What can I do before I buy a home?

First things first, as they say, before you start looking for that dream house. Get organized before you start actually looking at properties. There is lots you can do to prepare before you even look at the MLS.

Get pre-approved

It’s always a good idea to know how much you can afford. You may think you know what you can afford, but that may be different from what lenders think you can afford. Unfortunately, it’s their opinion that really counts. The general guideline is to allow no more than 30% of your gross monthly income (before deductions) to make your monthly mortgage payment. Further to this it is generally thought that your house payments plus all your other debt payments should not exceed 40% of you’re of your gross income.

This is an important step and it could save you a lot of heart ache later on. There is nothing worse than spending hours and hours looking for the perfect home only to find out after you have made an offer that the lender will not give you the financing. Imagine going out after this happens and try and find another dream home after you have been looking at much higher priced homes. You will have a lot of difficulty finding just the right place.

It’s much better to know how much you can spend before you even start looking. You can either use a Bank or Credit union or utilize the services of a mortgage broker. Banks or Credit Unions obviously want you to utilize the services of their institution and therefore tend to promote those services. Mortgage Brokers on the other hand deal with many institutions and are able to find you the best “deals” around.

Once you are pre-approved by a particular institution get it in writing including. How long the pre-approval is good for and at what bank rate. Also decide on the “Term” you’re looking for as well as how long you want to “amortize” your loan over.

When you’re putting your budget together don’t forget your “closing costs.” These are costs such as your legal fees, inspection fees, land transfer tax, appraisal fees, property taxes, fire and liability insurance and moving fee. This may not be a complete list but it gives you an idea of any additional expenses. I have attached an information sheet on the Land Transfer Tax to give you an idea how it works and the exceptions to it.

Property Transfer Tax And First Time Home Buyer’s Information

The Property Transfer Tax is a tax payable to the Provincial Government by purchasers of real estate. The tax applies to all types of real estate, whether residential, commercial or industrial.

The amount of the Property Transfer Tax is 1% on the first $200,000.00 of the property’s fair market value and 2% on the remaining fair market value.

For example, if the fair market value of the property is $200,000.00, the tax payable would be $2,000.00 ($1% of $200,000.00). If the fair market value of the property is $450,000.00, the tax payable would be $7,000.00 (1% on the first $200,000.00 = $2,000.00 and 2% on the remaining $250,000.00 = $5,000.00).

“Fair Market Value” is best described as the price that would be paid for a property on the open market (which is usually the actual purchase price paid for the property). If the transfer of property is taking place without the exchange of money, the fair market value must be the fair value of the property if same was sold on the open market. In some situations, the fair market value is determined by the recent Assessment received from the Assessment Office.

There are a number of exemptions available to purchasers so that the tax is not payable. The most common is the exemption for “First Time Home Buyers.” To qualify for an exemption to the Property Purchase Tax as a First Time Home Buyer, the following criteria must be met:

* Purchaser must never have owned an interest in a principal residence anywhere in the world at any time;

* Purchaser must be a citizen of or a permanent resident of Canada and have resided in B.C. for at least one year immediately prior to the purchase or have filed two income tax returns as a British Columbia resident within the last 6 years;

* To obtain full exemption, the purchase price must not exceed $425,000.00. A partial exemption is available for homes between $425,000.00 and $450,000.00 (see formula below);

* Purchaser has not previously received a FTHB exemption or refund.

* Purchaser must move into the property within ninety-two days after registration of the purchase of the property and reside in the property for at least one year;

* Pro rata exemption where property exceeds .5 hectares or a portion of the property is not residential (i.e. commercial lofts) – purchase price of entire property must not exceed the price limitations.

* After February 20, 2008, there are no longer any minimum financing requirements or pay down restrictions.

Property Transfer Tax should not be confused with Property Tax. The Property Transfer Tax is a onetime tax paid to the Provincial Government by purchasers of real estate. The Property Tax is the tax paid on an annual basis to the local City/Municipality.

Please remember that the Property Transfer Tax Act may frequently change along with the exemptions for payment of this Tax.

What kind of home do we want?

Decide on the type of dwelling you want. A detached home, condo, townhouse or apartment. Part of this process also involves identifying what you are looking for inside the home. Do you need three bedrooms or four? How many bathrooms do you want? Do you want a basement? Do you want a fireplace? How many square feet do you want. How big a yard do you want?

As important as the type of home you are looking for is, where the home is located is also important. You need to think about what type of community you want to live in. Take a drive around and have a look at the community and see how the homes are maintained. What are the demographics of the neighbourhood? Are there young families with potential playmates for your children, mature retirees? What facilities are important to you, things such as grocery stores, gas stations other stores? Check out the local shopping center. If it appears to be in decline it could mean the neighbourhood is in decline.Do a little homework if you like a particular area and check on future plans for the area. Find out what the local property taxes are in the areas. What public services are offered in the community? Services such as fire service, ambulance coverage, garbage pickup, mail service and snow removal. Transportation should be reviewed as well. Is there access to major bus routes or are there major arterial routes nearby. How long is the commute from your place of work?

How do we look for our new home?

As I said earlier ensure you have your pre approval so you know the price range you are looking in. Sit down with me before we even start looking and we will go over exactly what you are looking for. Try and get a list of “must haves” then a list of “would like to have”. It helps me narrow down the type of home you are looking for and saves you time. We will try and narrow it down without restricting you too much. We may even have to look at few homes to get an idea of what you’re looking for.

Once we actually start looking, bring a note pad and a digital camera if you have one. If you don’t I will bring one for you. As we look at each home take a few notes and some pictures of the (address first) and then things you like and don’t like in the home. At the end of the day homes start to blend together and before you know it you love a house that is actually a composite of several houses. When you try and tell me which one you want to look at again it gets a little confusing. It also helps me prepare for the next group of showings as I can see what your likes and dislikes are. Many times when you start looking at homes you see things in homes that you would like to have or not have. As a result we will change our search parameters.

We have found the perfect place now what?

Once you find the home you love don’t be afraid to go back and have another look at it or several looks. Look at it with a critical eye. Don’t let your heart take over just yet. I will walk through it with you and have another look just to be sure. Once you decide to make an offer there are three critical things to ensure are in the offer. Subject to inspection, Subject to inspection, Subject to inspection. We all have friends that know something about building but I strongly suggest you spend the very nominal sum for a registered inspector. Inspectors are not licensed yet in B.C. so at present you should speak to your friends and get referrals or I can give you a list to choose from (attached)

Local Registered Home Building Inspectors

Alan McGowan – Almar Inspections Ltd.

Phone: (604) 644-1309

Website: www.almarinspections.com

Bjorn Rygg – Pillar to Post

Phone: (604) 532-0530 Toll-Free: 1 (800) 294-5591

Website: www.ptphome.com/langley Email: BRygg@ptphome.com

Douville & Co Home Inspections Ltd.
Phone: (604) 626-4887 Toll-Free: 1 (888) 804-2444
Website: www.douvilleco.com Email: contact@douvilleco.com

James Dobney & Associates
Greater Vancouver Phone: (604) 942-8272 Abbotsford Phone: (604) 854-1516
Website: www.jamesdobney.com Email: admin@jamesdobney.com

Peter Wright – AmeriSpec Inspection Services
Phone: (604) 943-2806 Toll-Free: 1 (866) 943-2806 Cell: (604) 790-1084
Website: www.asktheinspector.ca or www.amerispec.net/pwright Email: pwright@amerispec.net

Vince Burnett – Superior Home Inspections
Phone: (604) 328-9640
Email: superior-inspections@shaw.ca

*All of the above Home Inspectors are Registered with the CHAPI. Visit their website at www.cahpi.bc.ca
Phone: (604) 532-0530 Toll-Free: 1 (800) 294-5591
Website: www.ptphome.com/langley Email: BRygg@ptphome.com