Tag Archive for real estate transaction

Laurin Jeffrey | April 28, 2011
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Own home affordable to most

By Anna Vozza, The Windsor Star

Many people are often surprised to learn that the costs of owning a home can be substantially lower or comparable to those of renting. There are also many financing options and a wide variety of choices that can make owning a home more affordable for first-time buyers.

Before you start searching, it’s important to determine how much you can afford to pay. You may learn the modest home you can afford is a far stretch from your “dream home,” but it will be a start and will require a lower down payment.

To determine how much you can afford, enlist the services of a Realtor. A Realtor will help you identify what you want and take you to homes and neighbourhoods that reflect your lifestyle, needs and price range. They will also help you understand property financing, taxes, insurance and the steps you will have to take as a first-time buyer to complete a real estate transaction.

The vast majority of homebuyers lack the funds required to buy a home without assistance from a bank or other lender. Most people will need to arrange a mortgage. Before a lender will give you one, they will need to determine the amount you can afford. A lender will look at how much you will need for the initial purchase of your home, including your down payment and other costs such as legal fees, inspection fees and taxes. They will also look at the ongoing costs of paying back the mortgage, along with monthly costs for utilities, maintenance, insurance and annual property taxes.

Most lenders will not permit a borrower to take on a debt load the borrower can’t carry. That’s why reputable lenders “qualify” potential borrowers. Usually, lenders say your monthly housing expenses (mortgage payment and taxes), plus condominium fee, if applicable, should not exceed 30% of your monthly gross family income. This is called your gross debt service ratio. Lenders also use a second calculation called total debt service ratio.

Generally speaking, no more than 40% of your gross family income can be used when calculating the amount you can afford to pay for mortgage payments and taxes, plus other fixed monthly expenses. These other fixed costs are your ongoing commitments and can include auto, student or personal loans, as well as credit card payments.

The hardest part about buying a home for most first-time buyers is getting that down payment. You may have the ability to keep up with the monthly financial obligation (mortgage payment, insurance, utilities, property taxes, maintenance), but finding the down payment may be a problem. Once you decide what you can afford and find the home you want in the right neighbourhood at the right price, here are some of the sources you can tap into for a down payment.

- Savings and investments: If you have a Registered Retirement Savings Plan, you can withdraw $20,000 per individual ($40,000 per couple) without any tax penalty as long as you pay the amount back within 15 years.

- Mortgage insurance: Until recently, to qualify for a conventional mortgage, a buyer needed to put down in cash at least 25% of the purchase price. But a new law that came into effect last year lowered the level to 20%. To put down less than 20%, a buyer has to qualify for a high-ratio mortgage. By law, this type of mortgage must be insured against default in payment. The cost of this mortgage insurance depends on the value of the house and the size of the loan. Most mortgage insurance companies offer a five% down option. This program insures the mortgage on your home against default in payments for up to 95% of the lending value.

Contacting a Realtor is step No. 1. They will help you understand how all the programs work and ensure that you get the maximum benefit possible. He or she will guide you through the entire home-buying process and explore all your options to get you into your very first 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, Mortgages | Tags: , , , , , , , , , , , , , , , , , , , , ,
Laurin Jeffrey | October 30, 2010
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Six questions to ask before you buy a home

Angela Self – Globe and Mail

Wondering if you should continue renting or take the plunge into home ownership? To help you clarify this debate, we’ve compiled a list of questions from various professionals associated with a real estate transaction. Answering the right questions about the early stages of the home ownership process will likely help you sit confidently with your decision to stay put, or leap with eyes wide open into the market.

Why do you want to buy a house?

This is an important question for first-time buyers, according to Sarah Wilson, a Calgary-based Certified Financial Planner and consultant with T.E. Wealth.

First-time buyers have to ask themselves if they want a home because their friends are buying and they think it’s the next step or because it actually fits into their long-term life plan and will be a smart financial move. Ms. Wilson adds that we should have an overall financial plan that takes into account our short and long-term life goals, to ensure that such a significant investment makes sense. If you don’t have a financial plan, then locating a certified financial planner for a discussion would be a smart step.

What values will I honour by buying or renting?

Christie Mann, a Toronto based leadership coach and consultant, asks clients how buying or renting will align with their life vision and specifically their five-year plan. Travel plans, entrepreneurial pursuits and timelines for starting a family are all examples of things to consider in your five-year plan.

If you are thinking of starting a family in the next five years, for example, will the home you are considering accommodate such a life change? If not, you should think about the financial implications of selling a few short years after buying.

Why take a five-year view? According to Ms. Wilson, we have to realize that when we’re buying a home, we’re buying into a market, and if we are going to buy, we need to be in our home for at least five years. If we sell our homes prior to the five-year mark, there’s a higher risk we won’t get our money back due to the fees associated with the transaction, compared to the increase in the home’s value.

Are you ready for home ownership?

Owning may match up with your values and fit neatly into your financial plan, but that might not mean you’re ready for ownership. When you own, you see the property in a different light, according to David Fleming, founder of TorontoRealtyBlog.com.

“You look at your floors and think about replacing and upgrading them. You get down on your hands and knees and plant flowers. You paint. You decorate. You want bigger and better for your house,” Mr. Fleming says.

However, he adds that people should be ready to “rake leaves, shovel snow, take out garbage, and deal with racoons, damp basements, and leaky roofs.” If a problem arises, you can’t just call the landlord and be done with it. You’re now on the financial hook for the repairs and the upkeep. You inherit the good and the not-so-good elements of home ownership when you’re handed your keys.

Do you have a steady job and income?

It’s harder and harder to be approved for a mortgage if your provable earnings are not steady. A steady income and a reliable job make a very big difference these days, according to Mike Averbach, president of Averbach Mortgages in Vancouver. He adds that going through a full analysis of credit and income is an important first step for house-hunters because it provides an accurate feel for the amount of house you can afford and will address any possible issues before you begin your search.

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

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Category: Ajax Real Estate, Buying Real Estate, First Time Buyers, General Real Estate, Oshawa Real Estate, Pickering Real Estate, Scarborough Real Estate | Tags: , , , , , , , , , , , , , ,
Laurin Jeffrey | August 16, 2010
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Top 5 Must-Haves For Flipping Houses

By Glenn Curtis – Investopedia.com

Many people assume that they can simply 1) buy a house, 2) apply a fresh coat of paint, 3) trim some bushes, and then 4) resell the home at a profit. Unfortunately, this process, called “flipping” is not that easy. After all, if it were, everyone would be doing it.

There are several skills and people that every potential investor/flipper should have in place before even considering entering into a real estate transaction of this nature. In this article we’ll look at the top five “must-haves” you’ll need to succeed in this endeavor.

1. A Group of Experts

While a house flipper can certainly go it alone, it will certainly help to retain individuals that are familiar with the legal, accounting and construction ramifications of flipping houses.

Flippers typically work against the clock, so they must renovate a home on budget and then turn it around and sell it before the financing costs eat up their profits. In any case, a bevy of experts including a real estate agent, an attorney, a contractor or renovator, an accountant, a home inspector and an insurance agent can ensure that the work is completed in a timely and efficient manner.

2. A Handyman or Knack for Home Improvement

The house flippers that make the most money buying and selling homes tend to be handy people. That is, they have the ability to step in and lend a helping hand when time or money constraints kick in. Most flippers can do things like change a sink, install a countertop, do basic electrical or plumbing work, and/or shingle a roof.

Why is being handy so important?

The obvious answer is that if you can do the work yourself, you won’t have to pay someone to come in and do it. However, there are other advantages to being handy as well. For example, there are times when it will be impossible to get an electrician to install an attic fan on short notice. There are also times when a job must be completed without warning at the last second in order to obtain a certificate of occupancy. In these instances, having the ability to navigate your way around a tool box is very valuable.

3. A Good Lay of the Land

The buyer should know about the area in which they are buying property. A buyer should know, for example, what characteristics (acreage, number of rooms, type of home, etc) are the most desirable in the area in which they are looking to buy. Equally important is knowing what houses in the general vicinity have sold for and if there is likely to be any future development in the community (such as a new school, condominium or shopping center) as this could affect supply and demand.

4. A Good Estimator

By definition, house flippers attempt to buy a property and then resell it at a profit in relatively short order. In order to do this, however, the flipper must typically make some structural and/or cosmetic changes to make the property more appealing to the next buyer.

If the flipper underestimates the costs associated with the refurbishment he or she may be exposed to large monetary losses. Therefore, a flipper should be familiar with construction materials (their use and their cost), as well as local construction codes, the cost of local labor and the time it should take to do a given job.

This is no small feat. In fact, it takes even the most seasoned construction professional many years before he or she is aware of all the nuances that exist. In any case, before becoming involved in “flipping”, be certain of your abilities to estimate a job in terms of both cost and time.

5. A Dose of Patience

One of the biggest obstacles to making money in the real estate market is that buyers tend to overpay for a given property.

Why do buyers overpay?

Typically, buyers become emotionally attached to a property or develop some other bond with it, which in turn forces them to enter into a contract on less than favorable terms.

However, savvy flippers have the ability to avoid emotional purchases, and the desire to find diamonds in the rough and properties on the cheap. They also understand that if they aren’t buying a property at a favorable price and with favorable terms, it makes sense to simply move on to greener pastures.

The bad news is that patience is a difficult virtue to teach and hone. In general, either you have it or you’ll lose a lot of money trying to learn it. (To read more about choosing the right house, see Smart Real Estate Transactions and Investing In Real Estate.)

Bottom Line

While quitting your job and becoming a full-time house flipper may sound like an attractive proposition, be sure that you have these five “musts” before investing in a real estate project.

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

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Category: Ajax Real Estate, Buying Real Estate, General Real Estate, Pickering Real Estate, Scarborough Real Estate, Selling Real Estate | Tags: , , , , , , , , , , , , , ,
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