Closing Costs & Information
Congratulations on deciding to buy a new home. There are three major steps involved in this process, the home buying, the home financing and the home closing. Most people buy a home based on finding a home they would like to own or by outgrowing their existing home. Potential buyers then contact a real estate agent to negotiate the purchase on their behalf. The next step is to sign an agreement of sale with the seller, followed by applying for a loan to purchase your new home. Closing the deal is when everything comes together, all conditions have been waived and title is transferred into your name. The onus is on the buyer to investigate the property they are buying and with the help of their real estate broker and home inspector protect themselves from any unwanted surprises.
Real Estate Brokers
Most buyers contact a real estate agent as soon as they determine they are in need of a new home. Although real estate brokers provide helpful advice on many aspects of home buying, they may serve the interests of the seller, and not your interests as the buyer. Commony buyers have their own agents who will negotiate on your behalf, usually dealing directly with the owners and their real estate agent, known as the listing agent. Also, in some areas, such as Barrie and Simcoe County, agents and brokers are allowed to represent both buyer and seller. Even if the real estate broker represents the seller, local real estate licensing laws usually require that the broker treat you fairly. You have to sign a waiver agreeing to the fact that the agent is representing both parties in the transaction. If you have any questions concerning the behavior of an agent or broker, you should contact your local Real Estate Commission or licensing department. Sometimes, the real estate broker will offer to help you obtain a mortgage loan. He or she may also recommend that you deal with a particular lender, title company, attorney or settlement/closing agent. You are not required to follow the real estate brokers recommendation. You should compare the costs and services offered by other providers with those recommended by the real estate broker.
Selecting a Lawyer
Shopping for a lawyer is just as important as selecting a real estate agent. There are no set fees for lawyers in real estate transactions and you should find out up front what your costs are going to be. Title insurance is now a separate fee which is added on to your closing costs, this relieves the lawyer of any liability if there is a title problem after closing. Also it is recommended that you use a lawyer who specializes in real estate or you may find yourself waiting around for an extra day for keys if not handled correctly.
Terms of the Agreement of Sale
If you receive this information before you sign an agreement of sale, here are some important points to consider. The real estate broker probably will give you a preprinted form of agreement of sale. You may make changes or additions to the form agreement, but the seller must agree to every change you make. Your agreement of purchase and sale includes selling price and any inclusions or exclusions that may be added by owner. Some sellers will leave all window treatments, while others exclude them specifically. Usually any item attached to the home should be dealt with by exclusion if the seller intends to remove the item.
Title refers to the legal ownership of your new home. The seller should provide title, free and clear of all claims by others against your new home. Claims by others against your new home are sometimes known as liens or encumbrances. This is covered by your Title Insurance which is done automatically by your lawyer.
The agreement of sale should provide that your deposit will be refunded if the sale has to be canceled because you are unable to get a mortgage loan that is agreeable to you. For example, your agreement of sale could allow the purchase to be canceled if you cannot obtain mortgage financing at an interest rate at or below a rate you specify in the agreement.
It is a good idea to have the home inspected. An inspection should determine the condition of the plumbing, heating, cooling and electrical systems. The structure should also be examined to assure it is sound and to determine the condition of the roof, siding, windows and doors. The lot should be graded away from the house so that water does not drain toward the house and into the basement. The home inspector works for you and will provide you with a detailed report of any visible or notable defects. This is why it is so important to verify your home inspectors qualifications and experience. You dont want to trust your investment to recent collage graduates whose only prior experience is working in a factory.
Sharing of Expenses
All expenses, such as; taxes, heat, hydro and water bills are computed out from closing day. You will be assessed accordingly by the days you have possession that month.
Mortgage brokers offer to find you a mortgage lender willing to make you a loan. A mortgage broker may operate as an independent business and may not be operating as your agent or representative. Your mortgage broker may be paid by the lender, you as the borrower, or both. You may wish to ask about the fees that the mortgage broker will receive for its services.
Types of Loans
Loans can have a fixed interest rate or a variable interest rate. Fixed rate loans have the same principal and interest payments during the loan term. Variable rate loans can have any one of a number of indexes and margins which determine how and when the rate and payment amount change. Most loans can be repaid over a term of 30 years or less. Most loans have equal monthly payments. You should shop for the type of home mortgage loan terms that best suit your needs.
Lender Required Items
Your lender may require you to obtain certain settlement services, such as a new survey, mortgage insurance or title insurance. It may also order and charge you for other settlement-related services, such as the appraisal or credit report.