PREPARING TO FIND THAT PERFECT HOME
When you are ready to embark upon one of the larger purchases we make in our lives; buying either your first home, or moving to a new home, there are many considerations and things that you can do in order to make the process as smooth as possible. The old adage of work smarter than harder pertains here too! Much stress and time can be eliminated with some preliminary planning.
Initially, you should sit down and crunch your numbers. How much equity do you have in your home if you are an existing home owner (approximate market value of your home less mortgage and other existing debt.) If you are a first time home owner, how much of a down payment do you have?
Always consider that when you approach your mortgage broker or bank for preapproval, your total debt to income ratio will be a major consideration. At the end of the day, you want to ensure that such is less than 36. The following is a calculator to help you figure this out. Simply copy and paste into your browser and start calculating:
‘Shop’ for more than one financial institution/broker. Discuss your financial situation with them and they will work with you to determine a comfortable mortgage amount that you can afford based on your income, assets and debt. Once you understand what amount of mortgage you can obtain and maintain, and know your down payment, get pre-approved. Once again, shop! Visit more than one mortgage broker and or financial institution. Many people make a big mistake in not doing so, as if you shop, you can save yourself thousands of dollars based upon the interest rate and term you are offered.
Now comes the fun! Sit down and establish your list. What are your current needs? Where do you see yourself in a few years? The following is provided by CMHC as a guide, of sorts: ( http://www.cmhc-schl.gc.ca/en/co/buho/hostst/hostst_003.cfm )
Your Needs — Now and in the Future
Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs.
Here are some things to consider.
How many bedrooms do you need?
How many bathrooms do you need?
Do you need space for a home office?
What kind of parking facilities do you need? For how many cars?
Do you want air conditioning? If so, what type?
Do you want storage or hobby space?
Is a fireplace or a swimming pool high on your list?
Do you have family members with special needs?
Do you want special features to save energy, enhance indoor air quality, and reduce environmental impact?
Lifestyles and stages
No matter what type of housing you choose, you must have a clear idea of your needs today as well as your possible future needs. These are some examples of questions home buyers might ask:
Do I need a home office?
Do I plan to have children?
Do I have teenagers who will be moving away soon?
Am I close to retirement?
Will I need a home that can accommodate different stages of life?
Do I have an older relative who might come to live with me?
Is FlexHousing™ for You?
FlexHousing™ is a housing concept that incorporates, at the design and construction stage, the ability to make future changes easily and with minimum expense to meet the evolving needs of its occupants.
FlexHousing™ allows homeowners to live in their home for a longer time — perhaps an entire lifetime. By adding or removing walls you can make the home suit your lifestyle.
In an adaptable home, space can be arranged and re-arranged without expensive retrofits and renovations. Designing an adaptable home involves anticipating possible new uses for rooms, potential traffic flow, and future requirements at the design stage.
What Location Should You Choose?
Location is a critical factor. A home with everything you need but in the wrong location, is probably not the right home for you. Here are some things to consider about location.
- Do you want to live in a city, a town or in the countryside?
- How easy will it be to get to where you work? How much will the commuting cost?
- Where will your children go to school? How will they get there?
- Do you need a safe walking area or recreational facility, such as a park, nearby?
- How close would you like to be to family and friends?
What is a Sustainable Neighbourhood?
A sustainable neighbourhood meets your needs while protecting the environment. Homes in a sustainable neighbourhood are located near shops, schools, recreation, work and other daily destinations. This helps reduce driving costs and lets residents enjoy the health benefits of walking and cycling. Land and services, like roads, are used efficiently. Sustainable neighbourhoods also feature a choice of homes that are affordable.
In your search for a sustainable neighbourhood, here are some questions to ask:
- Easy transportation
- Are stores, schools, recreation facilities, restaurants, and health services within walking or cycling distance? Will your children need to take a bus to school? Can they walk to the park? Can you do most of your shopping without a car?
- Are there nearby bus stops and cycling lanes? How long is the bus ride to work, or school? Can you safely bike?
- House size and features
- Are the homes compact with shared walls to reduce heating costs?
- Are homes reasonably sized with lots requiring less upkeep?
- Are there different dwelling types (such as single-detached, semi-detached, townhouse and apartments) in the neighbourhood?
- Are the lots modestly sized? Roadways narrow? Driveways/parking areas small? Do natural drain ways lead to streams or park lands? Is there native vegetation and streams with woodland edges?
- “Look and feel”
- Do the buildings have a friendly face to the street? Are the community centres, shops and meeting places welcoming?
- Are there trees lining the street? Do you find the homes interesting to look at? Do the building sizes feel comfortable to you? Are the roads easy to walk along or cross?
- Do the homes have “eyes on the street”? (In other words, are there people around who might watch out for you? Is there somewhere to go in an emergency?)
- Is there adequate street lighting?
- Are there safe places for children to play?
- Are the streets safe for cyclists and pedestrians?
- Is traffic slow moving and light?
Do You Want a New Home or a Previously-Owned Home?
A new home is one that has just been built — no one else has lived in it yet. You might buy a new home from a contractor who has built it, or you might hire a contractor to build it for you. A previously-owned home (often called a resale) has already been lived in. Here are some characteristics of each type of home.
- A new home has up-to-date design that might reflect the latest trends, materials and features.
- You may be able to choose certain features such as style of siding, flooring, cabinets, plumbing and electrical fixtures.
- You may have to pay extra if you want to add certain features, such as a fireplace, trees and sod, or a paved driveway. Make sure you know exactly what's included in the price of your home.
- Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) apply to a new home. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website at www.cra-arc.gc.ca.
- A new home will have lower maintenance costs because everything is new, and many items are covered by a warranty. You should set aside money every year for future maintenance costs.
- A warranty may be provided by the builder of the home. Be sure to check all the conditions of the warranty. It can be very important if a major system such as plumbing, or heating, breaks down.
- New Home Warranties may be provided by provincial governments. There are also private new home warranty programs. In some provinces a warranty may be provided by the builder of the home. Check with your realtor or lawyer/ notary to find out what the new home warranty program in your province covers.
- Check the internet for Home Warranty Programs in your province.
- Neighbourhood amenities
- schools, shopping malls and other services, may not be completed for years.
Building Your Own Home
Some people prefer the challenge and flexibility of building their own home. On one hand, you make all the decisions about size, design, location, quality of material, level of energy-efficiency and so on. On the other hand, expect to invest lots of time and energy.
- When the home already exists, you can see what you are buying. Since the neighbourhood is established, you can see how easy it is to access services such as schools, shopping malls, libraries, etc.
- Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.
- You don't have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house.
- You may need to decorate, renovate or do major repairs such as replacing the roof, windows and doors.