Buying a Home To Buy or to Rent
According to Canada Mortgage and Housing Corporation (CMHC) , 37 percent
of Canadian renters could afford to buy a home. But when it comes to buying or
tenting, age, lifestyle, whether or not you’re a parent, even where you live,
all play a role. This was among, findings of a late 1990s study by the CMHC,
which wanted to know why, in Quebec, so many 25-to 34-year-olds--the so-called
Generation X--were tenants rather than homeowners. At the time, 56 percent of
this age group outside Quebec owned their homes, a figure that dropped to 34
percent in Montreal. CMHC’s Kim-Anh Lam explained: "When we asked about their
priorities, Gen Xers placed housing fifth--after recreational activities,
retirement planning, consolidating their jobs, and repaying their debt."
However, home ownership became a priority once a couple became serious, or the
first child arrived. Most experts agree that renting makes sense
if you’re highly mobile and don’t want to be burdened with the slow pace of the
buying and selling process, or if you can’t or don’t want to take on the
long-term financial commitments of a mortgage and home maintenance. Renting may
be necessary in order to save for the 10 to 20 percent down payment needed to
buy a home. Whether you buy or rent your home, you should use no more than 35
percent of your income on housing, including rent or mortgage, utilities,
insurance, and repair. Most banks recommend that no more than 30 percent of your
income should support a mortgage, and no more than 40 percent should go to a
mortgage and other debt. Offer to Purchase Home
buyers sometimes get stung because they or their representatives fail to include
important conditions in the offer to Purchase , or, as it is sometimes called,
the Agreement of Purchase and Sale. Your offer can be conditional-it is good
only on condition that you obtain mortgage financing, or the house passes a home
inspection or a termite check. In Homebuying Step by Step: a consumer guide and
workbook, the CMHC recommends your offer also include: ·Basic
details such as your legal name, the name of the vendor, and the legal and civic
address of the property. ·The purchase price and all financial
details included in this should be the amount of the deposit and any interest to
be paid on it. You may also want to spell out the specific amount of penalty
should you wish to back out of the deal. ·The chattel or items
in the home which are included in the purchase price. This may include window
coverings, appliances, a satellite dish, carpeting, bookcases, or a backyard
swing. ·Enumerate all of them, and stipulate that everything in
the house--all appliances and systems--be in working order at the time of
closing of title. ·Date of closing and taking
possession--usually 30 to 60 days from the date of the agreement, but it can be
longer. ·Request for a current land survey of the
property. ·Date and time at which the offer becomes null and void. A 48-hour
limit on the seller’s response time to your offer is reasonable. For
Buyers only A typical real estate transaction often begins
when prospective buyers drive by a house that looks appealing, take down the
name of the real estate agent listed on the sign in the yard, and call that
person for an appointment. The only problem, That agent--usually the listing
agent--works for a commission paid by the seller, and the agent’s legal
responsibility is to get the best price possible for the current homeowners, not
the prospective buyers. Common sense calls for buyers to be
honest about their priorities, preferences, and price range. But since the
agent’s commission comes from the vendor, and since this money is a percentage
of the sale price, it is entirely possible that any information the buyers
reveal to the agent--their finances, the top price they’ll pay, their reactions
to the house--could be used to sweeten the pot for the sellers.
Keep in mind, too, that the agent-vendor relationship doesn’t change just
because you ask an agent to help you find your dream house. The agent’s services
will be free to you since his or her fees will be paid by the vendor whose
property you eventually buy. Commissions are divided between the listing agent
and the agent who brings about the sale. What can buyers do in these
situations They can be aware that agents will be motivated to get the highest
price and the best terms from the seller’ s point of view. Also, the higher the
price, the bigger the agent’s commission. Accordingly, buyers should not expect
any agent to volunteer information on a house’s defects. If an agent says it’s a
"fixer-upper," find out exactly what needs fixing up. Buyers should ask specific
questions and expect factual answers. But, unless you ask, don’t expect the
agent to tell you the roof is 25 years old or the fireplaces don’t work.
Buying a New Home When buying a home that’s been
around for a while, you’re getting a known quantity that’s proven how it reacts
to winter, summer, rain, wind, and other circumstances. When buying a newly
built home, you’re getting something that "hasn’t been road-tested,’ says Alan
Fields, coauthor of Your New Home: the Alert Consumer’s Guide to Buying and
Building a Quality Home. So it’ s important to be careful. He
points out the three biggest mistakes people make when buying a new
house: ·Forgetting to get the "window sticker" for the
house--the written list, similar to that on a new car, of specifications and
materials used by the builder. "Deal with a builder who’s willing to give you
specifics about the construction process," advises Fields.
·Failing to cheek out the neighborhood. "People fall in love with how
pretty the new home is, and don’t ask enough questions about what’s going on
around them with respect to schools, parks, zoning, traffic flow, and other
details." ·Not hiring an independent inspector or engineer to
help evaluate the construction. "People think because it’s new it’s not
necessary to inspect the home," says Fields, "or that the city or county housing
inspector will check to ensure quality. Those inspectors are checking to ensure
that the home meets the minimum standards--not the highest standards--for health
and safety codes in the area. Just because a home passes a city inspection does
not mean you got what you paid for, or what your family deserves. ’ According to Canada Mortgage and Housing Corporation (CMHC), 37 percent of Canadian renter could not afford to buy a home.