Buying your first property is the biggest dream coming true event and also is the biggest investment of your life so far.
It comes with big excitement and even bigger responsibility. But if done in a proper way it can fill your life with happiness and joy.
There are many steps to buying a property in Brampton, which I will try to explain below.
Unless you have won a lottery, inherited a big fortune or have saved up a big amount to buy the property all with the cash payment, you need to get financing. To obtain financing there are few requirements that you need to fulfil before a bank or lender can lend you their money for your purchase.
1. Very first thing is a healthy credit score. The credit score is a log of your financial payment habits stored over the years by Equifax or TransUnion. Keeping your credit in good standing pays off at this moment. Bad credit rating could push you behind the line for months or years. So make sure you pay your bills and payment on or before time and do not go crazy by spending over your credit limits (I will be explaining in another post, how to maintain your credit rating at the highest so that every lender loves to lend you their money)
2. Income comes right behind the credit score. Every lender wants to make sure that you are making enough money to afford your monthly mortgage payments plus all other household costs. A full time, permanent(secure) and good paying job is what a lender is looking for. They will ask for all the proofs like job letter, pay stubs and notice of assessment from CRA to verify your income.
3. A good sizeable Deposit/Down payment is another very important requirement in order to get financing. Back in the good old days in around 2007, you could get a mortgage with zero (0) down payment. But not anymore, these days there are a very few lenders that can give you a mortgage with 5% down payment and majority lenders ask for 10% to 15% down payment.
When you pay less than 20% down payment, you have to take mortgage insurance from one of the 3 companies (CMHC, GENWORTH OR CANADA GUARANTEE). This is the mortgage insurance to cover the lender’s risk on the money that they are lending to you. (We will go deep into this insurance and premiums in another blog post).
Need of a Realtor:
When looking for a home, you are making the biggest investment of your life so far. At that point, you need an experienced, knowledgeable and full-time real estate agent to help you guide through the home buying process with ease to make this stressful process a piece of cake(smooth) for you.
Once you figure out your budget by getting a mortgage pre-approval from bank or lender your realtor set up a search parameter for you according to your requirements and your preferred location, with that you start getting all the new listing that fit your budget and requirements in your email every day, so that you could select the ones that you would like to go check out with your real estate agent.
Most people think only showing houses is the job of a realtor, which you have seen is not true so far reading through the steps of home buying.
Realtors have access to every single property that becomes available for sale on MLS, no matter which real estate company has listed that property. And real estate agents are insured to cover any hiccups during the deal if anything is misrepresented or mistakenly done wrong. When the same kind of hiccups happen while dealing directly with the private seller, can become the reason for a lawsuit and added stress to make your dream house buying process painful experience.
Most realtors have a team of professionals like Home Inspectors, Lawyers, Mortgage Brokers, Home decorators, Accountants & handymen etc. in order to help their buyer/seller clients and work efficiently to make the life of their client easy by referring all these trusted professionals whenever a client needs any.
After you find your dream home:
Once you have found your dream home, now the time comes to prepare the offer. Your real estate agent will do the market evaluation of that subject property by comparing it to the other recently sold similar properties in the neighbourhood and figure out the offer price and that offer is sent to the listing agent who then presents it to the sellers. Both parties(buyer/seller) try to negotiate with the help of their real estate agents. When both parties agree to the price, terms and conditions, the offer gets accepted. The property is sold, conditional upon buyer getting the satisfactory home inspection done and obtaining a firm mortgage approval from the lender or fulfilling any other condition (if any) within 5 business days(mostly).
Within 24 hours of the acceptance of the offer, the buyer has to deliver the deposit to the listing brokerage office. This deposit is refundable (unless stated non-refundable in the offer) if the property fails to in-home inspection or lender denies you the firm mortgage approval and you get a full refund upon both parties signing the mutual release.
Firm mortgage approval:
You have got the pre-approval at the beginning of the process, but at that time we didn’t have the property info, now you got the property details to send to the bank/lender. In some cases, banks ask for an appraisal report of the property from a home appraisal company to make sure the property’s current value is exactly what they are going to lend you money on.
Within 5 days’ conditional period of home buying process, you hire a home inspector to get the home inspection done on the property, in which home inspector goes through the whole property to check for any cracks in foundation, damages to the heating, plumbing, electrical, roof, outside structure and inside appliances etc. If there are any minor deficiencies your realtor negotiates those repairs with the seller for you, in some case seller agree to fix those deficiencies or compensate you in the purchase price.
After fulfilling these conditions now you sign a notice of fulfillment or a waiver to waive these(Mortgage/Inspection) conditions and the deal goes firm. After this point, no party buyer or seller can legally back off from the deal.
Lawyers and Closing:
When a deal goes firm, all the documentation is forwarded to the lawyers. The seller gets represented by his own separate lawyer and buy has to hire his own lawyer to perform the title search and closing, procedure. In closing, the day lender sends the fund to the buyer’s lawyer who then directs the funds to the seller’s lawyer in order to obtain the keys and register the property on the buyer’s name.
I hope this post has answered most of the questions you had about buying your first house in Brampton and these first-time buyer tips will help you down the road when buying a property.
If you still have any questions, please feel free to call or text me at 905-598-0725 to book a 15 minutes’ session so that I could sit with you and go through all the details with the help of an audio-visual presentation to make the picture clearer.
About the Author:
Laddi Dhillon has been living in Brampton area for the last 17 years and having thorough knowledge about different communities helped him achieve massive success in his real estate career in last more than 12 years. He is the top producer in his RE/MAX office and One of the Top 1% agents in Brampton. He also specializes in Power of sale/Bank sale homes.
He can be reached at 905-598-0725 (call or text) for any of your real estate related questions.
Note: Laddi and his team provide free one year warranty on home systems (plumbing, appliances, heating and electrical) when you buy/Sell your property with their help.
Check out his reviews on different websites.