First time Home Buyers and the Mortgage Process
by Geraldine Santiago
So, you’re thinking of buying your first house. That’s great! There are a few things you need to know about getting a mortgage for the first time and knowing what banks need in order to get your application done quickly and effortlessly.
One of the things your loan officer or mortgage broker will be asking for you is to verify your income. They will need to verify your income by asking you for your T-4. (The latest one.)
If you are self-employed, there are special lending programs that are available. There are special programs for self-employed individuals because their income is not stable and tends to fluctuate depending on the season or the stability of their business.
In addition, self-employed individuals also have the ability to write-off more expenses than salaried employees. Mortgage brokers in BC have a solution for you. This is called NIQ which means “no income qualifier” and you might be able to qualify for a 5% down payment. (For more information on self-employed individuals and mortgages, please go to my blog on Mortgages and Self-Employed individuals.)
A copy of your letter from your employer will also be needed. This letter will outline how much you are making, how long you have been in the company and state what your position is in the company. This letter is signed and dated by your employer which also shows that the position you are holding is the present time and not a letter that was written five years ago.
Your loans officer or mortgage broker will also require confirmation of your FICO score or your credit score. The better your credit score is, the better your situation will be when it comes to lending you money. Your credit score allows the financial institutions to get an idea about your payment history, whether you pay your bills on time, whether you are always late, etc. and how much debt you may have on credit cards, car loans or student loans. Remember, the banks will need information on the person to whom they are lending money to and you will go further if you have a good credit history.
You might want to get a copy of your own FICO score yourself to verify that the information they have on file is correct. Errors are made and if you have a bad credit score due to human error, you would want to fix that problem first. (i.e. They have the wrong John Smith on file who has a poor credit rating and who had gone into bankruptcy.)
Your investment and contribution, or rather your down payment is also verified at this point. If you are planning to use your RRSP contribution, a copy of this is required. Remember, you can use up to $25,000 towards the purchase of your first home so this is a great way to get into the housing market. If your down payment consist of ‘gift monies’ from family members for example, you will need a letter from the person giving you a gift money stating how much he or she will be giving you. Gift monies are typically not repaid and is not a loan from family members.
If you are purchasing a home with your spouse, and your spouse is on title, all the above apply to him or her. Your spouse will need to fill out a co-applicant application as well.
"You can have it all, but it's going to be small--Vancouver BC Real Estate"
by Geraldine Santiago "First Time Home Buyer Expert"
OK. You're a first time home buyer. You can't afford a home, you're strapped for cash, a down payment, interest rates are on the rise....Is there any relief in sight? Do I have any options?
Many first time home buyers cannot get over the sticker shock when they see the price of a one-bedroom condo in Vancouver. "I can NEVER afford that!" they exclaim. However, first time home buyers need to be aware that there are options available to them, which they probably may not have thought of before.
For one thing, buyers can decide to search for their home further away from the city-- Burnaby, Coquitlam, New West, Richmond, Delta, and Abbotsford. If, however, you don't want to bother with the commute, and you decide you want to stay in Vancouver, you'll definitely have to go SMALL. I mean, teeny, tiny, small. It's called a STUDIO APARTMENT and most first time home buyers overlook this type of property.
A studio apartment is definitely going to be small--no matter how you call it it's going to be, "itsy-bitty, mini, teeny, tiny", it is small. Typically under 500 square feet small.
But because many studios are functional, oftentimes with high ceilings and large windows, the unit does not always feel small. Some studios are lofts and the space in this case, is actually more than the square footage outlined in the floor plan. (Strata floor plans are based on square footage only.)
In addition, most studio apartments make the most of its limited space by making it multi-functional. The living area can be transformed into a bedroom during the evening, and work spaces can be hidden behind a wall. Furthermore, today's furniture are made with condo home owners in mind. Sofas and tables are built compact and take on double duty.
Studio apartments, though small, do have it all-- a functional kitchen with all the appliances, full bathroom (three piece), storage space, underground parking, in-suite laundry, the use of the strata's amenities like a fitness or club room, or both. Some studio apartments even have exclusive use of an outdoor space such as a balcony or patio.
How many first time single home buyers opt to purchase a studio apartment? Nearly 40% of my clients, who are single, first time home buyers decide to purchase a studio in Vancouver because it is more affordable than a one-bedroom unit. In some cases, it could mean the difference of being a home owner or not. The difference in price, in some cases, can be approximately 40-70k less for a studio unit than a one bedroom unit in the same building!
What are the positive aspects you ask? Some studio apartments allow two person occupancy, which means that there could be up to two people living in the unit. Consider this as well as a home owner, you are eligible for the home buyer's grant which means a reduction of your property taxes! In addition, many studio apartments are rentable. I've seen studio suites rented for up to $1500 per month. (Visit www.uniqueaccommodations.com) The sweetest aspect is this-- it is a STEP albeit a tiny, teeny baby step in home ownership!
The bottom line is this--you CAN have it all, .....but it IS going to be SMALL!
First Time Home Buyers Beware--Home Shopping & Oil Tanks
by Geraldine Santiago, Realtor and Author
Many underground oil storage tanks in Canada have reached the end of their useful lives and are beginning to corrode, rust, and leak. Leaking fuel oil tanks may create several hazards. Oil and its varpours can--
- generate a potentiall explosive mixture
- enter surface water
- enter drinking water
- contaminate surrounding (your neighbour’s) soil and property
For a first time home buyer, who would think of searching for an underground oil tank? It is difficult to know whether or not a property has an oil tank in the back, especially if the oil tank is buried underground! There are some signs such as a long pipe found in the exterior of a home, or there may be a small pipe sticking out from the ground.
Most provinces and territories currently have safety standards for oil tanks. If you suspect the home you are purchasing may have an oil tank, check with your REALTOR, and make sure you hire a home inspector who inspects the entire property. Make your concerns known to the home inspector to watch out for oil tanks as there may even be more than one oil tank located on the property. Look at the age of the house, and find out as much as you can from the previous owners. Check the property condition disclosure statement (PCDS) as well as this is now included in some disclosure statements in Canada.
If the property you are purchasing has an oil tank, make sure that the sellers are responsible for the removal, clean up and disposal of the oil tank as this is a cost you don’t want to incur. As a buyer, make sure you receive documentation such as a certificate from the oil tank removal company and pictures of the removal and disposal so that when it is your turn to sell your property, all the documentation will be in order for a clean sale.
Fast Forward to 2010 & First Time Home Buyers by Geraldine Santiago
Author and Realtor First time Home Buyer Expert
Fast forward to 2010, and first time home buyers have it GREAT. Buyers today are actually better equipped with the use of the internet, ebooks, consumer’s advocacy groups than yesteryear when I purchased my very first home.
Back then, there were no zero per cent down so it was difficult for first time home buyers to get pre-approved for a mortgage as easily as today. In addition, mortgage application forms are made easy today for the consumers. One can get a pre-approval on-line, with a computer and mouse! I remember when my husband and I went to the banks and it felt like they were pulling teeth--it was difficult for the banks to give us a home loan as we were new to the work force, and fresh out of University. Actually, we were still in University.
In addition, today there are buyer’s agents who represent the buyers and listing agents who represent the sellers. At that time when we purchased, there was no clear definition or designation. Now, I understand that in a year’s time, they will no longer have dual agency but DESIGNATED agency so that each party is best represented by their own agent. That means for REALTORS and agents, there will be no double ending the deal.
Today, the MLS listings are posted on-line, through the Real Estate Board. Before, we had to go through an agent and they were the ones who carried around this huge listings books as thick as the yellow pages and they would not lend it to buyers as it was too costly.
REALTORS today encourage that consumers hire the services of a certified home inspector so that consumers can determine for themselves the health of the home. Back then, it was not common to do so, and oftentimes, if one had a relative who was a plumber or electrician, they would “inspect’ the property with their limited capacity as a plumber or electrician.
So many things have changed from way back when I purchased my home, (as well as the price). Consumers can feel comfortable that they have the tools to get empowered. This is why I wrote my book, the “Complete Home Buyer’s Guide for Canadians” because it has everything you need to know about purchasing today and why you should take the time to borrow it from your local library, your bookstore or friend!
Let me help you every step of the way.
When purchasing a home, you are faced with a multitude of decisions! The primary one is whether you are actually prepared to purchase a home. Locating the perfect home is not always an easy task, and obtaining a mortgage loan can be a complex and tiring process. However, once you have determined that you are ready to move forward with the required effort towards your home-purchasing goal, the rewards are unquestionable.
While at your side each step of the way, I will make the process of purchasing a home easier, more enjoyable, less time-consuming, and less expensive than if you undertook this challenge on your own. I will help you prepare so that sellers perceive you as a preferred buyer, help you locate and assess properties for sale that match your specifications, and help you through the myriad of details attending the actual purchase.
I am always familiar with the current homes on the market, and I know neighbourhood values well, so I can help you determine which properties are fairly-priced and in good condition before you start your search.
You have my word that I will be there with you to help you every step of the way, right up until possession day. Many realtors overlook this very important and special day. You have my commitment and dedication to see that your home is ready to be moved in, and if there are any last minute questions you have, I will be there for you.
Possession day can be extremely stressful while you are trying to move in and the previous owners are trying to move out. There may be unexpected hiccups that you are not aware of such as the movers damaging a carpet, or tenants not having moved out yet. These are all familiar to me and I will be there to help you out.
I will be there to help you and give you peace of mind. You have my word!
Your First Steps
Your first step to buying a home is to first ask yourself why you want to buy a home: to stop paying rent? To start building equity? To have a place of your own? To raise a family? To entertain business associates? To move up to a bigger house? Next, list what kind of home you'd like and where you would like to be. Be specific. Separate the "must haves" from the "want to haves." You need to be realistic about your list as you may need to settle on some items on your list.
Think of yourself as zeroing in on a target, going from the general to the specific. Consider area (city, suburban neighborhood, country); community (north, south, east, or west side); neighborhood (older and settled or sparkling new; a particular school zone; recreational facilities; and other community services such as transportation, day care, library, stores, entertainment). Ask yourself how many minutes you are willing to commute to work.
Think about home styles. How much space do you need? Does your situation require a one-level home, or are stairs acceptable? Consider size and kind of property. Do you want a newer home, or maybe an older one to fix up? Someday you or your heirs will want to sell. Consider how long you expect to live in this particular home.
Your First Step: Loan Pre-Qualification
Once you have addressed the above needs, your next step in the purchasing process is to get pre-qualified with a mortgage company. This can be done over the phone or even online in a matter of minutes. You will need to obtain some documents such as a letter from your employer, a copy of your bank statement, a copy of your T-4 and so on. A call to your mortgage broker, or any mortgage broker on our team, is highly recommended.
Your Second Step: Choosing a Realtor
"You have my promise." Geraldine Santiago
"I will find the right home for you. Once you've been pre-qualified and know what price range you want to stay in, I can help you determine which properties fit your needs by using the (MLS) Multiple Listing Service system to locate them.
I have the best possible resources and communication systems available today to help you locate the homes on the market that match your specifications. You can even search my listings here at my website.
I Will Help You Every Step Of The Way!
I will help you complete your financing and inspections, and close on the transaction. My top priority is to make sure that your home buying experience is pleasant, cost-efficient, and successful.
Geraldine Santiago, Published Author of the, "Complete Home-Buyer's Guide for Canadians" Self-Counsel Press Ltd. (Over 7,000 copies sold!)
The Complete Home-Buyer's Guide for Canadians is written by an experienced real estate agent who specializes in working with first-time home buyers. This book is written in an easy-to-understand manner, guiding the home buyer from obtaining financing to the final paperwork. Whether it is a condominium, a newly built house, or a resale home, the Complete Home-Buyer's Guide for Canadians will help you decide which home is best for you.
The following questions are answered in this book:
- Where can I get a mortgage?
- What kind of interest rates can I expect?
- What is my borrowing capacity?
- Are financing options available for first-time home buyers?
- Can I use my RRSP for a down payment on a new home?
- What is the relationship between the buyer and seller, and the realtor representing each party?
- How do I make an offer?
- What is a fair price when I place an offer?
- How do I remove subjects?
- What does a building inspection include?
Please reserve your seat as space is limited. All classess are from 7-9pm. Check your local community centre for space availability and dates or call me directly at (604) 764-6873 or e-mail me at geraldinesantiago@shaw.ca to reserve your space!