the perfect homeIn a world of changing needs, finding the perfect home oftenrequires making immediate decisions and compromises. Because ofthis, prospective buyers may begin to wonder if their dream abodeis even out there. At Sage Real Estate, we are confident the perfecthome is within reach. Every day, in neighbourhoods throughoutToronto, we help clients acquire the home they’ve dreamed of.Of course, it’s not as simple as sifting through MLS propertiesonline, showing, and then selling. Finding the perfect home is reallyabout listening: having your individual needs and wants understood,your priorities and concerns addressed, and your tastes andlifestyles considered.It’s also about agent networking: drawing on previously establishedrelationships and resources and exchanging information andsupport. It’s about overall professionalism: maintaining honesty andintegrity, dedication, respect, and commitment. It’s also about plainhard work: employment of energy and hustle, passion, and drive.By working with a Sage Real Estate agent who understands justwhat ‘perfect’ means to you, your perfect home is within reach.
a b o u t s a g e r e a l e s tat eSage Real Estate stays true to its vision of a next-generation realestate company - one that continually raises the bar on service,professionalism, and performance. It is a vision that consistently attractstop-producing Realtors, all of whom produce very satisfied clients.Sage Real Estate has also invested heavily in industry-leadingtechnology. By establishing state-of-the-art office support and creatingmarketing and customer-relations programs, Sage Real Estatedemonstrates its dedication to the profession which enables its Realtorsto provide their clients with the very best resources available.Sage Real Estate truly cares about making its list of very satisfiedclients grow one client at a time. It is our hope that your name will beadded to that list.
h o w r e a l e s tat e a g e n t s w o r k f o r yo uWith a wealth of online resources, an increasing ‘for sale by owner’ market,and countless real estate cable TV shows, it’s not surprising that somehomebuyers consider adopting a ‘do it yourself’ approach as their option ofchoice when deciding to purchase real estate.For most people, a real estate professional is an indispensable partner inthe home-buying process. While buyers today are more educated aboutreal estate than ever before, all the research in the world can’t match anexperienced agent’s understanding of today’s market. Without the pavementpounding and advance scouting an agent does on behalf of their clients,prospective buyers might overpay for a home or lose out on the home oftheir dreams simply because they do not have the same type of resourcesthat an agent does. An agent is also completely objective and professionalwhen discussing their opinion of the property being considered for purchaseunlike a parent, spouse, partner, or best friend.The buyer’s agent is typically compensated by the seller, which meansbuyers have nothing to lose and everything to gain by tapping the expertiseof an agent. From the moment you select a Sage Real Estate agent until theday you move in, our team will be working for you.Anyone can purchase a house; however, at Sage Real Estate we prideourselves on finding you a home. The right home not only fulfills yourcurrent needs, it continues to be right for you as time progresses. Buyingthe right home has long term personal and investment benefits whereas thecosts of buying the wrong home can be immeasurable.
THE BUYING PROCESSg e t t i n g s ta r t e dTo the uninitiated, the process of buying a home may appear to be relativelystraightforward; however, there are dozens of variables and pitfalls to avoid inany transaction that can make home buying quite complex. If you are organizedand prepared the process will not only be easier and less stressful, you will bewell-positioned to take advantage of an opportunity when it presents itself.Here are some steps to take before beginning your search.
Yo u r Pat hway H o meTh e B u yin g P ro cess1 C h o o s e you r Re a l Estate Team 2 Choose Your Sa ge Rea l Esate Agent C h o o s i n g a n a d vi s o r to g u i d e 3 U nd erst a nd Ag ency Rel at i o ns hi p s Buy ing a ho m e is a B uy ing a hom e is a collaborative e ffort . yo u th ro u g h a tra n s a c ti o n i s a s colla borat ive effort . Each member of your team i m p o r ta n t a s b u y i n g th e h o m e i ts e l f. Each member of your team plays an important role. plays an important role. 4 G et a M ortg age P re-A p p roval A m ortgage pre -approva l i s 5 Create Your Wish List P r i o r i ti ze yo u r wa n ts & 6 Know Yo ur P ro p ert y Ty p es Every neighbourhood in e sse n t ial an d in cre dib l y e a sy needs before beginning t he c it y offers a va riet y of to at t ain . your search. housing st y les.
7 F in d You r H o me Look at eve ryt h in g, ke e p 8 Ma ke a n Offer Wh e n yo u f i n d a h o m e yo u a b s o l u te l y l ove, i t ’s i m p o r ta n t 9 U nd erst a nd The Ro l e o f Yo ur L awyer Your lawyer will protec t your track of what you see, and be to a c t q u i c kl y. rights and ensure you actually sure to give your salesperson get what you’re paying for. honest feedback. 10 G et I n su ran ce Se e k qu ot at ion s from re levan t in su ran ce 11 Com plete the Tra nsa c tion Your Sage real estate agent 12 Move Ahea d As you’re set t ling into your new hom e, expe rt s for e ach t yp e o f we’re st ill working. will make sure everything is in su ran ce you re qu ire. in place for a smooth and efficient closing.
THE BUYING PROCESS1b u y i n g a h o m e i s a c o l l a b o r at i v e e f f o r tYou will need to acquire your own team of professionals to support youthroughout the process.Your First String Players Are:1. The Listing Agent/Salesperson2. The Selling or Co-operating Agent/Salesperson3. Lender4. Appraiser5. Inspectors6. Lawyer7. Insurance BrokerSupporting Roles:8. Home Security Specialist9. Moving CompanyUnderstanding the parts each one plays will allow you to work with themin a mutually beneficial way.
THE BUYING PROCESS1buying a home is a collaborative effort1. The Listing Agent/Salesperson: 6. Lawyer:Works with each homeowner (Seller) to market a home. The Listing Your lawyer handles much of the paperwork involved and facilitates theSalesperson works for the Seller. transfer of the home’s ownership. They also ensure that you receive good title to the property you purchase.2. The Co-Operating Or Selling Agent/Salesperson:This is the Agency role a salesperson plays for most buyers. 7. Insurance Broker:The co-operating or selling agent works with buyers to help them locate Property insurance will be required for your new home. In securingexactly the right home to meet their needs. The co-operating agent works insurance for your property, you might opt for other insurance coverage asfor the Buyer. many insurance brokers offer complete packages for a reasonable amount. Please review the Insurance section in this guide.3. The Lender:Unless you have all the necessary funds to purchase the property, you 8. Home Security Specialist:will require a mortgage from a lender. There are many different types of Although burglar alarms are not essential, homeowners value the peacemortgage loans, all of which are reviewed in detail in the Financing section of mind having a home security system brings. With advanced technologyin this guide. now incorporated into many systems, some home alarm systems contain freezing temperature alerts in case of furnace malfunctions and flood alerts4. The Appraiser: in case of back-ups.The property must be appraised to make sure it is worth the full amount ofthe loan that the lender is planning to make. 9. Moving Company: Good movers are worth their weight in gold. Negotiating for replacement5. Inspectors: of articles carelessly broken is not fun, so ensure the moving company youThere are many inspections that can be obtained on any home. employ is fully bonded and has provided you with several references.The basic ones are:• Building inspection. This detailed mechanical and structural homeinspection is used to assist in understanding the condition of the propertybeing considered for purchase. Also helps with budgeting for required repairs.• Pest control• Environmental (if applicable)You can obtain a useful list of questions to ask potential building inspectorsunder the Buyer’s section of our website at SageRealEstate.ca.
THE BUYING PROCESS2c h o o s i n g a s a g e r e a l e s tat e a g e n tChoosing an advisor to guide you through a transaction is as important asbuying the home itself. Homebuyers should give just as much considerationto hiring a buyer’s representative as sellers give to hiring a listing agent.That means conducting interviews, seeking referrals, and researching thebrokerage as well as the salesperson.It is important to ask potential agents a number of questions relating to theirexperience, comfort levels, and routines. It is also important to listen for thequestions they ask you to see if they are intent on understanding your needsand if they are committed to fulfilling your wants.Experience in your preferred neighbourhood and the style of home youwant is important. The comfort level that is established between you andyour agent is equally important because buying a home is a highly personalexperience. Ultimately, you only work with one agent so it should besomeone you like and respect and who feels the same way about you.You must have complete trust in your salesperson of choice. If you feel agenttrustworthiness is not there, keep on looking.Learn more about the agents of Sage Real Estate at www.sagerealestate.caThere is a handy questionnaire in the Buyer’s section there for you to usewhen interviewing salespeople.
THE BUYING PROCESS3u n d e r s ta n d i n g a g e n c y r e l at i o n s h i p s‘The salesperson works for me, right!?’Your salesperson will work on your behalf to find you a house and will negotiate for iton the best terms possible for you if you retain the salesperson by signing a BuyerBrokerage Agreement.Buyer AgencyIf you sign a Buyer Brokerage Agreement then your agent is called the SellingAgent or the Co-operating salesperson in the transaction. They work exclusively torepresent and protect their buyer’s best interests. Selling or Co-op agents do not owetheir allegiance to the Seller so they can fight on their buyer’s behalf to get the houseon the best terms for the buyer. The Seller’s interests are protected by the listingagent of the property.Who Pays The Salesperson?In the case of Buyer Brokerage, the Selling Agent can either be compensated directlyby the purchaser or be compensated through the Listing Broker from the proceedsof the sale. Buyers are usually only responsible to directly compensate the SellingAgent if they purchase a property which has not been listed for sale. Buyer BrokerageAgreements clearly detail any responsibility for payment of commissions. Buyersshould discuss the type of agency relationship they desire to have as well as Realtorcompensation with their Realtor. Please read, review, and ask questions of yoursalesperson until you completely understand.Where Do I Go From Here?After reviewing and understanding the forms it will be necessary for you to chooseand authorize the appropriate representation. This is to be done before you can lookat homes. Representation agreements are now required by law in Ontario if youpurchase a property through a registered real estate sales representative.
T IME TO GET YOUR F I N A N C I A L HOUSE I N OR D E R
THE BUYING PROCESS4g e t t i n g a m o r tg a g e p r e - a p p r o va lIn today’s home buying environment, a mortgage pre-approval is not onlyessential, it is also incredibly easy to obtain and can be done over the phoneor in person. A mortgage pre-approval lets you know the maximum mortgageamount the lender is prepared to lend you. It also demonstrates to a sellerthat you are a serious, willing, and capable buyer. It goes a long way toprovide you with the lender’s formal loan commitment once you have foundthe home you would like to buy. There is a specific mortgage section locatedin this guide.
THE BUYING PROCESS5c r e at i n g a w i s h l i s tAlmost every home purchase involves some degree of compromise which iswhy you must prioritize your needs and wants before beginning your search.When deciding to purchase a home, think about the following:• Three features a home absolutely must have in order for it to be in the running.• Additional features that are essential for you.• What else would really make you happy?Sage Advice For Home Buyers1. Location, Location, Location !You’ve heard it before, and it’s true! Buy into a location that you predict will be equallyattractive in the future and you most likely will have made a good investment.Remember, you can change a house but you can’t change its location.2. Check Out the SchoolsThe school district is important even if you don’t have children because at some point,you might decide to resell your home. It is not uncommon in Toronto for some peopleto move into an area just because of its close proximity to a particular school.Re-visit point one, above.3. Energy Efficient Houses Save Thousands of Dollars in Utility Bills Over TimeIf the house you’re considering purchasing isn’t energy efficient now, makecertain it becomes so once it’s yours.4. Trial Run Your Commute During Rush HourDrive, walk, or use “The Better Way” to get yourself to work during peak periods fromthe house you are considering buying. If the commute is unbearable, it’sbest to find out now.
THE BUYING PROCESS5c r e at i n g a w i s h l i s t5. Want Your Equity to Increase Exponentially? Buy a Fixer-UpperBuyers will pay top dollar for a good house in a demand area that is in reallygood condition. Give your equity position a terrific boost by purchasing theclassic “fixer-upper”. If you pay to have the kitchen and bathroom remodeledyourself you not only get the benefit of living with your own design choice butyour home instantaneously becomes worth much more. Your Sage Real Estatesales representative can tell you which renovations reap the best returns.6. Do a Credit Check on YourselfMake certain there are no errors on your credit report. If there are, take steps torectify them before they adversely affect your mortgage pre-qualification. Reviewthe video section for Buyers at our website SageRealEstate.ca for information onhow to obtain your own credit report free of charge.7. Clean Up Your Credit – Pay Off Debts and Don’t Incur More!Make all your payments on time. Even if your credit history has been througha bad patch or two, lenders are more forgiving to borrowers who have seen theerror of their ways and have recently been making regular on-time payments.This is a time in your life to be financially prudent.8. Interest Rates Low?Go for a longer term, fixed-rate mortgage or a variable-rate mortgage that willallow you to lock in to a fixed term if you see interest rates on the increase.9. Buy So You Can ExpandBuy a house that can expand along with your family’s changing needs. There aretimes when trading up is appropriate and there are also times when the need topurchase another home could have been avoided had you bought a home thatwould have accommodated minimal expansion.
THE BUYING PROCESS6to r o n to : a va r i e t y o f h o u s i n g s t y l e sFrom towering skyscrapers to sturdy bungalows, Toronto’s housing stock is amongthe most diverse in the world, giving homebuyers virtually limitless options whenlooking for a home to call their own. Almost every neighbourhood in the city offers avariety of housing styles and a choice between existing, new construction, orrenovated homes. Here is a brief rundown of the various types of residences you’remost likely to encounter during a home search in Toronto:Single-Family HomesOfficially defined as a residential structure that includes only one dwelling, single-family homes are readily available in most of Toronto’s neighbourhoods. Buyersshould be prepared to pay a premium for the extra land, privacy, square footage,and outdoor space a single-family home affords. The variety of single-family homesin Toronto is vast and includes bungalows, detached, semi-detached, row homes,modern homes, town homes, and multi-million dollar mansions.CondominiumsPurchasing a condominium in a multi-unit building means that the buyer owns anindividual unit as well as a share of the building’s common areas, such as the lobby,corridors, and amenity areas. Many buyers choose condominiums because theyrequire little maintenance, frequently offer amenities such as a swimming pool orfitness centre, and in most cases are relatively affordable compared to town homesor single-family homes.Because of the shared ownership, a condominium association is responsible fordecisions regarding the operations of the building and owners must abide by the rulesand regulations set forth by the association. Condominium owners also pay monthlyassessments which cover maintenance and repairs of common areas aswell as costs associated with shared amenities.In Toronto, condominiums run the gamut from new construction highrises withstriking views and luxury amenities to vintage walk-up buildings with charmingelements such as original hardwood floors and built-ins.
THE BUYING PROCESS6to r o n to : a va r i e t y o f h o u s i n g s t y l e sLoftsTraditionally, a loft is a home adapted from a large open space in a factory,warehouse, or other commercial building. Hallmark features of an authentic loftinclude high ceilings, large windows, exposed timber or concrete support columns,timber or concrete ceilings, exposed brick walls, and exposed ductwork. In recentyears, buildings in many of Toronto’s former manufacturing and industrial districtshave been converted to residential lofts thanks to demand from buyers whoappreciate the urban style and open, airy layouts. In fact, loft homes have becomeso popular that many developers now build ‘soft-loft’ or ‘loft-style’ buildings. Plentiful inToronto, these are actually new construction buildings that replicate the layoutsand distinctive styling of a true loft conversion.Town HomesTown homes are multi-level dwellings that share at least one common wall with aneighbouring home which typically has a similar façade. In downtown Toronto whereland costs are high, town homes tend to be more affordable than single-family homessince they use land more efficiently. Likewise, the common walls and roofs of townhomes lessen construction costs for developers. Town homes are usually lowmaintenance and offer buyers many of the features they would typically find in asingle-family home such as ample living space, a private garage, and an outdoorarea. Town home buyers enjoy the benefits of a strong community.
THE BUYING PROCESS6to r o n to : a va r i e t y o f h o u s i n g s t y l e sGreen TorontoThinking of living Green? Here are some considerations:• A location near public transit• Building materials containing recycled content• Renewable energy sources such as solar power• Energy-efficient windows, appliances, and heating and cooling systems• Plumbing fixtures that reduce overall water usage• Rapidly renewing or recycled materials for interior finishes, such as bambooflooring, wool carpet, and countertops made from recycled metal or glass• Low-VOC (volatile organic compound) paints, carpet adhesives, andsealants which limit emission of volatile organic compounds and therebypromote a healthier indoor environment• Native vegetation in landscaped areas or on a green roof• A landscape irrigation system that recycles rainwater• Facilities for storage and collection of recyclablesIf green features are important to you, talk to your Sage Real Estate agent.We’ll help you find a housing option that fits your needs.
THE BUYING PROCESS7l o o k i n g at p r o p e r t i e sYou are ready to begin your home search once you have obtained a mortgagepre-approval, decided on a real estate agent, selected your buyer representation,and completed your wish list.The Buyer’s ResponsibilitiesShare your wish list and your price range comfort zone with your salesperson.That information will assist them with researching the market for properties that seemto fulfill your requirements.Get Educated in the MarketAsk questions such as: What are current market conditions? What is happening in themarket in your particular price range? What are the price trends in the locations thatinterest you?Look at EverythingThe first series of showings should give you an overall understanding of what isavailable in the marketplace. There is no home listed on the market by any realtor thatcannot be viewed through your Sage Real Estate sales representative.Now is the Time to Explore AlternativesKeep an open mind. As you inspect various possibilities within your price range, youwill be more comfortable narrowing your search to specific parameters and you will beable to assess various alternative housing styles, configurations, and conditions.Tell Your Salesperson Your True Feelings about the Houses You’re SeeingHonest feedback efficiently steers your salesperson towards your goal. It is importantto discuss your impressions and reactions to properties confidentially with your salesperson in a frank and direct manner.
THE BUYING PROCESS7l o o k i n g at p r o p e r t i e sKeep Track of What You SeeUse the ‘Individual Property Viewing Score Card’ and the ‘Summary Record ofProperties Viewed’ under the Buyer section of SageRealEstate.ca to keep a record ofeach house you see. This is an essential part of your market education process andwill assist in evaluating the home you ultimately decide to buy.Should you go into Other Agents’ Open Houses?You may attend open houses if you identify yourself to the salesperson holding theopen house and tell them that you have a buyer’s agency contract with another salesperson. Hand them one of your Sage Real Estate Sales Representative’s businesscards. This will allow the Real Estate sales representative hosting the Open House toconcentrate on other prospective buyers. It is inappropriate for another salesperson topry into the confidential details of your home search.Outside of Open Houses, Should I see Homes with any other Salesperson?No. Once you have signed a buyer’s agency contract with Sage Real Estate itbecomes your salesperson’s responsibility to show you homes. It is unethical forother salespeople to show buyers homes if they know the buyer is under contract toanother brokerage.Inform your Salesperson of Changing Search ParametersKeep your Sage Real Estate Sales Representative advised of any changes to yourrequirements along the way. Decide to spend more money? Decide to spend less?Decide to consider other locations? Decide to only consider one location? Tell yoursalesperson so your revised parameters can be responded to immediately.
THE BUYING PROCESS7l o o k i n g at p r o p e r t i e sHow to use the Internet to Your Best AdvantageThe Internet provides a comprehensive database of current listings and almost everylisted property works its way onto several websites. Write down listing identificationnumber(s) of listings which appear interesting and record the site domain name.E-mail, fax, or telephone this information to your salesperson so they can investigateand identify.When You Find “The Right House”Our goal is to educate you so that you will feel comfortable directing your Sage RealEstate Sales Representative to proceed with the purchase of the right property whenyou see it. Timing is critical when purchasing a home and there are several strategiesthat you can use in order to be successful with any offers that you make. To help youdecide if a specific property in which you are seriously interested is indeed the rightone please review the ‘Is this the One? Let’s be Certain: A 15-Point Property Hit List’form that is located under the Buyer’s Section of sagerealestate.ca.
THE BUYING PROCESS8the abc’s of making an offerWhen you find a home you absolutely love someone else may love it too.It’s important to act quickly and make an educated offer based on a rationalapproach to pricing and negotiating that you and your agent have discussed.To start the process rolling, your agent will draw up an agreement that includesyour offering price and other terms and contingencies. Buyers often focus onprice but there are other important terms included in a real estate agreement.You can include any terms you like but remember that the more you add, themore likely the seller is to object. Here are the most common elements of anAgreement of Purchase and Sale:PriceThe market, the Buyer, and the Seller will determine the final price. Your agentwill help you formulate an offer based on comparable listings and sales, andcurrent market conditions.Mortgage ConditionA mortgage condition stipulates that you will buy the home subject to obtaining amortgage. If you cannot obtain a mortgage then the contract will be void. You willneed to establish a timeframe for securing financing.Home Inspection ConditionA thorough inspection of the property by a licensed home inspector protectsyou against structural or material problems that are not detectable in a casualwalk-through. Home inspections are just as important in new construction as theyare in resale. Buyers can’t inspect a home that isn’t built yet; however, they canrequest an inspection prior to closing. In new construction an inspector will makesure that all mechanical systems are working properly and may also spot repairsthat need to be added to the builder’s punch list (a list of items that need to becompleted). The buyer, not the seller, is responsible for hiring and paying theinspector.
THE BUYING PROCESS8the abc’s of making an offerDepositThe deposit is given by the buyer to be held in the listing brokerage’s trustaccount and secures the contract until the closing. An initial deposit usually inthe form of a cheque must be given to the seller or seller’s agent along with theoffer. Upon completion of the agreement the deposit will be applied to the downpayment and/or closing costs to the benefit of the Buyer. If the sale does not gothrough due to contingencies covered within the contract, then the deposit moneytypically will be returned to the buyer.Closing DateOne of the most important terms of a real estate contract is the closing date – thedate when ownership changes hands. This is usually the date that the seller mustvacate and the buyer may occupy the property. Flexibility on the closing date cangive a buyer a big advantage over other potential buyers and can occasionallyallow you to negotiate a lower price or other, more favourable terms.CounteroffersIn many transactions, there is a fair amount of negotiation – offers and counteroffers – before both parties are satisfied. This is one aspect of a real estatetransaction in which an agent is invaluable. Not only can an agent draw uponprevious experience and market knowledge to offer sound advice during anegotiation, they can also serve as a buffer between the buyer and theseller/seller’s agent. Negotiating for a home can be a highly charged andemotional process, and even the most emotional buyer will look like one coolcustomer behind the right agent.For some additional Hints on the Fine Art of Negotiations please visit the BuyerSection of Sage Real Estate.ca where you can also find an article on InsiderSecrets on Bidding Wars.
THE BUYING PROCESS9t h e r o l e o f a l aw y e rThe buying process involves a number of legalities and sound legal representation isnot merely a suggestion, it is a requirement. Your lawyer will protect your rights andensure you actually get what you’re paying for.What is Important in a Lawyer?Ideally you will want to use a lawyer with substantial real estate experience, aslawyers who may be excellent in one field of law might not be as strong in real estatelaw. Most transactions close without any problems; however, if there were to be somedifficulties an experienced and effective real estate lawyer is invaluable. Go with thelawyer that you feel has the right experience for your situation.How Do Their Fees Work?Toronto lawyers typically charge a flat fee for their real estate purchasing clients. It isusually beneath the law society mandated maximum tariff rates. Talk to a lawyer andget a quote. The best lawyer for you may well not be the cheapest but save moneyelsewhere. You need a good lawyer!What About The Extras?Disbursements will be in addition to the quoted fee. Your ‘Closing Costs Work Booklet’is available on SageRealEstate.ca and details the costs of typical disbursements.Your lawyer will be able to provide you with exact disbursement expenses onyour transaction.
THE BUYING PROCESS9t h e r o l e o f a l aw y e rWhat Specific Functions Does a Lawyer Perform?Before the Offer is Signed: On Closing Day:• If requested, lawyers consult with purchasers to review the offer clauses. • With mortgagee will exchange mortgage documentation for money.Will not recommend negotiation strategies but will ensure that purchaser • Meet with vendor’s lawyer at registry office.understands legal aspects of the offer. • Complete final searches. • Transfer funds.After the Agreement is Accepted: • Register deed and mortgage in buyer’s name.• Detail exact closing costs. Most of these you will have already anticipated • Pay land transfer tax.and estimated in your “Closing Costs Work Booklet”. • Obtain keys from Seller’s lawyer.• Search title.• Search taxes, utilities, building and zoning or order title insurance. After Completion:• Execution search. • Send you a reporting letter certifying your title together with the deed,• Mortgages and other financing arrangements. survey, and all other related documentation.• Verify insurance policy documentation. • Invoice you for services rendered.• Calculate land transfer tax.• Requisition letter to Seller (requesting resolution of any problems foundin searches).A Few Days Before Closing:• Address any Provincial Sales Tax issues.• Prepare mortgage documentation.• Prepare statement of adjustments.• Prepare documentation for land registry.• Accept closing funds from buyer.• Review and have buyer sign necessary documentation.
THE BUYING PROCESS10insuranceThe insurance requirements associated with home ownership can be complex as there is no one-stopinsurance shop to fill every insurance need. Some insurance is placed by your lender or mortgagebroker, some by an insurance broker, and some by your lawyer.This section provides a brief overview of the various types of home-related insurance. Please seekquotations from the relevant insurance expert for each type of insurance. Carefully review coverage,limits, restrictions, rates, and overall policy suitability to ensure that your insurance needs are beingappropriately met. You do not need every type of insurance; however, if something goes wrong theappropriate insurance becomes the bargain of a lifetime1. Homeowner’s InsuranceWhat is it?Just as one would not drive a car without insurance, one does not own a home without this basicinsurance. Homeowner’s insurance protects your home against hazards such as fire, smoke, wind, hail,and acts of vandalism. It would also provide liability coverage against injury to any of your visitors.Is it Required?Your lender will require Homeowner’s insurance coverage in an amount equal to your mortgage.This is required because the lender could be left without security for its loan in the event of propertydamage or loss.OptionsMost homeowners opt for a homeowner’s policy that also protects the contents of the home.Contents protection coverage can also be for full replacement value.HINT: Non-smokers often get rate discounts.HINT: Monitored burglar alarms often get rate discounts.Where Do I Get it?Contact your general insurance broker or agent for advice and coverage.
THE BUYING PROCESS10insurance2. Mortgage Life Insurance defects. Most policies also pay the cost of defending against any covered claim. Unlike Homeowner’s Insurance which protects you from anWhat Is It? unforeseen event in the future, Title Insurance protects you from anThis is a life insurance policy with the amount of insurance being equal undetected defect or fault in the past.to the principal amount of the mortgage. In the event of the mortgagor’sdeath, the balance of the mortgage is paid off. What is a Title Defect? The following are some examples of hidden title defects that a titleIs It Required? insurance policy could typically cover: unsatisfied mortgage, lien, orLenders do not usually make their commitment to place a residential judgment; fraudulently discharged mortgage(s); missing heirs, etc.;mortgage with a buyer contingent upon the buyer taking out mortgage life improperly executed deeds; irregularities or errors in existing surveys;insurance. An exception to this would be mortgages for very high amounts. required removal of existing improvements; unregistered easements or rights-of-way;…the list could go on and on.Where Do I Get it?Through the lender or mortgage broker at the time you take out If I Don’t Have Title Insurance, How Serious Could A Claim Be?your mortgage. It could be very serious. You would have to pay all defense costs and a claim could result in complete loss of equity if defense were unsuccessful.3. Mortgage Insurance, or Mortgage Loan Insurance, or Mortgage Title insurance means that you do not have to worry about any mistakesDefault Insurance (not to be confused with Mortgage Life Insurance) in titles.What is it? How much does it cost? Should we get it?Mortgage Insurance, Mortgage Loan Insurance, and Mortgage Default The cost of title insurance is a few hundred dollars. We encourageInsurance are all the same. They describe the mortgage insurance through purchasers to consider buying title insurance not because of the fairlyCMHC which protects lenders of high ratio mortgages against mortgagor small likelihood of an undiscovered title defect but because of the costdefault. They are not one of the insurance policies that purchasers savings provided. Some savings are even significant enough to almostconsider buying for their own benefit. completely pay the cost of some title insurance policies.4. Title Insurance What Cost Savings are there if I get Title Insurance? In usual transactions lawyers not only search title but also obtainWhat Is It? certificates of clearance from the zoning department, work orders, liens,‘Title’ legally describes the ownership of land. Purchasers want assurance hydro, etc. If the property is title insured then the lawyer can skip somethat the property they are buying will legally be theirs and they will receive of the searches as the need for them is redundant. If there were to be‘good and marketable title’ to it. Those with any claim to your property a problem discovered on any search then the insurance would pay toshould be restricted only to any mortgagee(s) and the government if taxes resolve it. As municipalities increase their search fees title insuranceare not paid. Title Insurance eliminates the risks of a defective property becomes more cost effective. On some properties the savings amount totitle by providing the compensation necessary to rectify covered title several hundred dollars.
THE BUYING PROCESS11co m p l e t i o n o f t h e t r a n sac t i o nYour Sage Real Estate agent will work closely with you and your lawyer to makesure everything is in place for a smooth and efficient closing.Typically, a day or two prior to the closing your lender will forward all loandocumentation to either the title company or your lawyer and let you know theamount required to complete the purchase. You will be responsible for bringingthe balance of your down payment and closing costs to your lawyer in the formof a certified cheque. At the closing, your lawyer will guide you through the manydocuments you need to sign.Sage Real Estate’s goal is to provide you with the information you need to feelconfident throughout this process.In addition, if you have an existing home to sell, Sage Real Estate will customizea comprehensive marketing program to help you achieve the highest possiblesales price in the shortest amount of time. For more information, ask your SageReal Estate agent or visit www.sagerealestate.ca.
THE BUYING PROCESS12a f t e r yo u b u yWhile your transaction is complete our work is not. In fact, Sage Real Many lenders offer no-cost refinancing which means they take the costsEstate maintains relationships with our clients long after closing. We are and fees associated with refinancing and roll them into the interest rate.always glad to help you find a variety of service providers and tradesmen It’s a way for homeowners to lower their monthly payment.to perform work on your home. While refinancing a mortgage has become much easier in recent years,As you’re getting settled into your new home, here are a few situations it is still a major financial transaction with important implications whichyou may encounter in the coming months and years that are important to requires just as much diligence as securing the original mortgage. Yourthink about. Sage Real Estate Agent will happily refer you to a mortgage professional to help you determine the right time to refinance.Rebuilding Your Savings And Maintaining Financial DisciplineBuyers should take time to review and evaluate their finances after a Home Improvementhome purchase. One important step to consider is setting up an automatic Whether it’s a fresh coat of paint, new hardwood floors, or a major kitchenelectronic payment with your mortgage lender which lets you avoid costly remodel, most new homeowners have at least a few projects they want topenalties associated with late payments. undertake once they move in. Your Sage Real Estate agent can help you determine the market value of improvements you are considering makingMake a plan for gradually rebuilding your savings account which many to your home.buyers deplete in order to make their down payment and pay for movingcosts. As a homeowner, it’s important to have a cash reserve set aside forunanticipated maintenance that your home may require. In fact, a generalrule of thumb is that homeowners should expect to spend about 1-3% ofthe cost of their home per year on maintenance and repairs.RefinancingKeep an eye on interest rates even after you purchase your home.If rates go down you may be able to save money by refinancing whichsimply means you take out a new mortgage at a lower interest rate thatwill replace your original loan. Another common situation that calls forrefinancing is the expiration of the initial fixed-rate period on an AdjustableRate Mortgage (ARM). If prevailing fixed-rates are substantially lower thanthe rate your ARM will carry once it adjusts, then it might make sense torefinance into a fixed-rate loan.
FINANCING & MORTGAGESfinancing & budgeting Pre-Qualification“I Need a Mortgage; Do I Go to My Bank or to a Mortgage Broker?” This is the first step in obtaining a mortgage. Pre-qualification is theYou should see both. See what your bank can do for you. Interview a lender’s estimate of your borrowing power. Your ability to buy dependsmortgage broker as well because they have access to many lenders and can on your approved capacity to borrow. In the pre-qualification processobtain quotes from the various lenders who are best positioned to meet your the lender will review your mortgage application and usually request arequirements. Mortgage Brokers understand what qualifications each lender credit report. After analyzing your credit history, income, and debts theis looking for and can structure your application accordingly. They also know maximum loan amount for which you would qualify will be confirmed.where the bargains are. Mortgage Brokers are usually compensated by thelenders they represent. Pre-Approval The line between pre-qualification and pre-approval often gets blurred.How Much Can You Afford? Occurring quickly on the heels of pre-qualification, pre-approval formalizesYou can afford a house that costs as much as the mortgage amount for the estimate of a buyer’s borrowing power and leads to provision of somewhich you qualify added to your total down payment. type of commitment or offer to place a mortgage from a lender or mortgage broker. It would involve a credit application and usually requires incomeCheck Out Your Own Credit Report verification as well. The lender carefully analyses your financial situation byLenders will ask for your permission to obtain and examine a credit report applying their established standards for underwriting.detailing your credit history. Information contained in your reportformulates their decision whether or not to lend you money. Credit reports How Much Should I try to get Pre-approved for?precisely describe existing credit card limits, timeliness of payments, types Secure a pre-approval for the highest amount for which you would qualify.of accounts, loans, balances, judgments, and bankruptcies and easily Only spend into your comfort zone but it is important to establish youridentifies any exaggerations or misrepresentations made on mortgage maximum approval parameters.applications. Credit reports are not infallible however and you should requesta copy of your own report so that you can confirm its accuracy before you Loan Commitment and Final Loan Approvalformally apply for mortgage pre-qualification. You may challenge any errors The pre-approval process concludes with you obtaining a letter or certificateand attempt to rectify wrong information before it works to your mortgage of commitment from a lender to place a mortgage with you and their finalapproval disadvantage. approval of that loan. The commitment certificate or letter is confirmation that you have been approved as a borrower by the lender for a specified amountHow to Obtain Your Own Credit History Report at specified terms. Please carefully review the letter as it usually placesThere are two main credit bureaus in Canada; Equifax, and Trans Union of caveats on their final loan approval. Lenders usually reserve the right to haveCanada, both of which will provide you with a free copy of your own report. their own appraisers confirm market value of the house you want to finance.Visit the Videos for Buyers under the Buyer’s section of SageRealEstate.ca for They may want to ensure that the house complies with their underwritingdetails on how to go about it. standards, verify information, or re-check your credit before granting final loan approval. Carefully review approval documentation with your lender or mortgage broker and discuss any implications of buying a house without a financing condition.
FINANCING & MORTGAGESfinancing & budgetingGet Your Pencils Out! Closing Costs EstimationWhile your bank or mortgage broker will be able to tell you the exact Part of your available cash will have to be kept aside for expensesrange for which you can be approved, it is a good idea to also calculate incurred to complete the sale. Please review the closing costs work-what you feel comfortable spending. You must recognize and accept the booklet section of the Buyer’s section of SageRealEstate.ca where theextent of the financial commitment you are about to undertake as you costs are outlined. Even though you will not be able to establish thewill likely be making mortgage payments for many years. You may not exact expense total at this time, you should be able to arrive at a verywant to commit to monthly mortgage payments as high as the amount close approximation.for which you qualify. Only you know how much you are comfortablespending on monthly mortgage payments. How Much Mortgage Should You Carry? This calculation will allow you to determine how much you areTotal Down Payment comfortable paying on an ongoing monthly basis. At SageRealEstate.You must determine exactly how much money you now have available ca, under the Buyer’s section we have included a “Mortgage Affordabilityto invest in your down payment and closing costs. This is the total Workbook” with easy step-by-step calculations that will lead you to theamount of cash available. If you already own a home you will need principal amount of mortgage that you should be approved for and willto estimate the amount of equity you have acquired in your house so be comfortable carrying. Once you have determined that amount youthat you can add this calculation to your available savings for a down are in a position to calculate your price range.payment. This is your Total Down Payment.
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TORONTO REAL ESTATE GLOSSARYg lo ssa ry o f t e r m sAdjustable Rate Mortgage (A.R.M) Bridge Financing CommitmentMortgage with a rate that is variable. It is usually Loan that covers a borrower in-between the Written agreement that a lender will provide atied to the prime rate. purchase of their new Toronto home and the sale specified amount of funds under certain conditions. of their existing Toronto home.Agency Common ElementsRelationship a buyer or seller has with their Canada Mortgage and Housing Corporation Parts of a condo building that are owned by allToronto real estate agent. (CMHC) owners of the building, ie. walkways, elevators, Institution whose primary purpose is to administer halls, recreation facilities, etc.Agreement Of Purchase and Sale (AKA Offer) the National Housing Act and provide lenders withLegal document that outlines the terms of a insurance against high ratio mortgages. ConditionToronto real estate deal that will be signed by both Clause written into the offer which outlinesthe buyer and the seller. Cap something that has to happen before the Maximum amount an interest rate can change. agreement becomes binding. Should the conditionAmortization not be met, the negatively affected party has theMortgage payment that includes both principal Chattels option to terminate the transaction.and interest. Contents of the home belonging to the owner which are not included in the sale of a home unless Conditional OfferAmortization Period specifically outlined in the offer. Offer that has one or more contingencies that mustHow long it will take to repay the mortgage. be fulfilled in order for the Agreement to become Clear Title firm and binding upon both parties.Appraised Value A Toronto property that has no claims against it.Amount that a professional appraiser thinks a CondominiumToronto property is worth. This is usually done to Closed Mortgages Form of ownership where the owner has the titleget the value of the house for mortgage purposes. Mortgage that cannot be paid out until the end of to a specific unit and a portion of the common the mortgage period. Sometimes exceptions are elements of a building.Assessed Value made, but usually there will be a penalty charged.Amount at which a property is valued for Conventional Mortgagetaxation purposes. Closing Date Mortgage from a traditional lender such as a bank Date that the house actually exchanges hands where the value of the mortgage does not exceedAssumable Mortgage from the Seller to the Buyer. The Toronto buyer 75% of the value of the Toronto property. AnyMortgage that can be passed on from the seller to gets the keys and the Toronto seller gets mortgage greater than 75% is considered highthe buyer, should the buyer want the mortgage their money. ratio and must be insured by CMHC.and qualify. Cloud on Title Co-operativeBlended Mortgage When a claim has been made against the title of a Type of ownership wherein the building is ownedCombination of two separate mortgages. Toronto property. Typically impacts the value of by a company. In order to be entitled to live in the the property. building you must buy shares. It is typically difficultBalloon Payment to get a mortgage for a co-op without a large downOne-time payment against the principal paid at the Collateral payment and you must also be approved by theend of certain mortgages. Tangible asset that is used as a guarantee of co-op Board of Directors. payment in a loan. A house acts as the collateral in the mortgage.
TORONTO REAL ESTATE GLOSSARYg lo ssa ry o f t e r m sDeed Equity Home InspectionDocument that officially transfers ownership of a Value of the property minus any outstanding debt. Objective evaluation of a house by a homeToronto property. inspector. At the end of the evaluation a detailed Fiduciary Duty document is provided outlining the condition of theDefault Legal relationship between a buyer or seller and house.When a borrower is not able to make a debt payment. their agent. Home Warranty PlanDeposit First Mortgage Insures against the failure of the operating systemsMoney that is put down after an offer has been First mortgage on a property. It has the first claim of the home. It may cover things such as theaccepted and is held in trust by the listing agent. on the property should there be a default. heating system, central air, electrical, plumbing, and large appliances.Disbursements Fixed Rate MortgageVarious expenses and costs that a lawyer will pay Mortgage that has a fixed amount of interest paid Interest Adjustmenton behalf of a Buyer to close the sale. over a specific amount of time. Portion of interest that is paid if the closing date of the transaction does not coincide with theDischarge Foreclose mortgage payment date. For example: if mortgageWhen a mortgage has been paid in full and the title When the lender takes legal ownership over a payments are made on the 15th of the monthhas been changed to reflect that. property due to the borrower defaulting on the but the sale closes on the 10th, there will be an loan. interest adjustment for 5 days.Discount PointsFee that is charged when a mortgage interest rate Gross Debt Service Ratio (G.D.S) Interest-Only Mortgageis reduced from the current rate. One point equals G.D.S is typically used as the indicator that tells The interest is paid on a regular basis and theone percent of the mortgage value. you if you can afford a certain mortgage payment. principal is paid at the end of the term. All costs associated with housing (mortgage,Down Payment taxes, heating, and 50% of condominium fees, if Irrevocable PeriodAmount that the buyer puts down on the property applicable) should not exceed 32% of your gross The period at the end of which an offer expires.in cash: this is the difference between the annual income (income before tax)purchase price and the mortgage amount. Joint Tenancy High Ratio Mortgages Situation where two people share an equalDual Agency – (See Multiple Representation) Mortgage that exceeds 75%. These mortgages ownership share of a property. If one dies, their must be insured by the CMHC. share is transferred to the remaining personEasement instead of to the beneficiaries of the estate of theLegal right to use someone else’s land for a Hold Back deceased.specified purpose. This right is tied to the land, not When money is held back by the lender until athe individual, so it passes from the seller to the condition is satisfied. Land Transfer Tax.buyer. Tax paid to transfer a property. Homeowner’s InsuranceEncroachment Protects homeowners against damage to their Leasehold MortgageOccurs when the boundaries of some part of home caused by fire, smoke, wind, hail, vandalism Home mortgage when the house is on leased land.one property impede over the boundaries of its and slips/falls.neighbouring property.
TORONTO REAL ESTATE GLOSSARYg lo ssa ry o f t e r m sLegal Fees Mortgage PenaltyAmount charged by lawyer to execute the An agreement between a lender and borrower Amount of money paid to the lender so that thepurchase or sale of a property. where the borrower puts up a piece of real estate borrower can prepay a portion of the mortgage. as collateral for a loan to purchase that property.Liabilities PITDebts. Mortgage Broker Principle, interest, and taxes. A professional who brings together borrowersLien and lenders. Usually their fee is paid by the PITHLegal claim against real estate to guarantee lending institution. Principal, interest, taxes, and heating.payment of a debt. Mortgage Insurance PossessionListing Agreement Also referred to as mortgage loan insurance or Control (ownership) of a property.Formal agreement between the seller of a property mortgage default insurance, this is offered throughand a real estate brokerage company authorizing CMHC and covers the lender when a borrower has Power of Attorneythe Brokerage to offer a particular piece of real less than 25% down payment. A legal agreement wherein one individual grantsestate for sale. another the legal authorization to represent them Mortgage Life Insurance and make decisions on their behalf.Listing Broker Mortgage life insurance covers the mortgage valueThe real estate brokerage company that in the event of the death of the mortgage holder. Pre-Approval for a Mortgagerepresents the seller. A written commitment from a lending institution to Mortgagee lend a potential buyer a certain amount of moneyLoan Commitment Lender. at specific terms for the purchase of a property.Document that demonstrates a lender is willingto lend a certain amount of money with certain Mortgagor Pre-Payment Privilegeconditions to a borrower. Borrower. The right of a borrower to prepay some of the principal without having to pay a penalty.Lock-In Multiple RepresentationOccurs when a buyer tells the lender that they Occurs when a sales representative(s) from Principalaccept a certain interest rate for a certain amount one Brokerage represent both the listing and This is the base amount of money borrowed.of time. selling sides of the transaction. For example, the buying client of one Sage Real Estate Sales Real Estate Agent (Broker)Maintenance Fee Representative buys a property that has also been The brokerage company that represents either aAmount of money a condo owner pays each listed with Sage Real Estate. buyer or seller in the process of buying or sellingmonth towards upkeep on the common areas of real estate.the building. Open Mortgage Type of mortgage where the borrower can pay the RealtorMaturity Date debt at any time. A registered real estate sales representativeEnd date of a mortgage. or broker. Origination Fee Fee the lender receives for processing a Refinance loan application. When a new mortgage is obtained and used to pay off the old mortgage.
TORONTO REAL ESTATE GLOSSARYg lo ssa ry o f t e r m sRenewal Agreement Survey Variable Rate MortgageAn agreement to extend the mortgage for another Document that outlines the property line on a piece Mortgage that has fixed payments but where theterm once the initial term is reached. of real estate as well as the location of any fences interest rate is adjusted to market levels. If rates go and buildings on the property. up, a larger portion of that month payment goes toReserve Fund interest but the actual amount of the payment doesBank account established by a condo corporation Tenancy in Common not change.to cover major repairs to the common elements. When a property is jointly owned by a group ofThe fund is paid into from a portion of the monthly individuals, not necessarily in equal shares, and Waivermaintenance fee. each owner has the right to sell their portion. Document normally signed by the buyer which relieves the seller from obligation to a particularSeller Take-Back Term condition in an offer.Mortgage where the seller personally provides Amount of time a lender lends funds to a borrower.some of the financing for the buyer. Warranty Title Legally binding commitment that the sellerSetback Legal certificate outlining who owns a property. provides to the buyer to guarantee that the houseThe distance back from the property line is in good condition.beyond which you must get approval for Title Insuranceany improvements. Insurance that covers a piece of land. Zoning Regulations This provides assurance that the real property Criteria that regulates how a property may beStatement of Adjustments remains the property of the buyer if a claim used, typically established by the Municipality.Amount of money owed at the time of closing. against the property is processed. A property could be zoned for many different usesThe amount will be calculated by a lawyer and the including residential or commercial.adjustment will typically be the difference between Title Searchthe deposit and down payment subject to various The process of checking records to ensure thecredits and debits. seller has the legal right to sell the property.Selling Broker/Co-operating Broker Total Debt Service Ratio (T.D.S)The real estate agent who represents the Buyer in T.D.S. is typically used as the indicator that tellsan Agreement of Purchase and Sale. you if you can afford to take on more debt. Your TDS should not exceed 40% of your gross annualSpecial Assessment income (income before tax). This includes anySpecial charge a condo owner has to pay for a mortgage debt, car loans, etc.capital improvement or unforeseen expense. Trust AccountStatus Certificate Bank account used by brokers to keep depositDocument that outlines the financial and legal funds separate from other funds.status of a condo corporation. UnderwritingSub-agent Calculation of risk involved for a lender.An agent who finds the buyer for a property buthas a fiduciary responsibility to the seller.
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