What’s Included on the Closing Costs?

To first time buyers, closing costs are always sort of a mystery: They have a slight idea of what it is, but don’t know what’s specifically involved or how much it will cost. Many people think it is just the notary fee and that’s all.

Sorry folks, that’s not just it.

In addition to the mortgage down-payment, you (the buyer) will need to put aside some money for the costs related a home purchase. What are these closing costs?

Here is a short list of the basic expenses you can anticipate: Read more >>

Buying an Income Property to Live in

There is a fundamental difference between buying a property solely for investment purposes and buying it to live in it.
We all want to live rent-free. Having the revenues cover all of the expenses, including the unit we occupy. And while all of this is feasible, it is important to mention that certain factors affect this outcome: size of the building, revenues, etc. So let’s take a look at what we can expect when searching for a income property.

Buying a property as an investment alone

Your home is else where, but you want to buy as an investment. This is all a numbers game: a property that generates enough revenues to cover all the expenses and then some. The bigger the property (with larger units) the bigger the revenues, in this case you can expect to have expenses paid, plus a little extra at the end of the year. But this does not always occur with smaller properties such as duplexes or triplexes.

Buying an income property to live in it

You’re contemplating to buy, say, a triplex and you’re planing to live in it, your main concern does not go so much in:
After all expenses are paid; How much does this property gives at the end of the year? Chances are with smaller properties they would cover only the expenses.

If you’re living in it, and you only have one unit with tenants, it’s highly unlikely you’ll be making a surplus of money at the end of the year, much less going on vacation with property revenues.
Instead, ask yourself: How much does “your” portion of the mortgage represent?

For example: Read more >>

Home Ownership: Quality of Life Program

This morning I received the latest electronic bulletin from the Montreal Real Estate Board, and I was pleased to read about one more addition to the First Time Buyers Program, a new take on the RRSP maximum withdrawing amount as well as the possibility to have all RRSP holders (not just first time buyers) to invest in Real Estate. Here is a copy of the bulletin, that explains what the Quality of Life Program has to offer:

The Québec Federation of Real Estate Boards, through its Quality of Life program, is making access to home ownership a top priority in its government relations initiatives. Representatives of the Federation’s Government Relations Committee made a concerted effort to have the ceiling lifted on the maximum amount of money that can be withdrawn under the Home Buyers’ Plan (HBP). The maximum that can be withdrawn is now $25,000 for each RRSP-holder, so couples can now withdraw a combined total of $50,000 to buy their first home.

By the fall of 2009, the Federation will lobby the federal government for a new commitment – that of opening the Home Buyers’ Plan to all RRSP-holders. This would make the HBP available to first-time buyers, and to all people who want to use their RRSP to invest in real estate. Hopefully, the Government of Canada’s Department of Finance will grant the Federation’s request during its next economic update. Read more >>

STOP Paying Your Landlord’s Mortgage!

Lets begin this article by stating: Renting is wasting money!

All those payments you’ve made at the end of each month, you will never see them back again. Ever.
But your landlord will, once he/she decides to sell the property.

If you remain a tenant, you are making your landlord rich, but you do nothing for yourself. But if you put those exact same dollars into a house payment instead of rent, you create “equity”…value that you own, that later can send your children to college, finance the start-up of your own business, or pay for your retirement.

For example:

If you are currently paying $1,000 a month for rented housing, then over the next three years, your landlord will effectively have reaped $36,000 of your hard earned cash! You’re paying his mortgage when you could be building equity in your own property.

What if I don’t have the money to buy a home right now?

There are many loan programs available that offer low and no down payment options. Read more >>

Property Hunting: Diligence is The Key to Your New Home

Even when the numbers from the last couple of months show otherwise, the sales in March are increasing. I’m not saying this because I have access to the stats (yet), but because I’ve been extremely busy working with buyers, visiting properties and trying to make offers. Yes, trying.
Let me explain: By the time the visit’s over and we’re deciding on the purchase price, I get a call from the listing agent saying: “Just to inform you, we have just received an offer on this property”.

Bummer. And then they say we’re in a slow market.

On many occasions, even before getting to see the place, we are notified that the property is already under negotiation, thus a visit isn’t possible until we know the outcome of the offer.

I have to admit, I am not the pushy type. All my clients receive their listings and a little walk-though the description sheet, with the advice to: “Look it over and let me know when you’re available to visit”
But because of the demand and the fact that a lot of properties are getting sold-pretty fast, my new motto is:

If the property meets your requirements, if you like the images, and if it has the WOW effect on you, don’t waste any time: Make yourself available to visit it ASAP.

If after the visit, you are still in love with the property, don’t hesitate to make a conditional offer. There have been times where a buyer takes a few (too many) days to think it over, and while they’re meditating on it, another more decisive buyer comes along with an offer that will leave everyone else out.

Get all your questions clarified before making an offer: Average sold price, conditions to include, etc. And after that: Be diligent. Be decisive.

It will be very sad to see your dream home going to another person.

What’s the difference between pre-qualification and pre-approval?

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer!

• With a pre-approval in hand, you now have the power to negotiate.
• The seller will take your offer much more seriously knowing you are already approved by a lender.
• Pre-approval can also shorten the time it takes to close, making even a lower bid attractive to sellers who are seeking to move quickly.

What will my monthly payments be?

Read more >>

CHMC and Federal Government Refunds on Eco-Friendly Homes

CMHC (Canadian Mortgage and Housing Corporation) is now offering a 10% refund on the Mortgage Insurance Premium when purchasing a energy-efficient property. There are several green projects in the market right now, we’ve talked about Square Benny being one of them, and now with the explosion of eco-friendly developments, you have more options in finding an energy-efficient home in Montreal.

The CMHC discount is also extended to home-buyers or Home-Builders and existing home-owners who are planning on making energy-saving renovations.

Bonus: Longer Amortization

You could also have the added flexibility of a longer amortization (the period of time required to repay your mortgage) from 25 years to a maximum of 35 years for loan-to-value ratios in excess of 80% (or 40 years for loan-to-value ratios of 80% or less), significantly reducing your monthly payments.

To get the details of this program: How it works, who can apply for it, etc. Visit the CMHC website

Other Discounts by the Federal Government

“The Government of Canada actively promotes energy conservation and initiatives to reduce greenhouse gas emissions that contribute to climate change.”

This is another program I found through the CMCH website, the refunds are offered by the Federal Government. I’m not really sure if they’re both available at once, or if you get the refund from one entity you can’t get it from the other. Something to find out. In any case, here are the details:

Eco-Energy RetroFit (Homes): is available to owners of single family homes including detached, semi-detached and low rise multi-unit residential buildings. The maximum grant you can receive per home or multi-unit residential building is $5,000; whereas the total grant amount available to one individual or entity for eligible properties over the life of the program is $500,000. It also helps home buyers choose an energy efficient new home. Visit their website for more info.

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