Tag Archive for home inspections

Laurin Jeffrey | April 29, 2011
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Factor other expenses aside from your mortgage

Once you have set aside a minimum of 5% for the mortgage down payment, you will need to budget for closing costs

By Helen Morris, National Post

While securing a good mortgage deal is a priority when buying your first house, be sure to have enough money to cover the extras as well.

Once you have set aside a minimum of 5% for the mortgage down payment, you will need to budget for closing costs.

For those purchasing a home in Toronto, the land transfer tax can add significantly to these costs (at least for now; the city’s mayor-elect has plans to change that). However, the good news is that if you really are a first-time buyer — you must not have owned a home anywhere in the world, and nor can your spouse, while being your spouse, have owned a home — the Ontario government will rebate your land transfer tax up to a maximum of $2,000. The City of Toronto provides a land transfer tax rebate up to a maximum of $3,725.

“As a first-time homebuyer, if they’re falling under these exemptions of the property transfer tax then their closing costs should not be more than $1,500 or $2,000 on the high side,” says Cara Savege a mortgage broker with Invis in Vancouver.

As well as legal costs, Ms. Savege says that if there is no survey of the property available from within the last couple of years, many lenders have started to require you to buy title insurance, which, she says, can be around $250 for a condo but as much as $500 for a house.

If you are putting less than 20% down, your mortgage will need to be insured. Obtaining this insurance will require payment of an appraisal fee.

“Appraisal fees, if you’re putting down less than 20%, typically are about $265,” Ms. Savege says. “A lot of people have home inspections. These aren’t necessarily what we would call a closing cost, but it’s a cost involved that is typically out of your pocket.”

She adds that you will also need to compensate the seller for any prepaid bills that cover the time after your move-in date. These would include property taxes, condo fees and utilities.

Ms. Savege says when budgeting for your new home, you will also need to be ready to pay home insurance, the cost of physically moving yourself and your belongings to the new place, plus cable and hydro hookup, etc.

Once you have added up all the extras, there are a number of ways to pay for it all. If you have more cash than the 5% down payment, then Ms. Savege says you can put down a smaller (but still 5% or more) deposit and use the remaining cash to pay closing costs.

“As long as there is 5% [down payment], the closing costs can be from a borrowed source as long as it qualifies in the ratios that are acceptable to the qualifying of the mortgage,” says Ben Melick, a mortgage broker with Mortgage Intelligence in Kitchener-Waterloo, Ont. “The ideal way would be to get it possibly in an unsecured line of credit … not everybody is going to qualify for that, it depends on the client, their income, credit and repayment history.”

Mr. Melick says that borrowing for closing costs is not suitable for everyone and he would only recommend it for clients who have stable employment and whose income will likely rise. He says that clients must be comfortable with budgeting for these additional payments.

“It’s important consumers understand what they’re getting themselves into. It’s probably the biggest transaction of their life to this point,” says Peter Vukanovich, president and COO of Genworth Financial Canada in Toronto. “They really want to make sure that they have some room in their budget to live and enjoy the house that they purchased. It’s not all about an investment; it’s as much about a place to live and call your home.”

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Contact the Jeffrey Team for more information  -  416-388-1960

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Category: Buying Real Estate, First Time Buyers, General Real Estate | Tags: , , , , , , , , , , , , , , , , , , , ,
Laurin Jeffrey | September 23, 2010
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Remember Y2K? The unfounded fear lives on with HST

People are still confused about how it applies to the real estate market

Terrence Belford – Globe and Mail

If you want to compare the impact that the harmonized sales tax (HST) is having on today’s housing market, think back to Y2K. In the 18 months leading up to 2000 there were horror stories galore about the potential impact. Planes would fall from the sky as their onboard computers stopped working on the stroke of midnight. Anything with a computer chip would shut down unless remedied in advance.

In truth the impact was wildly overstated; everyone adjusted and Y2K turned out to be a tremendous yawn. Its major impact was not the reality but the effect misinformation had on consumer confidence.

People just did not understand the situation.

There is indeed a close parallel with the HST, say men like Phil Soper, president of Royal LePage Real Estate Services, Canada’s largest residential brokerage, and Jim Ritchie, senior vice-president sales and marketing at the Tridel Group, developer of thousands of high-rise condo suites.

“There is a ton of misinformation out there,” says Mr. Ritchie. “The result is that people are hanging back from making buy decisions.”

To cut to the chase, with resale homes the only place HST applies is to closing costs. There is no HST on resale homes. Yes, you will pay significantly more on things like real estate agent’s commissions, legal fees, home inspections and such but not on the price of the home itself.

With new homes, while HST applies on anything costing more than $400,000, almost all the builders in the GTA started including the new HST into their price structures a year ago. Again the only sticker shock will come when buyers sit down and face increased closing costs.

“One of the things people don’t understand is that as soon as we got the details of the HST we

adjusted prices on anything that would close after July 1 of this year,” says Mr Ritchie. “The impact had already been taken care of.”

And yet this spring and summer fears about HST continued to plague both new and resale home

sales, the pair say. In an effort to shed some light on the situation Royal LePage commissioned a

survey of 735 of its agents and brokers in British Columbia and Ontario, the two provinces where HST would likely have the most effect on housing.

The result supported what the industry felt was happening. About 86% of those agents and brokers said HST was affecting their sales somewhat and 46.7% said that confusion over the HST is still ongoing.

By comparison only 28.4% said rising interest rates were affecting business.

“We have had three significant things affecting the resale market so far this year,” says Mr. Soper. “In winter and early spring it was the boom in resales. That produced much discussion about a housing bubble that would collapse and along with it prices.

“At the time we tried to explain the boom was simply the result of 18 months of pent-up demand and that it would slow as the year went along, which it has.”

The second thing the industry had to deal with was changes to CMHC rules raising income

requirements for those hoping to qualify for a CMHC-insured mortgage. In essence that affected

anyone buying a home with less than a 20% down payment.

The third factor was continuing confusion over the impact of the HST.

Taken together they have created enough confusion and uncertainty to shake consumer confidence and lack of confidence quickly translates into a reluctance to buy a home, the pair say.

“Buying a house means you are committing you and your family to the biggest investment you will ever make and committing them for a very long period,” says Mr. Soper. “You are unlikely to do that unless you are certain of what you are getting into and certain you can keep that commitment.”

What can be done to clear the confusion? Mr. Ritchie says time will probably take care of that.

“It is just going to take a bit longer than we hoped for people to get it right in their minds.”

Royal LePage is taking a more proactive role. Mr. Soper says the company has prepared HST

information kits for its agents to give to prospective buyers band has urged both provincial and

national real estate associations to help through their own public information campaigns.

Interestingly neither man is willing to discuss the provincial government’s responsibility to prevent confusion in the first place or to step in and rectify the situation once the impact of that confusion is evident.

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Contact the Jeffrey Team for more information  -  416-388-1960

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Category: Buying Real Estate, New Homes, Real Estate Taxes | Tags: , , , , , , , ,
Laurin Jeffrey | September 14, 2010
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Inspect your home inspector

Having a detailed home inspection should give you some idea of what really lurks beneath the surface beauty of that dream home

By Helen Morris, National Post

“The function of the home inspector is to identify what we call ‘major defects’,” says Trevor Welby-Solomon, vice president, technical training, support and development at home inspection company Pillar to Post. “What we’re looking for are things that affect health and safety or something that could have a significant impact on the livability or the affordability of the home.”

Mr. Welby-Solomon says his company’s inspectors undergo a rigorous training and mentoring process before they are let loose on the public. However, in Ontario the home inspection industry is not regulated.

“Real estate is buyer beware. Home inspections is still in the Wild West,” says Ray Leclair, real estate lawyer and vice president, TitlePLUS at LawPRO. “There is no legally recognized designation of home inspector. There is nobody that sanctions home inspectors and so anybody can call themselves a home inspector. There are some very good ones. There are some that are not.”

To make sure you get a good inspector, start looking for one well before you need him.

“The difficulty is that most buyers leave it to the last minute and so this means that being able to do the research is tougher,” says Aubrey Le-Blanc, chief operating officer, Ontario Association of Home Inspectors. “As with a lawyer, you want to know a home inspector in advance. You want references…the best test is [to ask] ‘Who did you use and did you have any surprises after?’”

Mr. LeBlanc also suggests asking your real estate agent for recommendations.

In the absence of personal recommendations, the Ontario Association of Home Inspectors does provide a list of inspectors who will carry out an inspection according to the association’s standards of practice.

“We have standards of practice that are on our website [oahi. com]. It forms part of everybody’s contract, what will be examined and what won’t be examined,” Mr. LeBlanc says. “The basic principle is, if it can’t be observed, it can’t be assessed.”

Knowing what the inspector will not do can be almost as important as knowing what he will.

“It is a purely visual inspection conducted of the home and its systems, and the only controls we use are the user operator controls,” Mr. Welby-Solomon says. “The home inspector is a general practitioner like your family doctor and is not an expert in any particular field. That is why — same as your doctor would refer you to a specialist–if a home inspector sees something outside the parameters of those standards of practice, they would tend to refer you on to a specialist.”

In many older Toronto homes, Mr. Welby-Solomon says, inspectors must hunt for clues that may suggest ancient wiring or plumbing is lurking beneath.

“In the downtown Toronto area, our biggest problem is the old housing stock that has been remodelled so many times we really don’t know in a typical visual inspection what’s behind those walls,” he says.

If you discover a defect after moving in that wasn’t on the inspection report, any recourse will depend on what your particular report covered. If you’ve lived in the house for some time and see a window leak, you may not be covered.

“The [response to any such complaint] may well be: ‘Well, that was a maintenance issue’,” Mr. Leclair says. “[They may say,] ‘You should have maintained that part of it, you should have recaulked the windows. If you would have done that, they would not have leaked, so I’m not responsible.’”

While 95% of Ontario Association of Home Inspectors members and all Pillar to Post inspectors have liability insurance, Mr. Leclair warns that some inspectors limit their liability to repaying the cost of the inspection.

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Category: Ajax Real Estate, Buying Real Estate, First Time Buyers, General Real Estate, Pickering Real Estate | Tags: , , , , , , , ,
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