When you purchase your home, there are a number of key players who will help you along the process.
Your Realtor is your partner in the home buying process.
Once your Realtor understands what type of home you are looking for, they will begin researching the market on your behalf. They will search all the available properties for sale and will show you the ones in your price range that meet your criteria. Once you have found the home you are interested in, your Realtor will prepare an offer and represent you in the negotiation process.
Generally you do not pay a fee to the realtor who represents you when you are buying a home. The realtor is paid by the seller of the home. Realtors are licensed through provincial bodies and are knowledgeable about the markets they work in.
Your Mortgage Broker
Your mortgage broker is another key partner in the home buying process.
Your mortgage broker will take time to understand your financial needs and will research the market to find the best mortgage for you. Your mortgage broker will represent you to the lenders, and will negotiate terms on your behalf.
Usually there are no fees to use a mortgage broker, as they are paid by the lenders. There are some circumstances where lender fees will apply.
Your mortgage broker will choose the lender that best suits your requirements. The majority of your contact with the lender will be after your mortgage funds. You will receive contact information you can use when you want to make any changes to your mortgage in the future.
If you have less than 25% of the value of the property as a down payment, you will be required to have mortgage insurance. Mortgage insurance protects your lender against any losses incurred. Your mortgage broker and lender will arrange this insurance for you. There are several mortgage insurance companies in Canada including CMHC and GE.
The appraiser’s role is to provide the lender with a market value of the home. The market value is the price that the home would sell at with reasonable exposure on the market to a large number of buyers. Your mortgage broker will arrange the appraisal for you.
A home inspector provides you with information on the construction on your home. They will make you aware of any repairs that need to be done in the near future, and will let you know what types of repairs you can expect in the next few years. Your Realtor can provide you with some names of quality home inspectors.
Your lawyer (or notary) will transfer the property into your name, and will draw up and register mortgage documents. Your lawyer liaises with your lender and realtor to ensure they have all the required paperwork to process the sale. Your mortgage broker will refer you to a lawyer.
The Home Buying Process
Step 1: Pre-approval
When you first decide you want to purchase a home, it is wise to get a pre-approved mortgage. The pre-approval will tell you how much of a mortgage you qualify for, ensuring you are looking at homes in your price range.
Step 2: House Hunting
Once you know your price range, your realtor will begin researching the available properties and will show you homes that fit your criteria.
Step 3: Offer in and Accepted
Once you’ve found the home you are interested in, you will make an offer, subject to financing. Your offer may also have other subjects, such as subject to a satisfactory home inspection or subject to review of the strata minutes. Once the offer is accepted, you will provide a copy of the purchase agreement to the mortgage broker.
Step 4: Lender, Insurer, Appraisal
Your mortgage broker will work with the lender, insurer and appraiser to get you final approval on the financing. Your mortgage broker may ask you for further documentation at this time. You will want to collect the requested paperwork and submit it to your mortgage broker in a timely fashion.
Step 5: Firm Sale
Once you have met all your financing conditions, your mortgage broker will instruct you to remove the subject to financing. This is done with your realtor. You may remove other subjects at the same time, such as ‘subject to a satisfactory home inspection’. Once all the conditions are off, you have a ‘firm sale’. Instructions from the lender will be sent to the lawyer’s office at that time.
Step 6: Moving Details
The lawyer is now receiving and preparing mortgage documents. You will want to use this time to start preparing for the move. Please review our moving checklist to see some of the steps you may need to take.
Step 7: Lawyers
The lawyer will call you into sign, usually about 3-4 days prior to the completion date. The completion date is the day that the money is given to the sellers and the property is transferred into your name.
Step 8: Move In
Usually your possession date will be the day after the completion date. This is the day that you receive keys and can move into your new home.
Step 9: First Mortgage Payment
Unlike with rent, you pay your mortgage at the end of the month. (If the purchase of your home was completed on June 1, and you chose monthly payments, you will not have a mortgage payment until July 1. If you chose weekly payments, the payments would come out at the end of every week.) You will receive the details of the mortgage repayment from your mortgage lender.