Process In Buying A House

[Travis Munroe]

I have worked with several people whom are not 100% sure on how to buy a house and the process involved. Buying real estate is not like buying a television. There are several minor details in the middle that are important to ensure a smooth transaction takes place.

1- Decide that you want to move

2- Contact a mortgage broker to get pre qualified. This will give you a great idea as to what you can afford.

3- Contact a Realtor and discuss exactly what you are looking for.

4- Browse the MLS for places you might like and send them to your Realtor. Your Realtor should also be sending you places and compiling a list of potential properties.

5- Set up a day to get out and view the places you like. I always find it better to view as many places in one day as it allows the buyer to really filter out what they like and do not like.

6- Once you find the place you like your Realtor will pull out the paperwork. It is a standard contract that focuses in on a few key points
- Price you are willing to pay.
Be prepared to write a check for your initial deposit. Between 5-10k is fairly common. A minimum of 5% of the purchase price will come from your own pocket.
- Day you want to move in.
2 weeks would typically be the quickest time frame to move in as the lawyers and mortgage broker will need time. A month or 2 is the most common.
- Specific conditions
Financing, property inspection, condo document review, sale of your current home are just a few of the many possible conditions. Your Realtor should be willing to guide you through each of these conditions.

7- Once your offer has been negotiated and your conditions have been taken care of you will have a firm deal. Your Realtor will send the paperwork to a real estate lawyer and the lawyer will call you a week or 2 before possession to come in and sign off on everything.

8- Possession day you will meet your Realtor at the property and the keys will be handed over.


Additional Costs In Buying A Home
Below are a few of the costs that many may not budget for when moving.

Moving Truck- Price will vary depending how much stuff you have.
Deposit- typically 5-10k
Appraisal- Usually no charge as lender verifies you paid fair market value.
CMHC Fee- Added onto mortgage total.
Property inspection- typically $300-$500
Condominium documents- (only purchased if buying a foreclosure) Can cost anywhere from a couple hundred dollars to $600.
Condominium document review- A specialist will charge around $300 to review the condo documents.
Remaining balance- You must have at least 5% of the purchase price (including your initial deposit) to bring to the lawyers.
Legal Fees- Will range between $800 to $1300
Home Insurance- You must have the property insured prior to possession or the lender will not send the money.
Utility charges- Is there a moving fee with any of your utilities or is a deposit required?

[Regular_John]

Wow, can't thank you enough, the wife and I were just saying last night "I have no idea how to even start"

We're currently renting and our lease is up July 1st, we're looking scrap up any additional funds we can between now and then.

[onetwo_threefour]

One other point as a bit of self-promotion. In general the contract Realtors use for resale homes is reasonably, although not completely, balanced between protecting Buyer's and Seller's interests. If you are using that contract, then waiting to get a lawyer involved until after conditions are waived is generally fine. However if you buying new on a builder's contract, buying a FSBO using a contract somebody pulled off the internet, or there are unusual terms added to the standard contract you should consider putting a lawyer review condition in your contract and getting your lawyer involved before conditions are waived.

Good idea for a thread!

[Travis Munroe]

No problem. It comes as second nature for me to think that everyone understands the process but in reality several people like yourself have asked me what really needs to happen.

Wow, can't thank you enough, the wife and I were just saying last night "I have no idea how to even start"

We're currently renting and our lease is up July 1st, we're looking scrap up any additional funds we can between now and then.

One other point as a bit of self-promotion. In general the contract Realtors use for resale homes is reasonably, although not completely, balanced between protecting Buyer's and Seller's interests. If you are using that contract, then waiting to get a lawyer involved until after conditions are waived is generally fine. However if you buying new on a builder's contract, buying a FSBO using a contract somebody pulled off the internet, or there are unusual terms added to the standard contract you should consider putting a lawyer review condition in your contract and getting your lawyer involved before conditions are waived.

Good idea for a thread!

[Sr. Mints]

When I bought my condo last August, I got an email several months later from my mortgage broker saying I owed ING a couple hundred dollars (I forget the exact amount) for an appraisal, which was, apparently, just a drive-by. Is that common? Also, are appraisals on new condos even necessary?

Also, would you recommend having the condo documents reviewed professionally on a newly built condo? I did, but if I recall correctly, it was a condition by my mortgage broker. I wasn't going to otherwise.

Oh, and I wish I saw this thread when I was in the market. I was LOST!

[Travis Munroe]

When I bought my condo last August, I got an email several months later from my mortgage broker saying I owed ING a couple hundred dollars (I forget the exact amount) for an appraisal, which was, apparently, just a drive-by. Is that common? Also, are appraisals on new condos even necessary?

Also, would you recommend having the condo documents reviewed professionally on a newly built condo? I did, but if I recall correctly, it was a condition by my mortgage broker. I wasn't going to otherwise.

Oh, and I wish I saw this thread when I was in the market. I was LOST!

Drive by appraisals are common. The main purpose is to ensure the property actually exists. Charging you for this is not unheard of but I would definitely raise a small concern with it.
Review of condo documents is always suggested however it is not nearly as important with a newly built condo. A new condo (assuming the board has been set up) is not going to have much information for you.

[Deegee]

For doing a basic Mortgage I can't stress enough for people to shop lawyer costs.

The local guys in our area charge $1,300 and I refer everyone I can to a guy who is about half that (and who gets documents done right the first time) who works primarily out of Calgary.

[Regular_John]

Alright so I've got a question about when you start paying a mortgage VS the possession date. Mainly with new construction in that you make an offer a condo that's under construction and it's accepted but it won't be complete for a 2-3 month period. Do you immediately start paying the mortgage to the bank once the offer has been accepted and papers signed, or would it be starting from the possession date?

[troutman]

Alright so I've got a question about when you start paying a mortgage VS the possession date. Mainly with new construction in that you make an offer a condo that's under construction and it's accepted but it won't be complete for a 2-3 month period. Do you immediately start paying the mortgage to the bank once the offer has been accepted and papers signed, or would it be starting from the possession date?

When you buy a condo under construction, the lender cannot advance the mtg $ until the title can be transferred. In these instances, the buyer will pay "rent" to the builder for 2-3+ months, until the mtg can be registered. The rent can vary, depending on the fine print in the contract, but I think is normally at your normal mtg rate/mtg amount.

The Western Protocol does not apply to new condos:

http://www.lawsociety.ab.ca/files/conveyancing/LESA_Refresher_Course_2006.pdf

Sale of a condo unit by a developer (section 14(3) of the Condominium Property Act)

[Otherwise], The Protocol . . . allows the release of funds on the closing day without having to wait for confirmation of registration of the transfer and the mortgage.

http://calgaryfirsthome.com/more-info/risks-of-building-a-new-condo/

When you take possession of a new condo, you agree to rent the condo for the mortgage interest until the builder can transfer title and your mortgage can be registered on the title. Here is the catch, your mortgage cannot be paid to the builder until it is registered on the legal title. The problem with this is that title is not even available until the building is 50% owner occupied. Becoming 50% owner occupied can take month/ even years in some cases, so while you are waiting for 50% of the home owners to move in so that everyone can obtain title, you are paying interest on the amount of money you owe to the builder each month. What this means is that your mortgage is not forwarded and each month that you are paying interest, nothing ever goes to your principle, so essentially you are renting your new condo. Now if you are taking advantage of an excellent rate hold, you should be aware that your mortgage does not close until it is registered on title and if this takes months and in some cases years, you may be subject to whatever rates are in place when your actual mortgage is registered.

[Winsor_Pilates]

Alright so I've got a question about when you start paying a mortgage VS the possession date. Mainly with new construction in that you make an offer a condo that's under construction and it's accepted but it won't be complete for a 2-3 month period. Do you immediately start paying the mortgage to the bank once the offer has been accepted and papers signed, or would it be starting from the possession date?
If you buy a pre-construction condo, you're really obtaining an agreement "to purchase" rather than an actual purchase that results in a title transfer. Usually this means a deposit or series of them held in a trust account until completion, but you aren't responsible for mortgage payments or other responsibilities such as condo fees, property taxes, risk on the building etc.

[MrSector9]

this was/is alot of help, i dont plan on buying for a little bit but i love having all the info before hand.

Thanks

[Travis Munroe]

Its not cheap sponsoring the site these days ;) jk
Ill hold you to it when you do look at buying though lol.

[MrSector9]

I still check your posts everyday, so depending on when i get the funds together ( i never planned on buying a house in calgary) I will be calling you up :)