Montreal Real Estate Blog » First Time Buyer

The difference between pre-qualification and pre-approval?

Danuta Levitzki — Thu, 26 Jan 2012 11:30:19 +0000

Updated from our Mortgage and Financing Archives. Originally posted in March 2009

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?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain

The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval before you begin your home search.
For a free consultation, you can contact Danuta!

Posted By: Danuta Levitzki. Executive Manager of Mortgage Agency at HYPOTHECA Ac Accredited. With over 10 year experience, Danuta specializes in residential and multi-unit mortgage financing. Offering the lowest interest rates and finest mortgage service in Montreal, Qc. For home purchase pre-qualification, mortgage refinance, renewal or debt consolidation please visit www.RateDirect.ca http://www.hypotheca.net

Q & A: How Many Buying Brokers Can You Hire?

Deya Bautista — Thu, 19 Jan 2012 14:46:51 +0000

This is the first freshly written post of 2012. I hope you all had a great new years!
Today we’re posting a video shot last month, and here we discuss how many agents/brokers you (the potential buyer) can employ when looking for a property.

http://www.youtube.com/watch?v=YqDSNkCPEgs

A reader sent me the question on What’s the limit amount of agents a buyer can work with. My answer is: you can work with as many as you want, as long as you haven’t signed a buyer’s brokerage contract. Something you should know: we brokers share the same database (MLS), so chances are, if you’re working with multiple brokers, you will end up getting emails from all the brokers employed containing the same listings. [if you're giving all brokers the same search criteria]

The idea is to get fast results, right? Having to go through so many people to get the same results seems counterproductive. My suggestion: meet a few agents first, but work with the one (or two) that you like the most, the ones that gives you the best service/results. Keep in mind, however, that once you decide to make an offer in a place, you will have to commit to working with one broker, for that transaction.

Transparency is also encouraged. If you are already working with a broker, when approaching a new one, please be clear and let them know where you stand.

Further questions and comments? Feel free to send me an email.

More videos are now available at the Montreal Real Estate Blog

Posted By: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 http://montrealrealestateblog.com/

How to Protect Yourself When Buying New Construction

Deya Bautista — Thu, 02 Jun 2011 13:20:51 +0000

Following up with the article: New Condo Building Collapsing. Another great article by William Marsden from the Gazette, on how to protect yourself when buying new construction. The tips are quite interesting, I will add my own comments between the square brackets [ ]

The New Home Guarantee covers new condos that are part of small, one-to-fourstorey condo buildings. Highrise condo buildings are covered by private insurance plans.

Like all insurance policies, it’s important to understand fully the conditions of the Quebec government’s plan so you can protect yourself at every step during and after the construction process.

HERE ARE SOME TIPS:

1. Check with the Régie du bâtiment that the contractor is properly licensed and check his experience. Just because he holds a licence to install a foundation doesn’t necessarily mean he knows what he’s doing. [ Very Important!! - also check for any awards won by them, written articles and reviews about their company etc]

2. Make sure you read the entire condo purchase agreement so that you know exactly what you are buying and so that you understand your rights and liabilities relating to your condo and your building’s common spaces. This will help you make sure that at the end of construction, you get exactly what you were promised and that you are not liable for unforeseen payments to, for example, unpaid subcontractors.

3. The warranty covers up to $39,000 as a down payment. So don’t pay more than that. If the contractor goes bankrupt, you will probably lose anything above that amount. [ Again, do your homework about the previous work from the company to establish their credibility, financial strength, etc. Some units, depending their price, will require more than 39K as a downpayment ]

4. Get to know your fellow condo owners as soon as possible. Don’t wait until after construction is finished to form a condo association. Hire your own inspector to assure the work is done properly while the building is still under construction. Get the inspectors to supply written reports on the progress. If you can’t afford an inspector, call the city and get them to inspect the construction progress.

5. At the end of construction, your association must hire an inspector to inspect the entire building. Make sure that you get everything you paid for and that the work conforms with the building code. If the inspector finds any problems, make sure they are repaired before the condo association accepts ownership. DON’T make your final payment until all the work is completed to your satisfaction. Contractors might make empty promises and harass you for the money. If you give in, you’ll might never see them again.

6. Make sure that any communication with the contractor is done by registered mail so that you have an official record. You must make any claims on the warranty within six months of finding the problem, so you have to have a record of all communications. And make sure you send notification of faults immediately after they are discovered by registered mail to the administrators of the New Home Guarantee program. According to the Régie, many owners find they are not covered because they allowed a contractor to delay the work past the six-month period and then had no record of communications to prove their claim. [ Email will also work. Keep records of all of the messages sent and received ]

7. The guarantee lasts only five years.

8. Remember, in the end, only you can look after your interests. [ I could not agree more.]

What’s Included on the Closing Costs?

Deya Bautista — Mon, 04 Jan 2010 11:30:04 +0000

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:

Professional Home Inspection: Only if it’s part of your offer.
Legal fees (Notary): Costs involved in conducting a title search, drafting the title deed and preparing the mortgage, registration fees, etc.
Property Taxes and Utilities (prepaid): Sometimes the seller may have prepaid some bills before the closing date, which you will have to reimburse.
Land transfer tax - also known as welcome tax. This cost you don’t have to pay at the closing day, usually the city will send you a bill about a month (or so) after the signing date.
GST & Provincial Tax – Only if you’re buying a newly constructed home.
Home Insurance. The bank will ask you to insure your home – because they really care about your well being.
Miscellaneous: Little repairs you might want to make to the property, etc.

There is one more: Moving costs. I don’t often include it on the list because it maybe a helping friend or a relative will help you move for free, in which case you’re very lucky- and a couple of hundred dollars richer :)

Before you ask for prices…
I made sure not to place any values to the services mentioned above just because (exact) prices change often, and revising articles to change prices are not really my thing.

Your agent should give you a break down of the fees.
Don’t have an agent? We’ll be happy to help.

Buying an Income Property to Live in

Deya Bautista — Mon, 08 Jun 2009 12:24:32 +0000

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:

Let’s say you’ve found a lovely triplex with 2 bedrooms on each unit, the asking price is $450,000. One unit is vacant and the two other units are rented at $850 (tenants pay their own utilities). Revenues of ($850×2) $1,700 a month OR $20,4000 (gross) a year.
Taxes, Insurance and other expenses a year = $4500. So the net revenues are: $15,900/year.

Your down payment is 20%, which translates into $90,000. Giving you a mortgage of $360,000 amortized over 35 years at 3.5%, your monthly payment is $1,482.58 OR $17,791.01 a year.

So far the revenues from the two units alone ($15,900) are not going to cover the mortgage ($17,791.01). BUT remember that we have not consider YOUR unit into the equation.

We know we’re missing 1891.01 at the end of the year to meet our costs. And that’s what your portion of the mortgage represents!.
After all the calculations, in this particular example, it will cost you $157.58 a month OR $1,891.01 a year, to live in this property. (Taken from $15, 900 – $17,791.01 = -1891.01)

How much are your comfortable with paying each month?

This is one of the questions I often ask to first time income property buyers. Having that amount in mind, and the max purchase price given by the lender, you can begin to do a search for a good property match.

Of course, we don’t always find such great properties with high revenues priced at the right amount. The condition of the building has a lot to do with your offer, and let’s not forget: your down-payment will affect the monthly and yearly mortgage expenses, and with that, the amount of money you will pay to live in your unit.

A while back, I wrote an article on Repossessing your income property, where it was discussed the terms and conditions when taking possession of one of the units, it’s full of useful information. I invite you to read it!

Home Ownership: Quality of Life Program

Deya Bautista — Tue, 02 Jun 2009 12:20:49 +0000

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.

Finally, the Federation is preparing a position paper on home ownership that will aim to have all three levels of government implement measures that help first-time buyers. For example, the Federation would like the Canada Mortgage and Housing Corporation to use its surplus in order to establish a program that helps first-time buyers build up their initial down payment.

Helping first-time buyers purchase their first home not only benefits the economy – it also improves the quality of life of these people, and the quality of life of communities across the province. It is within this framework that the Federation will guide its political actions in order to help first-time buyers realize their dream.

About the Quality of Life Program

The goal of the Federation’s Quality of Life Program is to demonstrate the real estate industry’s commitment to improving the quality of life of communities across the province. The Program is based on five main principles that shape the political and public directions that a real estate organization should develop.

These principles are:

1. Ensuring Continuous Economic Development
2. Providing Opportunities for Suitable Housing
3. Preserving our Environment
4. Improving the Living Conditions of Québec Residents
5. Building Better Communities

Improving Life in Québec: The Federation’s First Quality of Life Summit

The Federation will be holding its first Québec Quality of Life Summit on November 25, in Montréal. The Quality of Life Summit is founded on the Quality of Life Program, which is shared by many Canadian and American real estate boards. Several conferences will be presented as part of the Summit, including one by Jean Lemire, biologist, award-winning filmmaker and mission leader aboard the Sedna IV. Recognized industry experts will also be participating in a panel discussion on home ownership. Additional Summit and registration details will be sent shortly.

STOP Paying Your Landlord’s Mortgage!

Danuta Levitzki — Mon, 13 Apr 2009 13:16:58 +0000

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. Some programs permit gift money as a down payment, and often sellers are willing to make a contribution to your purchase if they want to sell the home quickly. On top of that, the city of Montreal offers a Home Ownership Program that provides financial assistance to help first-time buyers.

Become your own landlord and build up future financial security. I’ll even show you easy strategies to speed up the pay-off of your home without making extra payment.

Call me to discuss your specific needs and we’ll find the program that’s right for you. We have a variety of low down payment and no down payment programs available.