Mortgage Resources

The Mortgage Loan Process
Lenders & Partners
Understanding Your Credit Report
Understanding Credit Score
Lending Criteria
Free Mortgage Guide
Canadian Consumer Handbook
 

Mortgage Info
Taxes and Your Home
Learn About  Blends, Extends and Early Renewals
Does The Lowest Interest Rate Always Constitue the Best Mortgage  - NO!
Should I Refinance My Mortgage?
Mortgage Payments Got You Down?
Mortgage Life insurance - Necessary and Essential
Using a Home Equity Line of Credit
How to Pay Off Your Mortgage Sooner
Save Thousands Through Bi-Weekly Payments Instead of Monthly
Making Mortgage Interest Tax-Deductible

Buyer and Seller Info
Programs Available to First-Time Buyers
Buyer's Tips - Winning the Bidding Wars
An Easy Guide to Buying Your First Home
Negotiating Tactics and Strategies Can Make or Break the Home Sale 
Multiple Offers: How Can You Compete?
Buyer Tips for Negotiating Price
Can I Relax Now That My Loan is Approved?
No News From the Seller is Not Necessarily Good News
Why You need a REALTOR on Your Side
11-Step Program to Buying a Home
Pre-Qualification and Pre-Quantification 101
Don't Confuse An Appraisal and an Inspection
Sellers: If You Want It, Ask For it!
 

The Mortgage Loan Process

Normally starts with a telephone conversation to get an overview of your needs. You may also start by completing a brief online application, 3 to 5 minutes, on a secure website. The application goes directly into the software program that is used to obtain your credit check and connect to all the lenders. A follow-up phone call of 15 to 20 minutes and then your application is submitted. It can take from 4 to 24 hours for the lender to respond. With the approval, a meeting is arranged for a detailed review of the commitment. A sample of the mortgage closing requirements can be printed from the within the member site.

Clients appreciate working with The Mortgage Guide and technology as it:

• Streamlines the lending process
• One application, one credit check
• 40 + lenders, including broker only
• Ability to meet needs Canada wide
• Answers are obtained faster and not limited to one lender
• Flexible scheduling limits the need for formal meetings
• FREE expert advice, lender pays consulting fees *

* O.A.C., E. & O.E.

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Canadian Mortgage Lenders & Partners

There is a lot to consider when you purchase a home. My experience and business relationships with over 40 Canadian Lenders & Partners will help you make an informed decision based on the best product to fit your needs.

Have you checked your Credit Report recently? 

This important document can be YOUR FRIEND or YOUR ENEMY, depending how well you manage your credit. For example, a recent situation involved clients who allowed their MasterCard bill of $55 to lapse 4 months. The minimum payment was only $10 and believe it or not, the clients thought it best to let the bill accumulate until it was worth writing a cheque. That was not what the lenders wanted to hear! 

Simple oversights like late and missed payments can become the skeletons in your closet that are hard to get rid of. Your credit score can also be influenced by the number of inquires to your credit bureau. The next time someone offers you a gift for applying for a new card, think twice, as each inquiry impacts your overall rating. By far the worst violation and often unknown to the client until significant damage has been done, is credit fraud. Practicing safe identity discloser will help. 

As a mortgage consultant my role is to work with your application using one credit check, creating the best sales presentation possible, and finding the lender that will to allow you to move forward. Please contact me for further details on how to avoid unwanted surprises and how you can check your credit locally - for free.

If you want to hear more about the challenges of debt and credit from another independent organization visit CBC MARKETPLACE (http://www.cbc.ca/consumers/market/files/money/debt/index.html) Ensure you read the stories and watch the videos. 

This is well worth you time. (Note - there is some errors in the ranges reported for credit score  - see below.

Understanding Your Credit (Beacon) Score?

What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. 

Credit scores can range between a low score of 300 and a high of 850. The higher the client’s score is, the less likely they are to have defaulty fulfilling their loan. Only a rare, one out of approximately 1,300 people in Canada has a credit score of above 800. On the other hand, one out of eight prospective home buyers are faced with the scenario that they may not qualify for the loan they want because they have a lower score, between 500 and 600. There are fewer lenders for these applicants; but, a guarantor or co-borrower might possibility help satisfy the deal. Or just some good advise and a period of time for the score to repair itself.

Here are 5 factors and their % of impact on the score.

• Payment History 35%- pay on time, in full = best
• Outstanding Credit Balances 30%- stay < 90% available (not commonly known, i.e. with $1000 available stay below a balance of $900)
• Credit History 15% - total time credit line established
• Type of Credit10% - mix of loans & credit cards = best
• Inquires 10% - type and # of in past 6 months measured (often an issue)

Lending Criteria 

When it comes to lending mortgage money, there are four specific criteria that must be effectively addressed. In doing so, each lender must evaluates how likely you are to make your payments, and repay your mortgage in full. Part of my job involves writing a good story based on this information. No I can not alter the facts; however, a well written explanation will be to your benefit. Having someone working for you, not the lenders, is a definite advantage.   I, like you, want your application to be successful on the first attempt.

Credit History – the credit report tells all! It is your record of how well you have fulfilled past obligations. You should ask about the availability of free general credit reports.

Down Payment – normally a minimum of 5% of the purchase price from your own resources; however, you may qualify for the NO DOWN Payment Program. Financial gifts are permitted from immediate relatives if there is no obligation to repay.

Job Stability – how secure is the flow of income? Is there a three year history with the same employer? How does the future look? Is there a promotion in the works? Programs for self-employed persons are also offered with more flexibility than in the past.

Income – can your income service your debt obligations? Gross Debt Service Ratio generally limited to 32% to cover shelter costs. Total Debt Service Ratio adds in all your other debt for a maximum of 40%. Higher ratios and self declared earnings possible.

Guarantors or Co-borrowers can help strengthen a challenged application. Some lenders  will accept applications that are “outside of the box of normal lending” with assistance. Generally these applicants will pay a higher mortgage interest premium for these allowances. 

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Taxes and Your Home 

GST and your New Home
GST is not applicable to the purchase of all homes. Only new homes are subject to GST but they may qualify for a GST rebate. It does not matter whether you are buying a fully detached home, semi-detached home, condominium or townhouse, the entire purchase price including the land is taxable. If the property is a rental property, there is no rebate available of the GST.

However, if the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price. For primary residences costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $8,750. This equates to approximately 4.5% tax on the purchase price.

For homes over $350,000 and under $450,000, the tax rebate declines to zero on a proportional basis. For each $1,000 of purchase price above $350,000 the maximum rebate of $8,750 is reduced by 1%. For example: 

If your purchase price is $400,000, you are $20,000 over and must reduce the maximum rebate by 50%. As such the maximum rebate of $8,750 reduced by 50% equals $4,375. Therefore the GST payable would be $23,625. 

For a priced at $450,000, the rebate is reduced 100%, which means that you pay the full 7% GST on the purchase price.

GST and the Resale Home
There is no GST on the purchase price of a used residential home. The definition of "used residential property" includes an owner-occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. "Used" residential property is one that has been occupied as a residence before you bought it. Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it, regardless that it was never owner occupied.

GST and the Real Estate Transaction
GST applies to most of the services provided in completing the real estate transaction and is not reduced even if a rebate is calculated for the purchase price of a home. The different services that apply include, but are not limited to, realtor charges, legal fees, appraisal and inspection, and so forth.

GST and  Rent and Condo Maintenance Fees
There is no GST applicable on residential rents or condominium maintenance fees. However, any services employed surrounding the rental of a property such as a landlord services and maintenance, are taxed.

Land Transfer Taxes
As a purchaser you need to check with provincial regulations whether there are land transfer taxes that may be applicable. Contact us for more details.
 

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Learn About Blends, Extends and Early Renewals 

Early Renewal
Some financial institutions allow their mortgage holders to renew before the term has expired by paying a small administration fee. This would be a good option to examine if current interest rates are considerably lower than what you are paying on your mortgage and if you intend to average down to a lower mortgage payment. A simple example of how this works is as follows. 

• You are 5 years into a 10 year term. 
• Your interest rate is 10% 
• The current 10 year rate (it does not have to be the same term) is 5%. 
• By renewing early at 5% you extend your mortgage term to 10 years, but your blended rate is 7.5% over the entire 10 year term.

Increase and Blend

If you've paid down your mortgage and / or your home value has increased, and you would like to release some of the equity, it may be possible to increase and blend. A blend allows you to increase your existing mortgage and the new funds will be at current prevailing mortgage rates which will be blended with your current rate proportionally. Consider the following scenario: 

• Your current home value is $200,000 and your mortgage is $100,000 
• Your interest rate is 6.5% with 3 years remaining. 
• You desire an additional $25,000 for home renovations. 
• Current interest rates for the remaining 3 year term are 7.5% 
• You have qualified for the increase with your lending institution at the new blended rate.

Keep in mind, that in many cases the lender will round this rate up to the nearest 1/8th or 1/4 of a percent – i.e. 6.75%.

Blend and  Extend

Now that you understand early renewal and increase and blend, we can look at what it means to blend and extend – this is where you decide to increase your mortgage and also renew to a different term. Consider the following scenario:

• Current interest rates for a five year term are 7.75%. 
• Your blended mortgage is $125,000 at a rate of 6.7% for the next three years. 
• You want to extend your mortgage to 5 years.

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Does the Lowest Interest Rate Always Constitute the Best Mortgage? – NO! 
Comparing Mortgage Incentives and Discounts

Better Mortgage Rates – Getting The Best Deal
As Canada’s leading independent mortgage team, there are two things that our Mortgage Consultants constantly hear about our service – how low our mortgage rates are and how easy the mortgage process is when dealing with a knowledgeable professional. With so many lenders now competing for your mortgage business, it is increasingly difficult to know what is best for you. That's why mortgage consultants are there – to ensure that you get what you deserve, the best rates and the best products given your personal situation.

Lenders offer different rates and different incentives. There is the cash back incentive, line of credit, coverage of different costs associated with a real estate transaction and so forth. It's a lot of shopping that you don't want to do, don't have the time to do, and quite frankly, can't do to the same extent as a professional.

Let's take a look at an example to show a comparison of what different incentives mean. Your current mortgage is $100,000 and you have three competing offers to evaluate: 

• 3/4% off the current posted rate (8%) 
• 1.5% cash back off the mortgage amount. 
• 1/4% of the current posted rate (8%) and $800 towards associated fees with closing the mortgage transaction. 

 Obviously, from a purely financial perspective, 3/4% off of the posted rate is the best scenario. However, consider that you may need to purchase some goods for your home, the cash back would be considered the best scenario or the blend depending on what you require.

As stated above, understanding the incentives and your personal situation will dictate what is the best-case scenario for each person. We can help you through this whole process.

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Should I Refinance My Mortgage? 

Refinancing an existing mortgage can make sense when the homeowner wants a lower interest rate than they are currently receiving on their funding. The result is a lower mortgage payment or an acceleration of the payment process. It would seem obvious that everyone would want to trade in their higher rate of interest for one that is lower, so why is this even a question? Well, in short, there are penalty costs to closing out an existing mortgage obligation, as well as incidentals such as legal, closing and even appraisal costs. The mortgage industry rule of thumb is that refinancing becomes worthwhile when your current interest rates is two percentage points or greater than the current market rate. You have to factor in all the costs incurred in refinancing, as well as how long you are going to remain in the current home, as it takes time to recoup those initial losses and then realize savings. We can help you determine whether you should refinance your mortgage or not. 

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Mortgage Payments Got You Down? 
by Julie Garton-Good

Canadians are in love with their homes. But the romance can quickly sour once monthly mortgage payments become a financial stretch. It can happen innocently when overtime is trimmed, a growing family puts financial demands on the household budget, or when consumer debt starts to mount. One thing is for sure – ignoring the problem won't make it go away. In this article, we'll help you assess options before the mortgage monster brings you to your knees with late payments and possible foreclosure.

Even though you were financially qualified by the lender's standards when you took out the loan, financial strength can change over time (as well as your perception of how much payment you can handle.) Trouble signs that the mortgage is financially stifling include making payments later each month, paying less on credit card debt in order to scrape the mortgage payment together – perhaps even borrowing money from your credit cards to help fund a shortfall. Once these red flags appear, it's time to turn the mortgage monster around before it's too late.

Your first step should be to determine if it's financially feasible to commit to this size mortgage payment for the long haul as well as whether the present financial crunch is short-term or long term. For example, is it likely that previous overtime could be reinstated in a few months, making the payment easier to make? Can you and/or do you want to take on a part-time job, obtain new full-time employment to substantially increase your income (without creating new debt) or make family budget cuts to make money stretch farther each month?

A second part of evaluating a hefty mortgage should be whether or not you're mentally committed to making a large payment for the long haul. It's much easier for buyers to be motivated to make large mortgage payments during the "homebuyer honeymoon" phase of ownership when the blush is on the new paint and the ceramic tile still gleams. After a while, you may re-order your priorities and realize that a large house payment is not for you. If this is the case, consult with your lender about the financial pros and cons of your options before taking any action. The lender might be able to refinance the loan into a lower interest rate and/or place you in a mortgage with a longer payment term to lower your monthly payment.

Don't forget the possibility of selling your current house and purchasing a more cost-effective one. And since most mortgage payments are comprised of principal, interest, property taxes and insurance, whittle down any of the components and you have potential savings. While the real estate agent would be the obvious professional to pencil this out for you, don't make the a hasty mistake of jumping from the pan into the fire. Unless the agent can show you a strong net gain in dollars and cents from the sale and repurchase, you'd be better off troubleshooting your existing problems. This is especially true if you haven't owned the house long because selling and repurchasing can deplete most of your equity in new closing and purchasing costs, leaving you with fewer financial options and less equity.

One thing most lenders learned from the recession of the early 90's is that working with mortgage consumers is important for the long-term welfare of lending institutions and the economy. But it's up to borrowers to proactively contact the lender and seek alternatives at the first sign payments fall behind. (It's interesting to note that while most lenders are happy to talk with you at any time about your loan, some loan types won't allow the lender to work out payment alternatives until the borrower has missed two payments in a row.)

But eventual alternatives are available to borrowers with late payments (depending on the type of loan and lender.) These could include making interest-only or partial payments for a time and/or adding late payments to the back of the loan term. When working out payment alternatives, it's to your advantage to negotiate late fees and penalties that have accrued on delinquent amounts since they can easily total several months of additional mortgage payments added back into the loan. What if payments are several months behind before you contact the lender? Do you still have a chance at payment options? Yes, but based on the time that has elapsed your options may be minimized.

Don't forget that by this late date, it's likely that the lender has sent you one or more "late" notices/letters, requesting that you contact them. Ignoring these notices may indicate to the lender that you really don't take your obligations seriously and could limit work-out options on the mortgage.

Be prepared to share with the lender ways you could catch up the payments. This could include any wage increases you're receiving soon, how you've restructured debt to ease cash flow, and/or other cash infusions you're expecting soon (like an income tax return.) You and the lender are looking for a long-term fix to your payment problems – not a temporary one. So if a suggested repayment program won't fit in your budget, be honest. Let the lender know what amount/time frame you can handle. If a meeting of the minds isn't reached on catching up late payments now, you may be destined to repeat the delinquencies all over again. But next time, the options could be even more diminished.

What if late payments mount up and it's clear that a borrower can't extract himself from the situation? Is giving the property back to the lender a solution? Known as "a quit claim" the borrower gives the lender the property via a "deed in lieu of foreclosure". This means that instead of a formal foreclosure on the courthouse steps, the lender agrees to take back the property (plus any equity held in it).

While financial binds can visit at any time, it's what the mortgagor does with the problem that counts. Contacting the lender early, keeping in touch regarding payment options, and being committed to pay for the long haul are trademarks of the serious borrower. After all, it's your home and you deserve to keep it. 
 

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Mortgage Life Insurance – Necessary and Essential 

Some may consider mortgage life insurance as an option, however it may leave a family in dire financial shape if the primary income earner dies. With the increased financial obligation arising from taking out a mortgage, mortgage life insurance protects one's family if that obligation cannot be met due to a death. Your mortgage consultant can help you find a supplier and give you peace of mind that your family's obligations will be taken care of should you die.

Depending on the policy, the insurance will cover up to a maximum amount, and may cover more than one borrower. The premiums are based on age (if a joint policy, the older applicant) and amount of mortgage owing, and are usually combined with your regular mortgage payments The cost of the insurance is usually based on a set amount per thousand of mortgage owing with consideration given to the age of the applicant at the time application. This cost will differ depending on the supplier and your Mortgage Consultant can help you find the best deal.

Mortgage life insurance may not always be appropriate. Obviously, if you do not have a family, no beneficiary and no one residing with you, then mortgage life insurance will not be needed. Also, you may have life insurance that will more than adequately cover any financial obligations. It is your decision, but you may want to speak to a professional to determine whether mortgage life insurance is appropriate for you. 

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Using a Home Equity Line of Credit 

A home equity line of credit is available to you if you have more equity in your home than your original down payment. By using your home as equity you may be able to get cheaper financing with more flexibility. The most money that you can receive through a line of credit is 90% of the appraised value of your home, however this then becomes a 2nd mortgage on your home. A secured line of credit can be obtained up to 75% of the appraised value.

Just because you have a line of credit does not mean that you have to use it. It can be considered as security in case a sudden shortfall in funds occurs. You can withdraw the money whenever you need to and can repay it either in one lump sum payment or in parts. Lenders usually do not require that payments are made on the principal, but will always require monthly interest payments be made. The interest rate on the home equity lines of credit are usually at a rate at or above prime.

You can also use your line of credit in whatever manner you want. Remember, with any investments that you make using your line of credit, the interest on the monies borrowed for the investment are tax deductible against your income earned.

There are also fees that come with getting a home equity line of credit – appraisal fees, legal fees, disbursement fees, GST and so forth. We can help you to find the lowest cost fees out there.

In conclusion a home equity loan may be an inexpensive and flexible source of financing. However, take caution in how you use this money – do not spend it freely on that which does not provide a long-term benefit. The benefits of this security can become a financial burden quickly if a time comes when you need the funds and they are hanging in your closet as not-so-trendy clothes.
 
 

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How to Pay Off Your Mortgage, Sooner! 
By Anne Marie Froud

If you're waiting to be mortgage-free in twenty-five years you're missing the opportunity of a lifetime. Let me show you why. Let's say you took out a $100,000 mortgage today, at 8.50%, amortized over 25 years. Your monthly payment will be $795.36. In 25 years, you would have paid $238,609.06 for the mortgage. If you increased your monthly payments by just $50 per month, for the lifetime of the mortgage, you will pay off your mortgage in 20 years and 8 months. You would realize a total interest savings of $27,285.36 over the life of the mortgage.

Now let's take the same situation and say you paid just $1000 once a year, against your outstanding principal. Your mortgage will now be paid off in 16 years and 8 months; an interest savings of a whooping $51,891.49. Imagine the savings if you could pay more than $1000, a year against the principal! Doesn't it make sense then, that when you take out a mortgage that you also have a mortgage reduction plan in place? 
 

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Save Thousands Through Biweekly Payments Instead of Monthly! 
By Anne Marie Froud

Most people get paid on a weekly or biweekly basis. Nowadays, very few individuals get paid monthly. Therefore, it makes good sense to make your mortgage payments as often as you are paid. Making weekly or biweekly payments also has a dramatic effect on how fast you pay off your mortgage. Let's say you took out a $100,000 mortgage today, at 8.50% amortized over 25 years. Your monthly payment will be $795.36. In 25 years, you would have been paid $238,609.06 for the mortgage.

Now let's take the same monthly mortgage payment, divide by two, for a biweekly payment of $397.68. By paying biweekly you will pay off your mortgage in 19 years and 9 months with an interest savings of $34,222.80 over the life of the mortgage. A bonus, simply because you were smart and coordinated your mortgage payment day with your pay day! A word of caution! Not all weekly or biweekly payments will give you these results. Make sure that your mortgage company is calculating your weekly or biweekly payments properly so you can start saving now. 
 

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Making Mortgage Interest Tax-Deductible! 
By Ron De Silva

Can borrowers with existing mortgages make the interest on a mortgage tax-deductible? Yes, depending on their financial situation. Let's say you had a $100,000 mortgage at 8% and $100,000 in other investments. Sell your other investments and pay off your mortgage. Now, after a time lag, arrange a new mortgage for $100,000 and buy back those assets. The interest on this new loan used for investments is tax deductible. Consider the positive, financial implications of this transaction. The original interest expense on the first $100,000 mortgage was approximately $8,000. This $8,000 was paid in after tax dollars. If you were in the 50% tax bracket, you just reduced your taxable income by $8,000 and a tax saving of $4,000 for the year. The best time to consider converting to a tax deductible mortgage is when you have an open term on your existing mortgage or when the mortgage becomes due, without incurring discharge penalties.

Make sure that you have written documentation showing that the money was borrowed to earn income. Revenue Canada will insist on it! 
 

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Programs Available To First Time Buyers 

There are a number of programs available to first time buyers, that aid their ability to become homeowners. One such program is the ability to buy a home with as little as 5% down. In some instances you may qualify to purchase a home with No Money Down. For more information about this program, contact Tim. These programs give people an incentive to purchase by creating an opportunity to own their own home without having to accumulate a large down payment. There are special terms and conditions attached to many of these programs. For instance, insurance fees apply if the down payment is below 25%, and at the highest end equals approximately 3.75% of the mortgage amount. Please click here for more information.

There is also the federally instituted Home Buyers' Plan which allow individuals to take advantage of their RRSP without being penalized. Of course there are conditions that have to be met by the individual or individuals over time, and the property has to be a qualifying property, but nonetheless, this program is a great incentive for individuals to own their own home. Click here for detailed information on the Home Buyers' Plan and check to see if the property you are considering purchasing is a qualifying property.

There are also numerous mortgage products available from lenders that an Mortgage Consultant can explain to you. You should take into account that the first year of owning a home is when individuals have the most difficulty in making payments since they have apportioned large amounts of funds to the down payment. A lot of lenders also have cash back mortgages which give the consumer a percentage of the mortgage back in cash for their own use – closing costs, mortgage payments, furniture, incidentals arising from moving and so forth.
 

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Buyers Tip: Winning the Bidding Wars 
by Marcie Geffner

Hot real estate markets bring out the worst in everyone. Sellers become greedy and demanding. Buyers become desperate, frustrated and disillusioned. And real estate agents get caught in the middle as they try to negotiate purchase contracts that are acceptable to both sides of the transaction.

Along with frayed nerves, hot markets mean multiple offers will be received for just about every for-sale home. These bidding wars are great for sellers, but they add to the "freaked out" factor for buyers. How can you buy the home of your dreams when several other people are also bidding on it? Here are five tips: 

• Make your best offer. Let's face it, the bottom line is the most important consideration for most sellers. They're naturally looking to sell their home for the highest possible price. If you want to win a bidding war, offering the highest price – something attractively above the asking amount – is a sure way to get the seller's attention. Most sellers who receive multiple offers only seriously consider those at the top of the price heap. 
• Cover the seller's costs. Of course, price is only part of the equation when it comes to the seller's net proceeds from the sale. An offer with a slightly lower price can triumph if the buyer agrees to incur more of the transaction costs, like the penalty on discharging the seller's mortgage. 
• Show you're serious. Offer to make a large money deposit and as large a down payment as you can. Putting more money on the table up-front shows the seller you're serious about the transaction and willing to put your money behind your intentions. 
• Get pre-approved. Attach a copy of your mortgage pre-approval letter to your purchase offer. A pre-qualification letter is helpful, but a full approval, subject only to an appraisal of the property, is even better. Sellers favor buyers who demonstrate that they're financially able to close the transaction. Agents advise getting your pre-approval letter from a local mortgage broker or lender who has a good reputation among the local agents. 
• Don't add unusual or unnecessary contingencies or requests to your offer. Sellers know extra contingencies (e.g., the approval of in-laws, the sale of another residence) can delay the transaction or create a loophole for the buyer to bow out of the agreement. Special requests (e.g., the right to purchase appliances or move in early) complicate the offer and distract both sides from more important elements. On the other hand, don't waive standard inspection and financing contingencies unless you thoroughly understand the considerable risks. 

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An Easy  Guide to Buying Your First Home 

A lot of prospective homebuyers do not know where to start or what to look for when buying a new home. Here is a basic step by step guide that will help you on your way: 

• Decide what you want – depending on your situation and lifestyle different amenities will reflect the areas which will be of the most benefit. However, this has to be balanced against the price range in which you can qualify or feel comfortable being in. 
• Get a pre-qualification – nothing feels worse than finding the ideal home in the perfect area, and then not being able to get the financing to close the deal. A pre-qualification will provide as a reality check prior to mapping out your life in a home that you cannot afford.
• Find a realtor – although not imperative, a realtor knows the process inside out, knows how to negotiate a deal, and possesses a wealth of information and contacts that can answer your questions and put you at ease. Tim can recommend a realtor to you, as well as any other related professional you need – lawyer, appraiser, insurer etc. 
• Get a written pre-approval – by calling, filling out an online application, or speaking to one of our mortgage consultants you can be pre-approved by any one of our numerous lending partners. After that, there is no more worry about the ability to complete your home transaction. 
• Go out and get that house – it's now time to go out and find the home that fits all of your criteria. Remember, use your realtor or any other information source as much as possible to ensure that you are getting what you are bargaining for. 
• Negotiate an offer on the property – if you are not using a realtor, or you want to have a better understanding of the negotiation that is taken place, read "Negotiating Tactics and Strategies Can Make or Break The Home Sale". 
• Finalize an offer on the property – After a successful negotiation, you now have your home. To finalize the deal you need to have the home inspected by a professional home inspector, and you need to get a lawyer. We can provide you with all these contacts, and can help you take care of the details. Our association with the  Canadian Lawyers Network, a national association of law firms that specialize in real estate and mortgage transactions, ensures that you receive top quality service at extremely competitive pricing. 
• Be prepared – As your closing day comes closer and closer, don't forget all the other things that need to be done – i.e. fire insurance. We help you to ensure that the mortgage transaction goes smoothly and with as little stress as possible. 

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Negotiating Tactics and Strategies Can Make or Break the Home Sale 

In a perfect world, real estate closings would occur over night, sellers would keep every promise made, and both buyers and sellers would negotiate openly and fairly. Unfortunately, welcome to the real world where buyers whittle at the purchase price, closings are postponed, and both sets of players use negotiating gambits to win advantage. 

No matter which side of the transaction you're on, it's vital to learn to identify various negotiating techniques and their respective antidotes to achieve a win/win real estate transaction. 

Negotiating Tactic #1: Nickel-and-diming 

Antidotes: 
As the seller, it's not necessarily price but net proceeds that you should focus on. Some lower-price sales can actually put more money in your pocket than a higher offer that asks for various terms and conditions that you are not prepared to deliver. As the buyer, remember that everything is give and take; and in tough seller markets, you stand to lose the property to a higher offer if you play the nickel-and-dime game too long. If you really want the property (and can financially afford it) play the cheap card in moderation and give the seller a fair offer. 
 

Negotiating Tactic #2: Good guy/bad buy 
This gambit occurs when a party wants time before making a decision (often on a counter offer) and/or wants to sway the direction of the sale. 
 

Antidotes: 
If you're working through a real estate agent, he/she will probably try to present the offer to both spouses simultaneously. If you're working alone as a for-sale-by-owner, make the appointment to present for a time when both spouses are present. If only one of the parties shows up, ask if joint consensus is needed to make the final decision or if s/he is empowered to speak for both parties. Get signatures on all paperwork as soon as possible. 

Negotiating Strategy #1: Higher authority 
One or both of the players must defer to a third party for answers and/or approval. The higher authority could be a lender, an appraiser, a relative, and even a boss. 

Antidote: 
If you're making an offer that requires a response, set short time frames for the other party to respond back unless unreasonable (i.e. out of town buyer). Communicating to the buyer that you know s/he is capable of making sound decisions, with or without a third party, will quickly tell you if a higher authority is needed. If so, consider it a necessary roadblock with a timeframe that you'll have to deal with. 

Negotiating Strategy #2: The stall 
The stall is a decision not to make a decision. 

Antidote: 
Ask the stalling party to isolate their concerns about the offer. While you need to build the party's desire to accept the offer, don't forget that you have a powerful negotiating tool – revocation of the offer before acceptance. While this may seem like a dire measure, there's no harm in communicating to the party that you understand this option – This may be just the nudge needed to precipitate a decision. 

Negotiating Strategy #3: Reduce-it-to-the-ridiculous 
The idea is to make something you're negotiating for seem so insignificant, that the other party would appear a fool to say no! 

Antidote: 
As the seller, turn the table and show the ridiculousness of a buyers comments without insulting them – i.e. equate a sum of money into cost in cents per day to buy the house. 

The bottom line is that neither buyer nor seller gets to win all of the marbles; contrarily, no one should lose them all. Identifying negotiating gambits and more importantly, their antidotes, can help you structure a win/win transaction where all parties feel as though they've compromised, but won. Good luck with productive and fair negotiating! 
 

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Multiple Offers: How Can You Compete? 
by Blanche Evans

In a hot market, there are more buyers than homes for sale. Prices may rise, and the days a home is on the market may shorten to a week or even less than a day. Some homes will sell before they are even registered in the local MLS. That means that sellers are often presented with multiple offers. How can you position your offer to be the one the seller accepts?

The best way is to gain an understanding of how multiple offers work and how they benefit the seller. Multiple offers mean that the seller has his/her pick of offers, but that doesn't necessarily mean a disadvantage for you as a buyer. You just have to determine how badly do you want this particular home. If you want to compete in a multiple offer situation here is what you will need to know:

Price and Terms
There are two things that matter to the seller – price and terms. They want the highest price possible, and the best terms available. Both of these areas leave room for negotiation. Just because a seller is entertaining multiple offers doesn't mean you don't have a chance. You just have to hit the right note with the seller that the other contracts don't.

Just to give you an idea of how important terms are to the seller, let's look at a hypothetical situation. You offer a seller the highest price for his/her home, but you put in the contract a contingency that you must sell your home first before you close on the seller's home. It may seem reasonable to you, but these are terms that the seller has no reason to accept. Why would s/he wait for you to sell your home first?

The seller will only accept terms which meet his/her own needs, so keep contingencies to a minimum. Ask your agent to find out from the seller's agent what terms will be most favorably viewed by the seller.

If you can't get there first, get there the best way you know how
In a multiple offer situation, the seller is not under any obligation to negotiate with the first buyer who submits an offer. So, if your offer is not the first offer, don't panic. Because the seller has the liberty of choosing the best offer to negotiate, your offer stands a chance of being noticed.

As you already have learned, the seller will accept the offer that best reflects his/her needs. They not only consider price, they also look at such things as financing and possession dates. That means room to negotiate for you.

Believe it or not, the highest price doesn't always buy the home. Sellers have a number of needs aside from price; they want a quick closing, or a delayed possession, or they may wish to exclude items in the home, and so on. Any offer which puts any of these goals at risk will not be accepted.

A buyer may make the highest offer, but perhaps has not been qualified by a lender. A seller who accepts an offer from an unqualified buyer is taking a substantial risk. Should the offer fall through because the buyer fails to qualify, the home will lose valuable marketing exposure and advantage. In a hot market, many sellers won't even entertain offers presented by unqualified buyers. (Hint: Get pre-approved for a loan. Not only will you know exactly what you can spend, you will demonstrate your seriousness to the seller.)

Your seller may have a special need that is more important to them than price. For example, your seller may have a need to sell quickly, but remain in the home for a period of time until school is out or until a transfer takes place. Your ability to negotiate on this point may be more important than coming up with the highest dollar amount. You can offer a short-term lease post-closing or offer to delay possession to accommodate your seller.

You can do a number of things to get the seller's attention – offer to pay full price, or a little above the asking price. Work with your agent to determine the seller's "hot" buttons, and act accordingly within your budget and your own needs.

Deadlines can be deadly
Don't assume that the seller has to respond to your offer by your deadline. Deadlines are only important to the seller if s/he plans to either accept your offer or wants to keep the negotiations going.

By the same token, if the seller counters your offer and gives you a deadline for accepting, and another offer comes in that is more attractive than yours, the seller can withdraw his/her counter offer to you in writing and accept the other offer.

Don't falter in the negotiations
Don't assume that because your seller is negotiating with you that s/he can't entertain other offers. All it takes is for one party to make a change that the other party doesn't accept and negotiations are over.

In fact the seller's agent is under no obligation to let your agent or you know if there are other contracts on the table or not. The seller may be waiting to see your best offer before accepting another offer that may already be on the table. Multiple offers are often used by sellers to improve upon the asking price or terms. The sellers agent may be instructed by the seller to ask the buyers to "submit improved offers."

This is the time another offer can slip in and take your momentum away.

Answer promptly and with as much generosity as you can muster. Don't nickel-and-dime the seller with requests for small repairs, or complicate the contract with contingencies. Just ask for a repair allowance and take care of the problems yourself.

Hot markets don't stay hot forever
Hot markets may be hot for a while, but there may come a time when they will cool. The home you are so anxious to get now may level off in value very shortly. Make sure that this is the home you want no matter what the market conditions say. The home's history may be helpful here. Ask your agent to provide you with the home's history or a history of comparables in the area. If a home has been sold several times in the last few years, the history can tell you why and how much was gained or lost by the sellers involved.

Also look at the affordability of the home. Are the extra considerations you are offering to stay in the contract really worth it? Do they price the home out of your range? Will you be able to afford the other costs associated with move-in such as furniture and updates?

Know when to throw in the towel
There may come in a time when it is wise to simply give up and move on to another home. Some sellers, in a multiple offer frenzy, will simply make unreasonable demands. Some will even demand offers beyond those which can be justified by comparables or local lender guidelines. Lenders have a ceiling on what they will lend on homes in a given area and it can be broken down by square foot, age, history, and other factors. If the comparables don't justify the price, the lender may refuse to take a chance on being the first to raise the loan limits on a certain neighborhood or home. You might as well throw in the towel. Sometimes a lender's refusal can be the kick in the pants a seller needs, however, and s/he may agree to your price when confronted by the voice of reality.

The best way to position yourself as the buyer whose offer is accepted is to work closely with an agent who can help you step by step from getting pre-qualified for a loan, to helping you find homes in your pre-approved price range, to helping you negotiate the home of your dreams. 

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Buyer Tips for Negotiating Price 
by Julie Garton-Good

You want to make every dollar count in the purchase of your home. And one way to make it happen is to employ sound negotiating tactics that make a difference between small cents and dynamic dollars.

So let's cover steps you can take to negotiate a fair price with sellers and not leave money on the table. It's perceived that price is often a major concern with sellers. In fact, a common seller's lament is "We have to get our price because..." (I'm sure you can fill in the blank with statements you've heard).

But it's really not the highest price sellers are after – it's the greatest net proceeds from the sale. "Net" is determined by subtracting the seller's closing costs and any outstanding loans, liens and other financial encumbrances from the sales price. A second way home buyers lose out when negotiating the purchase price is to make a low, often ridiculous first offer. Yes, I know, sellers sometimes do take less (even though it's done far less often in the today's strong seller's market.) Put yourself in the seller's position. How happy would you be in continuing negotiations with a buyer who had just insulted you and your property?

First offers set the stage for all other negotiations that follow. In fact, the seller may become enraged and refuse to make any counter offer back to you. Or if there is a counter offer, the seller might turn the tables and insult you by asking for a price higher than what the property's listed for. (Yes, this does happen in a hot sellers' market!) If you do make a lesser offer, be prepared to defend why such as repairs to be made, etc. Sellers will be more willing to listen to a price cut if it's rationale and fair.

One last tip – earnest money does talk. When evaluating two offers side-by-side, the one bearing the heftiest amount of deposit gives the perception that the buyer is more serious about the property and is perhaps a better financial risk (even if it isn't true!) This is an important tactic in a seller's market where many buyers are vying for relatively few properties with multiple offers to the seller simultaneously.

When it comes to negotiating the purchase price of your home, neither buyer nor seller get to win all of the marbles! Decide how important purchase price is to you and negotiate with that priority in mind.
 

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Can I Relax Now That My Loan is Approved? 
by Dena Amoruso

When the question, "Is it safe?" is posed, somehow Dustin Hoffman in the movie Marathon Man comes to mind. If you recall, Olivier's ill gotten fortune was indeed not safe after all.

When new homebuyers begin feeling rather smug and complacent after their loan is pre-approved, they somehow think they can go on "autopilot" while their house is being built. The truth is, a solid loan pre-approval with no conditions is a fairly safe bet that everything will sail smoothly, but it certainly is no guarantee.

During the months a new home is being built, varying factors can enter into the "picture" the loan officer painted of the homebuyer and his ability to re-pay a mortgage loan to the lender in question. Most of these factors and responsibilities sit squarely on the shoulders of the homebuyer himself. Safeguards for buyers (borrowers) to observe after the loan pre-approval and before the home's completion may include the following:

Changing jobs:
Buyers represent themselves as being employed in a particular line of work at a particular rate of pay, and may offer the lender promises of salary bonuses or future commissions during the escrow process. This may all look great to the lender, with verifications received from the homebuyer's employer of all of the above. The danger here is in making a change after the fact. Many lenders agree that borrowers must have at least one years' stable employment history with their employer, and if they must change jobs, they should stay in the same line of work, have no gaps in employment whatsoever, and leave only for a higher rate of pay. If bonuses and predicted overtime are forfeited (they were not guaranteed) due to a change of this kind in employment history, the lender must be notified that qualifying conditions may have been altered since the original pre-approval was issued.

For that reason, many lenders would advise buyers to fight the urge to make a change in employment until after close, just to be completely safe.

Credit worthiness:
During the "feel good" stage, anticipating the completion of their new home, buyers oftentimes go crazy purchasing high ticket items and racking up major charges on credit cards. Buying furniture, deciding they want a newer car in the driveway, and arranging for thousands of dollars in new appliances have a way of adding up and kicking many homebuyers where they least expect it, suddenly affecting their credit scores and loan ratios. The rule of thumb here is: make every payment due on mortgages, cars, etc. and try not to take on any more or it may preclude you from qualifying when fresh credit reports may be reviewed prior to closing.

Communication:
Homebuyers, after a pleasant meeting with their loan officer and a subsequent pre-approval is issued, tend to believe that no news is good news. In theory this may be true, but only from the lender's side of the desk. After all, your loan officer does not have the obligation of calling you weekly to see if any material changes have taken place in your employment status, your money reserves or your credit worthiness. He or she will also not check weekly or monthly with you to see if money has since been removed from some of the accounts already verified. It is therefore incumbent upon you, the buyer, to communicate any changes of this sort on a regular basis directly to the loan officer. Communication is definitely the key here, and the responsibility rests primarily with the borrower to maintain his approval status.

The scary thing for homebuilders is the risk they take in banking on the loan pre-approvals, using them as a green light to build and personalize homes based on the premise that nothing basically will change. The hard truth is, some pre-approvals can fall apart due to buyer neglect and mismanagement of their assets and credit-worthiness. In these cases, builders must try to re-market the homes that lose their original buyers to others who may not be willing to pay for items already ordered and installed, and the builder loses money.

Homebuyers may want to think of themselves as posing for a portrait at the time of pre-approval. Nothing should basically change within that portrait until after they close on their new home. No flinching, changing outfits, or background landscape alterations should take place, with the pre-approval photo "frozen in time." With that posture in mind, they may at last be able to breathe easier and look forward with confidence to moving day.
 

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No News from the Seller? – Not Necessarily Good News 
by Julie Garton-Good

What's the standard time frame for a seller to accept an offer? There's no such thing as a standard time frame, it depends on how active the market is, how many other offers (if any) the seller is considering as well as the seller's individual situation and availability (i.e. one of the spouses being out of town, etc.)

It can vary based on the buyer's needs, the seller's needs – even customs in a local real estate market. Timeframes are initially specified by what the buyer or his/her agent specifies on the purchase agreement. Once the seller sees the offer, he has the opportunity to amend the timeframe specified by the buyer; but to do so constitutes a counter-offer, a brand-new offer that the buyer doesn't have to accept.

Most buyers want the seller to respond in the quickest timeframe possible. This is especially true in strong seller's markets prevailing in a majority of the country today. Characterized by few available properties, buyers are eager to hear a positive response back on their offer in order to lock up the property.

Conversely in a buyer's market where many properties are available, a buyer could feel less urgency to hear back promptly from the seller. But by giving the seller a leisurely timeframe in which to respond, all buyers run the risk of the seller "shopping" that offer to other potential buyers. It's possible that during a long timeframe for acceptance, the buyer making the initial "catalyst" offer could lose out on the property entirely, without the ability to make a counter offer to match a competing buyer's price or terms for the property.

What can you do if you fail to note a reasonable time frame for acceptance on your purchase agreement to the seller? Right the wrong immediately, notifying the agent (ideally in fax or email, rather than by phone) the time frame under which the offer will remain open. If it's been several days since presenting the offer to the seller (as with the questioning buyer I encountered!) asking for an answer in twenty-four hours could be acceptable.

No matter how you initially contact the seller with this information, back up your request with a written addendum (faxed, mailed or emailed to the agent). This will not only reinforce your interest in the property but could be an opportunity to move the seller to a decision – hopefully in your favour. 
 

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Why You Need a REALTOR on Your Side 
by Courtney Ronan

The deal sounded too good to be true: a two-story town home, completely gutted and refurbished according to my specifications and design preferences. Coordination of contractors' services and all aspects of the closing and financing were to be handled by an in-house development group – and at a price I could afford. The representative, draped in gold chains and reeking of dime store cologne, grinned at me. "This is the easiest real estate transaction you'll ever have," he assured me, after informing me there was no need to use the Realtor I had selected to represent me just two weeks earlier. Being a first-time buyer, I nearly let the promise of a brand-spanking new town home blind me. That's a scary thought.

Because once my Realtor caught wind of the development company's tactics, he did a little research ... and found out that these "developers had a record of shady tactics. What was sold as the "easiest real estate transaction" I'd ever have could have been a nightmare. It was a hard lesson to learn right out of the starting gate. And yet, I'm glad it happened. The experience taught me the value of having a bona fide Realtor on my side – somebody who has appointed to look after my best interests, and sometimes even fight for them.

Sure, some people can and do go it alone when buying or selling homes. If you're savvy enough to navigate the occasionally murky waters of the real estate transaction, then more power to you. But particularly for first-time buyers, the value of an experienced Realtor is immeasurable – a lesson I learned from the school of hard knocks. A Realtor's role extends far beyond just finding a buyer, or a nice house in a good neighborhood. In many cases, your Realtor is there to provide a reality check – as mine did – and to handle the tough negotiations involved before closing. My Realtor has assured me that regardless of what those developers tried to spoon-feed me, the real estate transaction is never, ever easy. He doesn't need to convince me.

Among a Realtor's areas of expertise are: 

• Advertising properties both to other Realtors and prospective buyers on the MLS, as well as through other local and regional media; 
• Creating marketing strategies to sell properties, based on accurate information and research about each property; 
• Holding and supervising open houses in various properties on the market; 
• Offering recommendations and information about various neighborhoods and properties that fit within a buyer's price range and individual preferences/lifestyle needs; 
• Draw up an estimate of the market value of the seller's home; 
• Drawing up the contract and negotiating its terms; 
• Providing guidance to buyers seeking financing; 
• Coordinating and handling all issues related to the inspection; 
• Coordinating appraisals and contingency dates 
• Negotiating offers and counteroffers; 
• Screening prospective buyers and reviewing their offers before an acceptance by the seller; 
• Assisting the seller when contract contingencies – for example, furnace repair, new carpet installation, etc. – are required; and 
• Coordinating details of the closing day.

While the town home I lost seemed great, my Realtor reminded me that the process shouldn't be as shady as the one we'd just experienced. He successfully convinced me that this town home wasn't worth the risks. So the search continues ... for me, a little more cautiously than before. Whether or not I'll find the town home of my dreams, I'm not sure, but I do know that I'm sold on the merits of having a Realtor on my side. 

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11-Step Program to Buying a Home 
by Ron Sneyder

Buying a home can be one of the most exciting and rewarding things you ever do, or it can be one of the biggest nightmares you will ever go through. How you experience the home buying process depends entirely on how well prepared you are and how knowledgeable the people helping you are. The following report should clear up a lot of confusion you might have.

Selecting a Realtor 
This is probably the most important step in the process. You will, for all intents and purposes, be in partnership with your agent/s. You will be confiding in them on a business level and often on a personal level. They will be the people dealing with any problems that crop up along the way. They are the key to your finding what you want in the area you want for the price you want. Be selective, look for someone you feel comfortable with and with whom you're experienced and knowledgeable. Working with a duo instead of an individual agent has its benefits, the most important being that time off for the agent does not become a problem for you. Don't be afraid to ask for references; most agents are used to this and will not object. Once you select someone you feel good about working with, sign them up as a buyers' agent. It is very important that the person you're working with is representing you exclusively.

Meeting with your agent for a home buyer's consultation 
Also a very important step in the process, this is when you and your agent prepare each other for exactly what to expect along the way. The following points should be covered and fully understood during this meeting: 

• Exactly what your needs are (number of bedrooms, baths, etc.), in which areas you're looking, what price range you are comfortable with, and what your time line is. It takes generally takes 30 to 45 days from contract to settlement. 
• How often you are available to look and what you expect from your agent in terms of availability and communication (e-mail, phone updates either daily or weekly). 
• Your agent should explain financing options and give you references they should explain the difference between the various loan programs available and anything else that you might be confused about. 
• Your agent should give you copies of all the paperwork you will be expected to sign throughout the process and briefly explain what each form is for. 
• Your agent should explain buyer brokerage vs. seller's representation, and you should sign a buyer broker agreement. 

Contact a mortgage consultant
Most people, when selecting a lender, call various lending institutions to check on rates and generally go with the lender with the lowest rates. We strongly recommend that you let Tim find you the lender that best suits your needs and provides you with the best rate.

Look at homes 
This is the fun part. It is important to limit the number of homes you're looking at in a day. If you look at too many homes, they begin to run together, and you can't remember one from another. It's a good idea to use a checklist form to help you track the properties you have seen. It is also helpful to actually begin to narrow down the properties after each visit. For example, if house #3 was better than house #2, immediately eliminate house #2. Remember, communication with your agent is crucial. It's important to let your agent know which houses you like and why, as well as which houses you don't like and why. Sometimes it takes going out and looking one time before you and your agent really have a good grip on exactly what you're looking for. Call your agent, and have him/her do the research on any advertised properties that look interesting to you. That's what agents get paid for If you should become interested in a for-sale-by- owner, ask your agent to contact the seller before you do, to see if he/she will cooperate (pay a commission) with a buyers' agent.

Select a home 
Once you've narrowed your search down to one or two homes that you really like, your agent will do whatever research necessary to help you make your decision, but the decision will ultimately be yours. And surprisingly enough, it's going to be a pretty easy decision to make Buyers are welcome to call the local chambers of commerce for any statistics in which they might be interested. Local zoning and planning offices are a good source for future road plans, etc. Once you've selected one home to focus on, your agents will do a comparative market analysis on that property. This involves determining "fair market value" by looking at what other buyers were willing to pay for properties similar to yours in the same neighborhood or area.

Making an offer and negotiation 
When making an offer on a property, it is important to decide ahead of time how much you are willing to pay at what terms for the house. You already know what fair market value is. Now you have to decide what price you will offer; how much deposit you will offer; what personal property you wish to have convey (everything is negotiable); when you plan to close; and what inspections you plan to have conducted.

When negotiating with any seller, it's best to remember not to take anything personally. Also, try to put yourself in the seller's shoes. Figure out what's not negotiable to you, and be willing to give a little on the things that are negotiable. A good agent should be able to give you tons of advice about how to structure your offer. Once your offer has been presented, the seller will either accept your offer outright, reject your offer outright, or counter your offer. The counter process can go back and forth many times. It's important for all parties to keep their cool and focus on the goal.

Get inspections and remove contingencies 
If, as part of your offer, you asked for time to be allowed to have inspections conducted on the property, you should have written what is called a contingent offer. Offers can be contingent upon loan approval, inspections, the receipt of acceptable homeowners or condo association disclosure packets, the sale of property, and many other conditions. It is important that all deadlines be met and that all contingencies are removed exactly the way the contract describes. Your agents are responsible for making sure this is done correctly.

Select an attorney 
If you do not have an attorney already then we can help you find one that specializes in real estate transactions at a very reasonable price.
 

Walk-through 
Most sales contracts will give the buyer the right to one pre-settlement inspection. This is your last chance to find any problems and have the seller correct them. Read the contract carefully, but most contracts read that all electrical systems, plumbing, appliances, heating, and air conditioning need to be in working order at the time of settlement. These are the items you checking for at walk-through.

You are also checking for any other items the seller previously agreed to fix or replace. If anything is found to be defective or missing, you have several options: The seller can remedy the problem prior to settlement; the seller can credit you the amount of money it would take to hire someone to remedy the problem; or the seller can promise to correct the problem and place into escrow with the attorney the amount of money you will need to pay someone else if the seller does not perform as promised.

On new-home purchases, the process is a little different. The builder will generally do a walk-through with you approximately one to two weeks prior to settlement, resulting in a "punch-out list." Hopefully, they will get everything on the punch-out list completed prior to settlement. If not, most new-home contracts allow the builder to complete whatever minor items have been noted in a "reasonable" period of time.

Closing on your home 
This is the day you "sign your life away," as most clients say. Not really. You will be signing all of the loan documentation, which can seem never-ending. The lawyer conducting the settlement should be able to explain every document to you in a satisfactory manner. Do not ever feel intimidated. If you don't understand, don't sign. Your lawyer will help your understand everything. If you like, you can request blank copies of the documents you will be signing in advance so that you can carefully review them. You will have to present whatever down payment and closing-cost funds you were expected to pay. This check must be certified; personal check usually are not accepted.

Moving day 
This is the last and probably the hardest step in the home-buying process. A little bit of planning and forethought, though, will make for a much smoother move. You will want to make arrangements with a moving company as soon as you can. Call at least two in order to get competitive quotes. They will usually ask to come to your home to get an idea of how much they will be moving and the distance they will need to travel. Be sure to change your address with the post office, your banks, and any creditors at least 30 days in advance. To avoid late payments, it's a good idea to actually call and verify receipt of the address change whenever possible. Call to order your utility hook-ups approximately 10 days prior to your move. Be aware that some utility companies will keep you on the phone for a long time.
 

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Pre-Qualification and Pre-Quantification 101 

The majority of Lenders will guarantee clients an interest rate for a set period while the client shops for a home ("rate commitment"). This protects the consumer from interest rate hikes for the established time period set by the lending institution. This feature is extremely important. It saves the borrower money and also saves them from losing their chosen home if interest rates increase. Interest rate increases reduce the amount of mortgage financing a borrower qualifies for, and could result in a larger down payment required.

If the rates one day before closing are lower than the committed rate, the lender will finance the mortgage transaction at the lower rate. However, some lenders will commit to the lowest market rate during the commitment period. When a lender commits to a rate, they usually require an applicant to be fully pre qualified. A mortgage consultant can pre qualify your with the right mortgage lender and insure your rate commitment meets your needs.

Pre qualification – The nuts and bolts
When you are pre qualified it means that the lender has reviewed the financial information from your application and has determined a maximum amount of financing you can afford. The information required for a pre-qualification is almost as detailed as that required for a mortgage approval. This differs from a rate commitment because a pre qualification requires the lender to complete the preliminary underwriting, whereas a rate commitment does not.

The benefits of being pre qualified are numerous, the more important of which include:

• shopping within your price range without having the concern or risk that major complications will arise in the final hour. 
• you may be able to make a stronger purchase offer without "subject to financing" conditions. Therefore, your Realtor will be able to negotiate harder on your behalf and get you your home ahead of other competing offers.

• Phase 1: An initial pre qualification is given based on unverified gross income figures. 
• Phase 2: A full pre qualification, yet unverified, is done based on information provided in the mortgage application. 
• Phase 3: Verification of all financial information including income and employment, savings and equity, etc. 
• Phase 4: Verification of credit worthiness. 
• Phase 5: Lender approval of property through a property appraisal.

Pre Quantification
Pre quantification is part of the pre-qualification process. It is simply a calculation of how much an applicant "may" qualify for given unverified gross income figures, and utilizing a Gross Debt Service Ratio (GDSR). The calculation also takes into consideration expected expenses. For example: 
Combined gross income of $72,000 ($5,000 per month). 
GDSR of 32% – this means you can spend and maximum of $1,600 per month on shelter, including the ancillary costs of owning a home – i.e. heat, maintenance, property tax Ö 
 
 

The lender then takes the amount calculated and comes up with the maximum amount of financing you would qualify for based on your income. This procedure is simply the reverse of calculating a mortgage payment given the payment amount, amortization and interest rate.

You can use our calculators to do these for you quickly. 
 

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Don't Confuse an Appraisal and an Inspection 

The bottom line of home buying is twofold: are you paying the right price, and are you getting what you are promised or told? In both cases, you need to determine the value of the home, and as such an appraisal is required. A lender will usual require that a professional third party appraise the property to determine the value.

Appraisal
An appraisal determines the value of the property by estimating the market value of the land and building for purposes of security in a mortgage transaction. An appraisal does not usually, but may, include a detailed property inspection Lenders are also concerned that the borrower will not have to incur costly expenditures on repairs or renovations which may cause the borrower difficulty because of financial drain. This is a valuable informational source for home buyers as well, ensuring that they are getting what they are bargaining for and will not be put in a position where they cannot meet their financial obligations.

Inspection
A home inspection does not result in a professional opinion on the value of the property. It merely inspects the adequacy and condition of the building and all major systems. Although an appraisal may provide sufficient security for a lender to provide mortgage financing, an inspection may reveal that the building and systems may not be up to par and will require costly repairs. A good inspector will provide the potential purchaser with a schedule outlining the estimated cost of repairs and when they will need to be done. An inspection therefore allows the purchaser to make an informed decision of purchase.

We can help you find professionally qualified appraisers and inspectors.

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Sellers: If You Want It, Ask For It! 
by Julie Garton-Good

There's nothing more frustrating to a ready, willing, and seemingly able buyer than to lose an offer to another buyer – especially since the seller was not specific (down to the letter) about what he expected to receive.

Sure, there's the list price; but in today's fast-paced market, a buyer/prospect may offer thousands more than the list price and still not be the lucky buyer who gets the property!

That's why sellers should be as specific as possible with buyers in what they want to receive and achieve in a successful offer. 

Let's tackle the major elements the seller should be prepared to address with serious buyers. I suggest that sellers (or their real estate agent) prepare a "Suggested Contract Requirement" sheet to give to buyers, outlining what they expect in the following:

Loan pre-approval
By now, it should go without saying that buyers without loan pre-approval shouldn't be competing in the current market; but sadly, some are. That's why it's important for the seller to specify that buyers be pre-approved for loans ample enough to fund the purchase price.

Or what about the buyer who claims to have "cash" coming to him to fund the purchase (often coming from proceeds of an estate or settlement of a law suit.) The buyer's funds are delayed. In order to close the sale, he must borrow the money, causing the seller a three-week delay in accessing his proceeds. Verifying the buyer's funding (which is tougher to do in a "cash" sale) is vital for sidestepping potential delays for the seller.

Big Deposit Money
In the old, slower school of home buying a decade or more ago, buyers would offer a meagre amount of money or even a post-dated check with the idea that they could always up the ante if need be. In today's market, more (rather than less) deposit money is advised in most situations. Not only does it subtly signify to the seller how financially motivated a buyer is, but can serve as a buyer's first (and often only) shot at a strong first impression to the seller.

By letting prospective buyers know the minimum amount of deposit money the seller is seeking, it places a strong buyer on equal footing with competitors. It also gives a heads-up that if you want a stronger foothold with the seller in this area, exceeding the suggested minimum amount is certainly in order! If a buyer structures an offer to include minimal contingencies like obtaining financing in a certain amount and the property appraising for at least the sales price, etc., deposit money would be at little risk of loss.

And what about contingencies? Should a seller require that buyers make all offers free of positively all contingencies if they're serious about the property? Hardly. But keeping contingencies to a minimum definitely gives buyers an added advantage over their competition and results in a smoother sale for you as a seller.

If a seller specifies a list price when putting his house on the market, why not set other minimum requirements for offers and share them with prospective buyers? While this hasn't been the common practice of most sellers in the past, many are finding it a practical way to sort through the myriad of offers received in order to go with the strongest possible buyer (not to mention reducing anxiety and headaches for potential buyers!)

By the seller noting suggested contract requirements on a printed sheet circulated to prospective buyers, buyers have an idea of minimum requirements and should attempt to meet or exceed them if they plan to compete for the property. Obviously, buyers are free to make any offer regarding the items. Likewise, a seller would be free to accept an offer that didn't contain the suggested requirements.

Net Proceeds
Real estate consumers have learned over the decades in purchasing and selling property, that there can be a marked difference between the sales price and net proceeds. If a buyer pays a seller his "list" price, those are gross proceeds. Deducted from the gross will be the costs of sale (commissions, closing fees, etc.) as well as any outstanding liens against the property (like mortgages or property taxes) Once these costs are deducted, the remainder is termed the net proceeds. Sometimes the difference between gross and net is slight; but other times, it's a huge chasm.

The best way to achieve definitive results is to make sure that you (or your real estate agent) estimate your sales costs before listing the property, and that you determine the type of offer (including the type(s) of financing programs) you'll consider in order to achieve your net proceeds amount. 

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