I will:
- Appraise you of all the costs involved in buying a home;
- Provide you with a complete range of suitable home purchase options that meet your needs (anywhere in Ottawa-Carleton);
- Show you the homes you want to see; arrange a suitable time to see them;
- Find your home; provide comparable home prices to help you understand pricing;
- Take care of all the "offer-to-purchase" paperwork; guide you through all negotiations;
- Be there for you at every step and make the whole process feel comfortable and easy;
- Assist you with all other details. (financing, legal, home inspections, etc.)
Your "dream home" becomes a nightmare when you end up "house poor," with most of your money going to pay for the mortgage and little left over for enjoyment.
When buying a home, you need to be practical and realistic. Over-extending yourself financially is the quickest way to destroy the excitement of owning your own home.
A real estate professional can help you find the home of your dreams; a REALTOR can also assist you in evaluating mortgage options and obtaining financing at the most attractive prevailing rate. In the meantime, here are some ways to determine your "affordability quotient".
WHAT YOU CAN AFFORD TO BUY
Setting a maximum price range is more important than simply establishing an upper price limit because unanticipated costs could push you into the "house poor" danger zone. To determine your "affordability" price range, you must calculate two amounts; the amount of cash you can afford to put toward the purchase (the down payment) and the maximum amount of loan (mortgage) you can comfortably carry.
ABOUT THE DOWN PAYMENT
A mortgage covers the difference between the purchase price and your down payment. The larger the down payment, the less you have to borrow, the smaller your monthly mortgage payment, and the lower your cost of interest over the term of the mortgage. So it probably makes sense to put down as much of your own money as possible.
You should keep a cash reserve for unexpected expenses and such typical "post purchase" expenses as land transfer tax, legal fees, mortgage arrangements, moving expenses, new furnishings and appliances.
HOW MUCH YOU CAN AFFORD TO BORROW
The first step towards establishing a maximum mortgage limit is to calculate a monthly payment you can afford. Financial institutions do this by calculating your debt-service ratio.
To calculate your debt-service ratio, list all your loans (car, personal loans, monthly credit card balances). The sum of these loan payments and your mortgage payment (including principal, interest and taxes) should not exceed approximately 40% of your gross income. The mortgage payment and taxes should not exceed approximately 30% of your gross income.
INTEREST RATES & OTHER VARIABLES
The size of the mortgage you can arrange, based on payments you can afford, depends on interest rates. The lower the rates, the larger the possible mortgage and the more affordable housing is.
But there are other mortgage terms to consider, as well. How open is the mortgage? Would prepayment be allowed? Is the mortgage portable? Discuss your mortgage options with a REALTOR®, your banker or a financial advisor. Establish a limit — and stick to it.
WHERE TO GET A MORTGAGE
The usual source of mortgage funds is a lending institution such as a bank or trust company — and it is the particular policy of the lending institution that determines the maximum loan allowed. But there are other sources of funding too, and a REALTOR can help you choose the best lender at the best rate and terms.
HONESTLY & INTEGRITY
Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA) — and only members of OREA can call themselves REALTORS®.
When you deal with a REALTOR®, you can expect not only strict adherence to provincial laws, but also adherence to a Code of Ethics. And that code is very important to you — because it assures you will receive the highest level of service, honesty and integrity.
HIGHEST PROFESSIONAL STANDARDS
Before receiving a real estate license, candidates must successfully complete an extensive course of study developed by OREA on behalf of the Ontario Government. And that is only the beginning: in the two years after receiving their licence, the new professionals are required to successfully complete three additional courses as part of their articling with an experienced broker.
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*REALTOR® is a trademark which identifies real estate professionals who are members of the Canadian Real Estate Association and of the National Association of REALTORS (U.S.) and, as such subscribe to a high standard of professional service and to a strict Code of Ethics. |
