FirstHome: The Buying Process


House Tours - The Virtual World of Home Buying

Homebuyers may be concerned about how to maintain social distancing while looking for a home. Realtors across the country have embraced technology more than ever by reaching out to customers with virtual open houses.


Tom Storey, a sales representative with Royal LePage, says that he’s used virtual tours for the past five years. “People bought secondary properties through virtual tours or floor plans—like new construction condos— but now people are buying their primary residence potentially only seeing it virtually.”


He says that the ideal virtual tour should make you want to pull yourself through the property. “The tour should have 360-degree capability and some have virtual reality options. It’s the dollhouse effect where you feel like you’re in the space.”


Nasma Ali, founder of One Group, says a great virtual tour allows buyers to navigate through it by clicking various parts of the screen. “It is more of a 3D rendering, video or image of the house or condo that has basically taken a snapshot of every corner and room of the space, all floors, and allows you to flow through the property by clicking where you want the camera to move to next,” she says. “Some also come with a floor plan that shows you where in the house or condo you are. And some very advanced ones feature measurements where you can even measure walls.”


Treat it like an open house

Ali says that buyers should take the time and walk through the space as they would on a regular physical visit. “That means starting from the front door, click on every direction to view the entire 360 degrees of the space.” It includes all the exits, bathrooms and laundry.


Don’t hesitate to ask for more

If you’re serious about the space, ask for more photos or videos of the home. Storey says he’s worked with the listing agent to have the sellers take serious buyers on a tour via Zoom so they can ask questions or take a closer look at rooms. Ali says extra photos could even include Google street view. “That’s in case there are any deal breakers there. maybe there is an auto repair shop right next door, or a school in front. Or it backs onto train tracks. Are the buyers OK with that?”


Make an offer, but with caveats

Storey says that he’s seen offers on properties that are conditional on an in-person viewing at a safer time. “Clauses considering COVID-19 are also appearing in offers.”


You can definitely find a home during this period of social distancing. It’s about leveraging technology to see the home, not being afraid to ask for more information and to have a smart contract that acknowledges that we’re in a unique position. Storey doesn’t think virtual tours will become the norm but says it’s the best option we have for now.


Walk-Through Before the Move-In Checklist

Buying a home means a lot of checklists. There’s the checklist for your finances, for your move (and your movers), and your renovations. But there’s one checklist that often gets overlooked: Your moving-in checklist.


This isn’t about your furniture, this is the ‘walk through before the move’ checklist to ensure your home is ready when you are. Here’s some of what to check off:


  • Who is the internet provider in your town/city/ condo?

  • What kind of internet do they provide?

  • Who are your cable providers?

  • Is your neighbourhood part of a homeowners’ association (HOA)?

  • What is the monthly HOA fee?

  • What does the HOA fee cover?

  • Does your neighbourhood do snow removal?

  • What are the garbage/recycling/ composting guidelines in your town/city condo?

  • What are the garbage/recycling/ composting pick-up days?

  • Who are the accredited hydro service providers?

  • Do you need to turn on gas lines?

  • How does mail get delivered (to the house, group mailbox, P.O. box)?

  • Where are your local doctors, dentists and optometrists?

  • How do you pay property taxes?

  • Where can you register and get a license for your pet?

  • Where are the local vets and grooming services?

  • Where is the nearest dog park?

  • Where are the daycares and schools in your area?

  • What are their registration dates?

  • Is there school bus pick ups and drop offs? What is the route?

  • Where are the parks, playgrounds, hockey rinks and other public spaces?

More on Mortgages: Understanding the Mortgage Underwriting Process

As we discussed earlier in this guide, mortgage pre-approval should be one of the first steps you take in your homeownership journey. While pre-approval indicates the amount of mortgage you are qualified for, your lender has final say on approving you for up to that amount, for the purchase of a specific property.


Mortgage underwriting is the process by which a lender assesses two things:

  1. A mortgage applicant’s creditworthiness for a mortgage loan;

  2. Whether a particular property is appropriate collateral for that loan.

Let’s say you’ve been pre-approved for a $450,000 mortgage and start your house hunt. You find a house for $445,000 that checks off all the right boxes and you put an offer on it. Now the insurance underwriters go to work:


YOU: Will have your credit report, employment and financials re-checked to ensure you’re likely to meet your mortgage obligations.


THE PROPERTY: Will undergo a property assessment to ensure $445,000 is fair market value for a property of this type, in this particular area. It is always best to speak to a mortgage professional about your personal circumstances to ensure a smooth process.


Tips For Smooth Approvals

It’s important to hire a mortgage professional to guide you through the homebuying process, and to help streamline the approval process making. Prepare for your meeting with the professional by bringing the following documentation with you:

  • Valid government-issued photo ID with your current address

  • List of debts and financial obligations.

  • A letter of employment from your current employer which includes income.

  • Other forms of income documentation (i.e., recent pay stubs, bank deposit statements, Notices of Assessment, etc.)

  • Proof of down payment (if your down payment includes a gift, you may need a letter stating it is a gift and not a loan).

  • Proof of savings & investments:

  • Proof of assets such as vehicles, cottages, boats, etc.

  • Proof of ability to pay closing costs

  • Information about any spousal or child support payments and separation agreements

  • Disclosure of all real estate currently owned

  • If you are self-employed or have a variable income, the last two years T1 General supported by the corresponding Notice of Assessment would typically be required.

Documentation needs may vary depending on your financial situation, so ask your mortgage professional what to bring to your meeting.


Credit Score Basics - Saving For a Down Payment

Your credit score is a three-digit number that is a prediction, based on statistics, of your credit risk at a specified point in time. The higher your score, the more likely you are to be approved for a mortgage — and at a better interest rate. Here‘s the lowdown on credit scores:


Factors that affect your credit score:

  • Debt

  • Payment history

  • How much available credit is in use

  • Length of credit history

  • Number of new credit accounts opened or inquired about

  • Mix of credit types

Factors that do not hurt your credit score:

  • Shopping for the best interest rate

  • Carrying a balance (limit it to 35% of your overall credit limit)

  • Ordering a copy of your credit report

How to improve your credit score:

  • Pay your bills on time

  • Pay off or pay down credit card balances

Order a copy of your credit report from consumer credit agencies Equifax or TransUnion. Check your credit report once a year to ensure the report is accurate. Mistakes can be made, so ensure that your information is correct. Contact the agency if you see an error, so it doesn’t negatively impact your credit score.


Insurance Assurance

About to close on your first home? Be aware of changing insurance needs. Here are three common insurance types many first-time homeowners need:


Mortgage default insurance

Who needs it: Mortgage default insurance protects the lender in case the borrower defaults on the mortgage. It’s required on all mortgages with down payments of less than 20%, which are known as high ratio mortgages.


Who doesn’t: Buyers who make a down payment of 20 per cent or more.


Homeowners’ or condo insurance

Who needs it: All homeowners, as it covers your property and contents against fire, water damage, theft and other forms of damage. It also protects you if someone gets injured on your property. Condo insurance is similar but tailored to condo ownership (i.e., shared common areas and amenities).


Who doesn’t: Non-homeowners


Tenants’ insurance (aka contents insurance)

Who needs it: Your tenants, if you rent out an income suite. It protects their contents, but more importantly to you, as landlord, it covers their liability for property damage caused by their negligence (i.e., a fire triggered by a pan left on the stove, flooding caused by an overflowing bathtub). Include a clause in the lease stipulating tenants must purchase this coverage.


Who doesn’t: Homeowners without tenants.


Next week we will take a look at Closing and Moving-In...


Article Credit: Sagen resources such as this guide are designed to help homebuyers make financially sound choices. Check out their online resources at sagen.ca for more!