The very first step, when it comes to buying a home, is to define what it is you are looking for. You should end up with a list of "Must Haves", a list of "Nice to Haves" and a list of "Not Interested In'. For example, our new home must be in the downtown core, we would prefer it to be detached, and we don't want a pool. While this list may change as you get deeper into the process, it is necessary jumping off point to help you and your RE/MAX Affiliates Realtor® start off on the same page.

The next step should be determining what you want to spend on your new home. This involves both what you have available to you for a downpayment and financing, as well as how much you are comfortable spending.

Not only do you have to consider what your mortgage payment will be, Tthere are also property taxes, utilities, and in some cases condo or strata fees to be considered. As a general rule of thumb, your monthly home-carrying cost should not exceed 30-35% of your income. If you need a referral for a mortgage broker or banker, ask your RE/MAX Affiliates Realtor® for a few recommendations.

Your RE/MAX Affiliates Realtor®

Hiring a RE/MAX Affiliates Realtor® as your Buyer's Representative will ensure a smoother, more enjoyable buying experience that is entirely client-focused. With an extensive list of qualifications and expertise throughout our company, we can match you with the specialist for your desired market and style of home. They will be with you every step of the way, providing assistance with:

• Fine-tuning your wants/needs list
• Access to hot new listings
• Scheduling and booking appointments
• Researching the neighbourhood or community
• Finding qualified, professionals such as mortgage brokers, lawyers, and home inspectors.

Mortgage Brokers

A Mortgage Broker will help you find the mortgage that has the terms, rate and conditions that are right for you. Much like an insurance broker, this professional works for you and can offer you an unbiased referral. Although most brokers are paid a finders fee by the lender, some will charge 2% of the total mortgage to find you a lender.

Lawyers/Notaries

A lawyer is there to represent your interest, and to process the sale, including providing legal advice, searching title and registering your mortgage. Your sales representative can provide you with a list of recommended lawyers in your area.

Home Inspectors

Whether you make it a condition of purchase or not, having the property pre-inspected by a qualified home inspector will provide you with invaluable information about the home and how to maintain it. Be very careful to verify the qualifications of your home inspector because there are no government standards or licenses for home inspectors. For your protection make sure your home inspector is a member of (PACHI) or (OAHI). This is your assurance that they have met their education requirements, have the experience and carry E & O Insurance. Your RE/MAX Affiliates Buyer's Representative will be able to provide you with a list of recommended inspectors in your area.

Insurance Brokers

You'll want to make sure your property and valuables will be covered. A broker offers independent advice and can save you time, trouble and money. Plus, the bank will insist that you carry full insurance because your property is used as collateral against your mortgage. Every insurance broker will ask you for detailed information about your home, to ensure its insurability. You can ask your RE/MAX Affiliates Buyer's Representative about common red-flags with insurance companies and have them assist you in finding a recommended insurance broker.

Appraisers

Hiring an appraiser to appraise the value of property you are considering to buy may seem sensible but it is highly unnecessary. Your lender will want their own personal appraiser anyway, so you could be wasting valuable money. As well, most sales representatives are competent and can do a "Comparative Market Analysis" for you, to establish a value range. The only situation where hiring an appraiser may become necessary is when the property is extremely unusual with no comparable sales.

Conventional and High Ratio Mortgages

To qualify for a conventional mortgage, you simply have to have a 25% down payment of the purchase price, with the mortgage not exceeding 75% of the appraised value.

If your down payment is less than 25%, then you qualify for a high-ratio mortgage. This type of mortgage requires loan insurance, which can cost an additional 0.5% to 3.75% of the mortgage amount. With this type of mortgage you could also be limited to a maximum house price.

Second Mortgage

Of course, if you cannot add on to your mortgage, you may consider a second mortgage. Each mortgage uses your home as security and gives the mortgagee the right to take your home if you default on your loan. The first mortgagee gets paid first in cases of default and has the best chance of recovering all of its money. So it only goes to figure that subsequent mortgages usually come with a higher interest rate.

Mortgage Features

Every lending institution is different, and each will have their own customizable mortgage options. When you're hunting for a lender and a home, see how the following features could be beneficial to you.

Prepayment

This is a wonderful option if you receive regular bonuses or if your income fluctuates throughout the year. With a pre-payment privilege, you have the right to make payments toward the principal portion of your mortgage over and above the monthly payments. A mortgage with a pre-payment option is closed. An open mortgage means you can pay the entire principal sum without notice of bonus.

Portability

If you still have time remaining on previous mortgage, portability is one option you'll want to discuss with your lender. Quite simply, it means transferring the balance of your current mortgage at the existing rates and with the existing terms and conditions, to your new home.

Assumability

Let's say that the vendor has negotiated a dynamite mortgage. With an assumable mortgage you, the purchaser, simply assume the obligations of the mortgage. This is a wonderful feature especially if the terms are more favourable than the existing market conditions would allow. Remember, when it is time for you to sell, you may still be liable for any mortgage you allow the buyer to assume. This means if the buyer stops making payments, you could be accountable for the payments. Be sure to have the subsequent buyer approved for the assumption of the payments, thereby avoiding this potential land mine.

Expandability

If you need additional funds down the road, will your mortgage terms allow you to increase the principal amount? Usually, your new rate will be a blended amount of the initial mortgage rate and the prevailing rates. It's a great option to discuss with your lender if you foresee large expenses in your future like renovation or education costs.

Mortgage Term

Over the course of your amortization period, you may have many different mortgages. The term is simply the length of time that interest rates, payment schedules and obligations to the lender exist. When the term comes to a close, you will have the option to renew your mortgage at your current or new lending institution. You can also put a lump sum toward the principal without restriction, or pay off your entire mortgage without penalty. If you wish to change the structure of your agreement during the term you may have to pay a substantial fee to the lender.

Choosing Security or Flexibility

Mortgages are available with closed, open and convertible options, with fixed or variable rates. The options you choose will reflect your beliefs about the market -- is it going up or down? -- and your short-term goals and desire for long-term security.

Amortization

This is the amount of time over which the entire debt will be repaid. Most mortgages are amortized over 15-, 20-, or 25-year periods. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run.

Open Mortgage

This type of mortgage offers a great deal of flexibility, as it can be repaid in part or full at any time without penalty. This is a great mortgage if you believe interest rates are moving down or if you plan to move in the near future. The term may be limited to six months or one year.

Closed Mortgage

Here the interest rate is fixed for the full term of the mortgage, and you will have to pay a penalty to change the agreement conditions. This type of mortgage is ideal for buyers who suspect that interest rates will rise and who are not planning to move in the near future. This type of mortgage is usually available in a wide variety of terms.

Convertible Mortgage

With this mortgage, you'll enjoy the same peace of mind as a closed mortgage, plus the flexibility to convert to a longer closed mortgage at any time without penalty. If you think rates will drop, this will allow you to wait until you feel they have hit bottom, or if rates rise, you can lock in.

Additional Costs

Before you calculate the amount of your down payment and determine what you can afford, it's a good idea to set aside a few thousand dollars to cover the extra costs that seem to spring out of nowhere. Here is an overview of costs you could encounter. The good news is that not all of them will apply.

Property Taxes

If the Vendor has paid a portion of the taxes in advance, you will be responsible for reimbursing the Vendor on closing. Plus, if you have a high-ratio mortgage, your lender may require that you have your property taxes added to your mortgage payments.

Land Transfer Tax

This applies in most provinces and ranges from 1% to 4%. For instance, in Ontario, you'll pay 1% of the first $55,000 - $250,000 and up to 2% of any amount over $400,000.

Survey Fee

Your lender will require an up-to-date survey. You can make it a condition of the Offer to Purchase that the Vendor provide a survey, or you will have to have one done. If there is no survey available, you may purchase "Title Insurance" in lieu of a survey which saves you about $500 - 700.

Appraisal Fee

A basic appraisal usually costs under $250.

Property Insurance

Your lender will insist that you have insurance on your property because your home is used as security for the mortgage.

Service Charges

You'll be charged for telephone, cable and a variety of other services that you hook up at your new home.

Lawyer (Notary) Fees

Each real estate transaction requires the assistance of a legal professional to review the Offer to Purchase, search the title, draw up the mortgage documents and take care of the details on the day of closing. Lawyers fees range widely depending on the complexity of the transaction. Ask your sales representative to recommend a lawyer.

Mortgage Loan Insurance Premium and Application Fee

Mortgage loan insurance will be necessary if you have a high-ratio mortgage (less that 25% down payment). The application usually costs $75 with a valid appraisal, otherwise it's $235. The actual insurance premium will range from .5% to 3.75% of the purchase price and is added onto the mortgage.

Mortgage Broker Fee

Some brokers may charge as much as 2% of the total mortgage to find you a lender. In most cases though, the broker is paid by the lender. Buyers with good credit should not have to pay a fee.

Moving Costs

Whether you've decided to do it yourself or hire a moving company, now is the time to budget for the costs involved.

Status Certificate

If you're moving into a condominium (complex not necessarily a high-rise) this certificate outlines the condominium corporation's financial and legal state. It will cost you up to $100, usually paid for by the seller if agreed to in the Offer to Purchase.

Condominium Fees

These monthly fees vary from complex to complex. The fees are applied to everything from grounds keeping and carpet cleaning to security personnel and health club maintenance. Depending on the type of structure, these fees will usually be a few hundred dollars.

Home Inspection Fee

For around $500, depending on the size of your home, you'll receive a complete written report about the condition of the structure. Do your research and hire a reputable firm.

Renovation and Repairs

Your home inspection may indicate the need for some general repairs or a major project. Have some money set aside, particularly if you are purchasing an older home.

Redecoration

Your taste will be different from the previous owner. Set aside money to paint and wallpaper. Prepare a list of things you can live with, for now, and decorating faux pas that need immediate alteration.

Water Quality Certification

If you are purchasing a home with a well, you'll want to ensure the quality of the water. This will cost approximately $50 to $100.

Land transfer taxes are a part of the purchase process in Canada, unless you live in Alberta, Saskatchewan, or rural Nova Scotia. These taxes, levied on properties that are changing hands, are the responsibility of the buyer. Depending on where you live, taxes can range from a half a per cent to two per cent of the total value of the property.

Many provinces have multi-tiered taxation systems that can sometimes be difficult to understand. In Ontario, LTT is calculated with the following scale:

Up to $55,000 @0.5 % of total property value
From $55,000 to $250,000 @1 % of total property value
From $250,000 to $400,000 @1.5 % of total property value
From $400,000 & up @2 % of total property value

For example, if you buy a property for $260,000 in Ontario, 0.5% is charged on the first $55,000, 1.0% is charged on the next $195,000, and the remaining $10,000 is taxed at 1.5% per cent. Your total tax bill would be $2,375.00 in this case.

($55,000 * 0.005 = $275)
($195,000 * 0.01 = $1950)
($10,000 * 0.015 = $150)
Total = $2,375

When it comes time to make an offer, your RE/MAX Affiliates Realtor® can provide current market information which will aid you in establishing your initial offer amount.

They will then communicate the Offer to Purchase to the seller, or the seller's representative, on your behalf. Sometimes there may be more than one offer on a property. When you find yourself in a multiple offer scenario, you will likely need to rely heavily on your Realtor's® advice to get you through this process as smoothly and effortlessly as possible.

Conditional Offer to Purchase

A conditional offer means that you have placed one or more conditions on the purchase, such as "subject to home inspection", "subject to financing" or "subject to sale of buyer's existing home". The home is not considered sold until all of the conditions have been met.

Firm Offer to Purchase

A firm, or unconditional offer is usually preferred by the seller because it means that you are prepared to purchase the home without any conditions. If the offer is accepted - the home is yours.

Acceptance of Offer

Your Offer to Purchase will be presented at the earliest possible opportunity. The seller may accept the offer, reject it, or submit a counter-offer. The counter-offer could be in reference to any number of factors, including the closing date and/or the purchase price. The offers may sometimes go back and forth many times until both parties have agreed upon the terms or until one or the other ends the negotiations.