Page 7 - REN Nov/Dec 2021_Loralee Burns

Real Estate Terms Cheat Sheet Now that you know how much you can afford, your REALTOR® can help determine what type of neighbourhood you
want to live in and what type of house you want to buy.

Buying a home
Tori Mcneely courtesy REALTOR.ca
uying a house can be an exciting, but complex process. So You’ve found your dream home…now what? It’s not time to pack your bags just yet. There are many expenses you
when you embark on your journey, one of your first stops must consider beyond the purchase price (the price you’re willing to pay for the house).
Bshould be familiarizing yourself with the lingo. You need to consider how much of a down payment you can afford. This refers to the initial up-front portion you

We’ve curated helpful information from our Homebuyers’ Road pay against your home purchase. The larger the down payment, the smaller your mortgage. Are you a first-time
Map and Tips for Buyers, to share with you some of the most home buyer with a Registered Retirement Savings Plan (RRSP) account? You can now withdraw up to $35,000 without
important terminology a new buyer needs to know—from pre- paying income tax through the Home Buyers’ Plan.
purchase to post-purchase.
Other factors you may want to consider at this stage are:
Before you buy • Property taxes: This annual fee, imposed by the local government, pays for services like public education, local
police and libraries.
First things first, you need to find yourself a REALTOR®. A REALTOR®
can bring you peace of mind thanks to their experience and • Home insurance: This is a form of property insurance protecting you financially in the event of damages or
losses to your home and its contents. In most cases, you can include these payments in your monthly mortgage
professionalism. From helping you find a home that meets your payment.
needs and price range, to negotiating your purchase price, • Home inspection: Even if the home appears to be flawless, many home buyers arrange a home inspection as
directing you through complex contracts, a REALTOR® is an a condition of their purchase. Hiring a professional to inspect the overall condition of the home can cost a few
important part of your home buying journey. hundred dollars, but can reveal any serious defects.
While it’s exciting to start visiting open Now that you have figured out all of the costs associated with your purchase, you’re ready to make an offer. An offer
houses, you must first determine how much to purchase is a formal, legal agreement made between the buyer and seller which often contains certain conditions.
a mortgage lender is willing to let you borrow This is commonly known as a conditional offer and includes factors that must be met in order for the sale to be
to purchase your first home. Your mortgage successful such as financing terms, appliances and fixtures, inspections and the physical condition of the house.
is a loan that can help you cover the cost of Generally, the seller has between 24 and 48 hours to accept, reject or counter-offer. This is known as irrevocability of
buying a home. How much you’re able to the offer, the length of time the seller has to consider your offer.
borrow will depend on factors including
your total current debt, monthly household Once your offer is accepted, you will need to determine your closing costs. This includes your mortgage broker’s
income, how long you’ve been at your current fee, real estate commissions, moving costs, title insurance—an insurance policy protecting you against challenges
job and how long it will take you to pay it related to the title of your home—and more.
back: Introducing the amortization period. While there’s a lot more lingo in the real estate dictionary, hopefully you now have a better understanding before
A longer amortization period means lower taking plunge into one of the biggest single purchases you’ll ever make. These resources available on REALTOR.ca
monthly payments but higher interest rates. may also help you along your journey to homeownership: g

Mortgage lenders use Principle, Interest, Taxes and Heating (PITH) as a tool to ensure mortgage affordability by • Tips for Buyers
determining the monthly payments that can be made by the home buyer. The REALTOR.ca mortgage affordability • Mortgage Calculators
calculators can help you perform your own PITH test to estimate affordable mortgage payments. • Homebuyers’ Road Map

When taking out a mortgage, home buyers grant the bank a lien on the property. This gives the bank the right to seize
your property in the event you don’t repay your mortgage.

Types of mortgages:
• Fixed-rate mortgage: Your interest rate is locked in for a specified period called a term. Your payments stay the
same for the mortgage’s term so you will not pay more even if interest rates increase over time.
• Variable rate mortgage: The rate of interest you pay may change if rates go up or down.
• Conventional mortgage: Requires a down payment of 20% or more of the property’s value. You’re not required
to get mortgage default insurance with a conventional mortgage.
• Closed mortgage: The mortgage cannot be paid off early without paying a prepayment charge.
• Open mortgage: A mortgage that can be paid off at any time during the term, without having to pay a charge.
The interest rate for an open mortgage may be higher than for a closed mortgage with the same term.

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