There are lots of firsts in a person's life: first time riding a bike, first kiss, first job and first car. Then, there is the purchase of your first home.
Like any leap of faith, diving into the unfamiliar terrain of real estate can be scary and intimidating. There are the teasing ads in the paper, the flirtatious links on the Internet and the come-hither For Sale signs.
It's at this point that many realize deciding on your first condo is even more daunting than selecting an ensemble for a blind date or making the first move in the movie theatre. In fact, once you take that first-base step to condo ownership, all you really need is some good advice to talk you through it. And here you go:
From a realtor
Before you set off on your condo trek, make sure you get pre-approved for your mortgage, then you'll know your financial limitations, says Calgary-based realtor Marlene Swinton.
As a first-time buyer, you need to distinguish your needs from your wants, she adds.
Do you really need two bedrooms and two bathrooms, a fireplace and underground parking? Or are these features negotiable?
Convey this information to your realtor, who will then show you only units that fit and you won't be wasting each other's valuable time.
"The knowledge of neighbourhood is also very important," she adds. Drive around areas you think you might like; familiarize yourself with the community, its assets and liabilities.
Open houses are a great way to meet realtors. Ask questions about the realtor's business history and request references. Or ask your friends for their recommendations.
Read the condo corporation's fine print before signing. Having a condo check will give you a review of the financial status of the condo development, plans for its future, what its bylaws are, minutes of meetings and what repairs have been done and are anticipated.
Older buildings will have a reserve plan study and new ones will be in the process of creating one. Getting a copy of the study "will cost you $300, and it will be the best investment you'll ever make," says Ms. Swinton.
From a market analyst
You are able to claim up to $750 on next year's tax return, says Lai Sing Louie with Canada Mortgage and Housing Corp. Thanks to recent federal tax breaks, you can now also draw up to $25,000 from your RRSP plan to use as a down payment for your condo without penalty.
"You're basically borrowing from yourself," Mr. Louie explains, adding that you should shop around for good interest rates for your mortgage.
Interest represents the "hidden component" of purchasing a house, but is a large piece of the actual cost of home ownership, he says.
Rates are at historical lows; these days you have access to rates as low as 4% for five-year mortgages.
If you are putting down less than 20% on your property, you will need mortgage insurance from CMHC (that's set up through your bank).
From a mortgage specialist
Know how much your condo fees are going to be, recommends Royal Bank of Canada's Alex Wolder. First-time condo buyers tend to focus what their monthly payments are versus what their equity position is, such as whether they'll be able eat something other than Kraft Dinner, he says. But condo fees range from $125 to $500 per month; to get a pre-approval for a mortgage, you bank will consider an average condo fee rate into its calculations.
Should your rate be higher than that average, your pre-approval amount may be compromised.
"It could completely kibosh the deal, especially for first-time buyers who are putting down a minimal amount," says Mr. Wolder. "There is very little wiggle room."
Be sure to get an estoppel certificate, which is like a real property report when you are buying a house, wherein the condo management company verifies all condo fees are paid and there are no levies or caveats on the unit. It ensures everything is in good standing with the condo management company.
If you are doing a quick closing, you will need one of these to accompany your other condo-related financial documents.
Down payment verification is the current trend in the condo-buying industry, says Mr. Wolder.
CMHC and lenders are abiding by stricter anti-money-laundering rules and regulations than ever before.
As a result, it could be that your down payment moneys need to be on deposit for 90 days prior to applying for a mortgage. An audit goes along with every mortgage application.
From the Internet
Vancouver-based National Real Estate Institute Inc. (home-buyer.ca) offers these additional suggestions:
Examine the parking facility. Is it safe? How far do you have to walk to your unit? Is there space for a second vehicle and sufficient parking for your guests? Is it included in the price?
Look for storage. Is there enough for your bike, skis or golf clubs?
How many units are housed by renters versus owners and what percentage of tenants are allowed? The more owners that are present, the more likelihood there will be greater consideration and care of the complex. Be aware if the rental percentage is not capped at a certain amount or is over 25%.
Is the condo managed by a professional group, a resident manager or is it self-managed? Consider visiting the complex on evenings and weekends to get a feel for what is happening (parties, noise levels) at various times of the day.
SOURCE: THE NATIONAL POST