Baywood Homes : News Releases : TITLEHERE

Save time, disappointment and maybe even money. Work out exactly what your needs are before you start home hunting.

For most Canadians, owning their own home is a life-long dream. It brings with it pride of ownership, security and the feeling of control over which improvements are made and how much they cost. There’s also the chance your home will increase in value, making it a sound financial as well as a lifestyle investment.

When buying a home, you have to juggle three important factors — your prospective home’s location, style and cost. For example, your goal may be to buy a single family detached home in an urban neighbourhood for $200,000. But you may have to settle for two out of three. An urban semi-detached home may be available for your price, or you may need to look in the suburbs for the price and style you want.

Your choice of location depends primarily on where you work and whether you want to commute, and also on your family lifestyle.

Do you want to live near recreation facilities such as a golf course or skating rink? How close are your children’s schools? Is public transportation available?

Urban living usually offers the largest range of home styles and often is closer to amenities such as restaurants and theatres. On the other hand, you may get more for your money in the suburbs.

Suburban homes often have larger lots and larger square footage than urban homes in the same price range.

If you’re considering moving to an unfamiliar neighbourhood, take time to drive or walk around it, both during the day and in the evening. Make some notes. It’s also a good idea to travel the route to and from your work.

There are many other factors you should consider when choosing the location of your home. For example, have property values risen or fallen in the neighbourhood?

Future development can also affect property values and property taxes, so you’ll want to consider whether there are any changes to zoning proposed or any major developments planned.

To do this, contact the local municipal office regarding planning and zoning bylaws. Is an office building going in next to your home? A new highway? Zoning bylaws may also affect your own plans, such as conducting a business from your home.

When considering your move, you may want to identify neighbourhood features that benefit you and the environment.

Single family detached: A free-standing home which sits on its own lot and is occupied by only one family.

Semi-detached: A single family home that is joined to another one by a common wall.

Row or townhouse: One of several single family homes joined by common walls. These can be condominium or freehold units.

Link or carriage: Houses, freehold or condominium, joined by garages or carports which provide access between the front and rear yards. Builders sometimes join basement walls so that link houses appear to be single family homes on small lots.

High- or low-rise condominium: Multi-story residential building containing condominium units. A condominium is not a type of house but a form of ownership.

You may be able to upgrade or choose certain items such as siding, finish materials, flooring, cabinets, plumbing and electrical fixtures.

The latest building code, electrical and energy-efficiency standards will apply. A builder warranty is available. This can be important if a major system, such as plumbing or heating, breaks down.

Unless you are a builder, warranties do not apply to homes you build yourself. There may also be incentives provided by the provinces and prospective borrowers should consult provincial or local authorities in this regard.

When you look at more than a few houses in a day, the special features can get blurred together.

Did the tidy little green house have the skylights or did it have the fireplace in the family room?

It is a good idea to create your own home hunting worksheet. This is a valuable tool that can help you evaluate the details of each of the homes you view.

Don’t make notes on every home you see — just those you’re seriously considering.

When trying to decide what style of home to buy, it’s a good idea to draw up a master list of all the features you want your new home to have. Try to be honest about what you’re looking for. Your vision will likely change based on what’s available.

This may not be the dream home you’d buy if you won the lottery, but rather the home that you and your family can afford now and that will meet your needs for the next few years. Buying a home involves many financial considerations. Be sure to calculate your costs so you know exactly how much house you can afford to buy.

Make a list of all the features you want in your new home. Be realistic and consider all the options. Consider such questions as: Are you starting a family or having more children? How many bedrooms will you need? Will a home office be required?

When considering your move, you may want to identify neighbourhood features that benefit you and the environment. Put together a checklist to compare the advantages of various neighbourhoods.

Consider compiling this list with the help of your Baywood Sales Agent, who would be happy to help you decide which features are important and suggest ones that you may have overlooked.

The word condominium refers to a type of property ownership rather than to a style of house.

Condominiums can be townhouses, high-rises or low-rises. They can be attractive to first-time home buyers because they are generally less expensive than single detached homes in the same neighbourhood. When comparing costs, make sure to include monthly maintenance or condominium fees.

When you buy a condominium, you’re investing in something you own, but likely eliminating maintenance such as yard work and snow removal. Condominiums also can offer extras you won’t get in a similarly priced detached home, such as security systems and recreation facilities.

Be prepared to pay monthly condominium fees that contribute to the corporation’s reserve fund and go toward covering the collective cost of property maintenance, repairs, replacements and insurance.

When buying a condominium, many of the same considerations as buying a detached home will apply. For example, the choice of location or the decision between new and resale.

Before you buy a condominium, it’s also important to consider some of their limitations. If a large yard is important to you, for example, a condominium is perhaps, not your ideal choice.

Baywood Homes offers a wide-variety of housing types including: detached bungalows and two-story homes; townhomes; links and condominiums. And Baywood is building in some of the province’s fastest growing cities including Wasaga Beach, Barrie, Oshawa, Bowmanville and Toronto.

By understanding the housing market, you’ll have a better sense of what, where and when to buy.

You want to buy at the best price possible. You want your monthly payments to be as affordable as possible. You want your home to increase in value as much as possible.

To make sure all that happens, it’s important to look beyond your individual purchase before you buy. You need to look at larger market conditions. What’s happening around you (house price trends, mortgage rate movements, new home construction) will have an influence on your purchase. The more you know, the more control you have.

In a buyer’s market, the number of homes available for sale exceeds the demand, so prices will either stabilize or drop. With fewer buyers and more homes, you not only have more options to choose from, you also have greater negotiating leverage. You have more time to look for the right home and you can evaluate the choices without feeling pressure to act too quickly.

Another major influence on your decision to buy is the mortgage interest rate. What rates are available now? Will they drop in the immediate future? Will they rise? If so, by how much?

Calculate Your Costs

Here are some basic calculations you can do that will help you determine exactly how much house you can afford.

Buying a home involves many financial considerations. Some home buying expenses are one-time costs and others are ongoing commitments. In addition, there are other costs that you may not be aware of or that you may forget to factor into your calculations. Below, you will find a list of additional expenses you will want to keep in mind when purchasing a home.

Homebuying Costs

The Down Payment
If you have a down payment of 25% or more, you may qualify for a conventional mortgage loan which does not require mortgage loan insurance.

A minimum down payment of 5% is required for a high-ratio mortgage. These types of mortgage loans — for any amount in excess of 75% of the value of the home — are required to be insured against default.

The federal government and some provinces offer incentive programs for homebuyers. You should consult an investment or tax advisor regarding the value of these plans for your particular circumstances.

The Mortgage
A mortgage is security for a loan on the property you own. It is repaid in regular mortgage payments which are blended payments. This means that the payment includes the principal (amount borrowed) plus the interest (the charge for borrowing money). The payment may also include a portion of the property taxes. See current mortgage interest rates.

How Much Can You Afford?

The shortest and best answer to that question is: it depends — on a number of factors. The most important are your gross household income, your down payment and the mortgage interest rate. Lenders also consider your assets and liabilities. Your own lifestyle and debt comfort zone also come into play.

If you understand these variables, you can examine all your options. You can make the best choice for you and even save money.

Meanwhile, use the table below to get an idea of the maximum home price you can afford.

Income, home price and down payment guide
Household income	5% down payment	Maximum home price	10% down payment	Maximum home price	25% down payment	Maximum home price

$25,000	$3,000	$60,000	$6,300	$63,000	$18,900	$75,600
$30,000	$3,900	$78,000	$8,200	$82,000	$24,700	$98,800
$35,000	$4,800	$96,000	$10,100	$101,000	$30,300	$121,200
$40,000	$5,700	$114,000	$12,000	$120,000	$36,000	$144,000
$45,000	$6,600	$132,000	$13,900	$139,000	$41,700	$166,800
$50,000	$7,500	$150,000	$15,800	$158,000	$47,400	$189,600
$60,000	$9,300	$186,000	$19,600	$196,000	$58,800	$235,200
$70,000	$11,050	$221,000	$23,400	$234,000	$70,100	$280,400
$80,000	$12,500	$250,000	$27,200	$272,000	$81,500	$326,000
$90,000	$12,500	$250,000	$31,000	$310,000	$92,800	$371,200
$100,000	$12,500	$250,000	$34,800	$348,000	$104,300	$417,200
Figures are rounded to the nearest $100

This table gives you an idea of the maximum home price you can afford. These estimates take into account household income and the percentage down payment you have.

Lenders follow these two simple rules to determine how much you can afford in monthly housing costs:

The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross monthly income. Housing costs include monthly mortgage principal and interest, taxes and heating expenses… known as P.I.T.H. for short.

Lenders add up these housing costs to determine what percentage they are of your gross monthly income. This figure is your Gross Debt Service (GDS) ratio.

The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross monthly income. This figure is your Total Debt Service (TDS) ratio. Based on these ratios, lenders will advise you of the maximum home price they think you can afford.

Keep in mind that most homebuyers today keep their debt ratios comfortably below the maximums prescribed above. The lower your debt load, the more affordable your home and lifestyle will be.

Other Costs to be Aware of When You Buy

This is a list of possible extra costs involved in buying a home. Some of them are one-time costs and others, such as condominium maintenance fees and property insurance, will be ongoing monthly expenses. Not all of these costs may apply in your circumstances.

Property taxes: Taxes are always a certainty. If you have a high-ratio mortgage, your lender may require that you have your property tax installments added to your mortgage payments.

Property insurance: This insurance covers the replacement value of the structure of your home and its contents. Your lender will insist on this because your home is the security for your mortgage.

Prepaid taxes or utility bills: You will have to reimburse the vendor on a prorated basis if some bills have been prepaid beyond the closing date.

Land transfer tax: This tax varies as a percentage of the property's purchase price. It is usually about 1% – 4%.

Service charges: You'll be charged a fee to hook up new services and utilities, such as your telephone, at your new home.

Lawyer (notary) fees: Even a straightforward home purchase requires a lawyer to review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details. Lawyer's fees for a mortgage range widely depending on the complexity of the deal but will probably be at least $500.

Mortgage loan insurance premium and application fee: If you have a high-ratio mortgage, your lender will require mortgage loan insurance provided by a company such as CMHC or GE Capital. The insurance will cost between 0.5% and 3.75% of the amount of the total mortgage (additional charges may apply) and can be included in the mortgage. The application fee will range from $75 to $235 depending upon how the lender processes your application (consult your local lender for further details).

Moving costs: Don't forget the cost of a professional moving company or a rental truck if you move yourself. Fees for a professional mover can range from $50 – $100 an hour for a van and three movers. These costs may be 10% – 20% higher at the end of the month and in the summer.

Condominium fees: Condominiums charge monthly fees for common-area maintenance, such as groundskeeping and carpet cleaning in common areas. Fees range widely depending on the type of structure but will probably be at least a few hundred dollars per month.