agent. We have more information and it narrows down your

search. When you hire somebody you trust, it's like going with

a parent or friend, and we get to know your tastes, too."

Once you've found the right home, your real estate will help

you to negotiate your purchase agreement. This is when most

buyers would hire a lawyer. You can get referrals through your

real estate agent or a friend, but if you don't already have a

lawyer, how do you begin the difficult task of sorting through

them? Max Cohen of Cohen Barristers & Solicitors has a few

easy tips. "It's best to shop around; the lowest price isn't always

the best value. If you can get them to speak to you, then it's a

good sign."

Cohen says that lawyers should tell you what they're going to

do for you and what they'll charge, but you need to understand

the total costs involved. These could include disbursements in

addition to or included in the lawyer's fees. "A purchaser will

probably spend anywhere from $1,300 to $2,000 for legal fees

and disbursements," says Cohen. Add to that land transfer tax,

which is determined as a graduated percentage of the purchase

price of your home, starting at 0.5 per cent and going up to 2 per

cent as the purchase price rises. Something else to consider is

that first-time new home buyers are eligible to receive a partial

refund of their land transfer tax, just for buying new.

So just what does a lawyer do? Cohen advises that a lawyer is

required to search title to the property, determine if there are any

other parties interested in the property, and make sure the seller

has valid title to sell the property. "We may suggest that the

homeowner obtain a title insurance policy, protecting

against mortgage fraud down the road." Then, on closing, the

lawyer prepares documentation for the purchaser to sign, including all the mortgage documentation, and confirms their

identification to prevent against fraud.

"I advise purchasers that on their last visit before closing, they

need to make a very detailed inspection of the house for their

Tarion warranty." If anything is missed during this pre-delivery

inspection, then it might not be eligible for the warranty should

it be noticed later on. Cohen also prompts buyers to get an

insurance policy, as it's a requirement for home purchases (with

the exception of condominiums), and tells them when to

arrange for telephone, cable, and other utilities.

The most important thing that lawyers provide is peace of

mind. They will review and explain your purchase agreement

in addition to your closing documents to make sure that

everything is in order. They also arrange to register the deed to

your property and your mortgage, the final step in completing

the purchase. Cohen's closing words are sound advice for new

home buyers: "Negotiate your mortgage early."

Finer details such as these are welcome tips from people you

trust. It's comforting to know that there are professionals

trained to help you make and carry you through one of the most

important decisions of your life.

Closing the deal

It's a good idea to plan ahead so that you

know how much you'll need to set aside when

your home or condo closes. Max Cohen of Cohen

Barristers & Solicitors has provided a list of costs

you might consider or investigate when budgeting. Remember,

there are always extenuating circumstances and every home

purchase is different. If you have any concerns, ask your

real estate agent, mortgage broker, or lawyer for help. You can

trust them!

Closing Costs Tips

The lawyer's fee: Most real estate lawyers quote a flat fee that

may or may not include disbursements-find out which when

you're budgeting your closing costs.

Disbursements: Include the title search, the cost of registering

the deed and mortgage, courier and bank costs, etc.

Land transfer tax: You may be eligible for a partial refund on your

land transfer tax if you're a first-time home buyer of a new

construction. This cost is calculated using a graduated

percentage of the purchase price of your home.

Adjustments: Include taxes, oil left in the tank, remaining hydro

bills, etc., that are split between the buyer and seller based on

how much time each has spent in the house (sellers may

still have bills to pay after they leave, but not necessarily the

entire amount).

Common fees: Include paying for meter installation on your

street if you're in a new development, contributing to common

area expenses in a condominium or gated community, paying to

have trees planted, etc.