is lower than the asking price, you may be able to negotiate a new price. If your lender requires a recognized appraisal to complete a mortgage loan, having one completed up front may save you time and money.
The appraisal should include an unbiased assessment of the property’s physical and functional characteristics, an analysis of recent comparable sales and an assessment of current market conditions affecting the property. This information provides you with an expert second opinion as to the property’s market value.
Real estate appraisal is an unregulated business in most provinces and a number of different appraisal organizations exist.
The key to finding the right lender is to shop around. Many different institutions lend money for mortgages, including banks, trust companies, credit unions, caisses populaires, pension funds, insurance companies and finance companies.
You can even find private lenders listed in your local newspaper. It will save you money to speak with more than one lender in each category because the terms and options of each will vary.
Some lenders, such as credit unions, deal only with members. But don’t be shy about approaching new institutions. For example, if you’d like to get your mortgage at a trust company, you don’t need to have a savings account there.
Mortgage brokers don’t usually lend money but rather put you in touch with others who do.
For example, brokers are aware of private lenders that you may not be able to find on your own.
Brokers are independent, which means that they are not affiliated with any specific lending institutions. Their role is to find the lender with the terms and rates that will best suit you.
In some cases, the mortgage broker will charge you a fee for services. This charge is more likely if you have a poor credit history and will probably be a small percentage of the value of the mortgage, for example, 1%-2%. But, in most instances, the broker’s fees are paid by the lender.
Ask to see a resume or portfolio, depending on the profession, and ask for references.
Hiring a lawyer (or notary in Quebec) is one way to ensure that your legal interests are being protected when you buy your home. Your lawyer will review any contracts you need to sign, especially the Offer to Purchase.
If you make an Offer to Purchase that is accepted, your lawyer will be responsible for many of the closing arrangements. (See Step 8 on page 38.)
Lawyers’ fees range widely and depend on the complexity of the deal, but will probably cost a minimum of $500 plus disbursements.
You can check for a lawyer referral service in your community or call the local law association for the names of lawyers who specialize in real estate law.
It is always a good idea to have the home inspected.
An inspector should supply a detailed written report on how well- built the home is, and whether any repairs are necessary and their estimated cost. The report should estimate the cost of repairs and the priorities—what should get fixed first and how soon.
You can find a home inspector through a local professional associa- tion of home inspectors or by asking your real estate representative.
Inspectors are unregulated in
most provinces, so you should inquire about the inspector’s credentials and ask for references.
Ensure that the inspector has errors and omissions insurance. This means that if, for example, you buy a home that requires a costly repair that the inspector didn’t report, then the inspector can be held financially responsible for the cost of the repair. Home inspectors’ fees can range from $150-$350 for a home that costs $300,000 or less.
If you have made a satisfactory home inspection a condition in an Offer to Purchase a home, the inspector’s fees are paid by you.
With older homes, you may also ask an inspector to check for termites, lead paint, asbestos or other problems.
An insurance broker can provide you with all your insurance needs, including property insurance and
Ask them to specify precisely what services you are getting and how much they will cost.
mortgage life insurance. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so premiums vary depending on your home’s worth.
Your lender may also suggest that you buy mortgage life insurance. This is often available through your lender, who then simply adds the premium to your regular mortgage payments.
But lender-supplied insurance can be more expensive than from a broker. Don’t confuse property or life insurance with mortgage loan insur- ance which is mandatory for high- ratio mortgages. (See Step 6 on page 32.)
STEP 4 • BUILDING YOUR TEAM