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Buying a house - Advice please :)

amikety

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My husband has house fever and has pre-qualified for a mortgage based on his income alone. I don't have a SIN, so far as I know, I can't be on the mortgage (but I could be wrong - although I would be useless - no job either.)

As you may know, I'm American and clueless about what we would need to do to buy a house in Canada. My husband is equally clueless, although he's Canadian :D

I know minimum downpayment is 5%, 20% or more to avoid the extra insurance. Does anyone know the cost of the insurance?

What are Closing costs? - As in, what percentage of the sale and/or flat fee are they?

Do you need to pay the realtor earnest money? What is normal in Canada? Does the earnest money go towards the commission at the end of sale?

Can the commission come out of the mortgage funds or must that be money already in the bank?

Does property tax come built into the mortgage - where you pay a little extra monthly and the bank makes a payment to CRA for you at year end?

What percentage is commission for a realtor?

Are there any extra fees/costs that I didn't mention? Title transfer, etc? Also, my husband wants to meet a mortgage broker. Do they charge any fees? What in the world is a mortgage broker? In the USA, we just go to our bank and see what we can qualify for - then try another bank if we don't like the answer!

I don't need hard numbers, just rough estimates. Oh, and you can be a dismal as you like. I'm trying to convince him to wait until I have a job so we can get something better than a shack. Thanks! :)
 

scylla

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Some of your questions are province / city specific. For example, the land transfer taxes you will pay on your purchase depends on where you are buying (city). As one example, if you buy a $500K house in Toronto, your land transfer taxes will be a bit over $12K.

Property taxes will be paid by you unless you end up with a downpayment of less than 20%. In that case I believe it will be factored into your mortgage and paid by the bank (out of your mortgage).

Realtor fees are typically 5% (2.5% per agent). This is taken out of the sale price of the house and is "paid" by the seller (i.e. taken from the proceeds of their sale).

Closing costs vary as well. I don't think you can really say they are a set % of the purchase price since certain costs are pretty fixed. Example: you will probably pay somewhere between $1K and $2K in legal fees regardless of the cost of the property. I would google "closing cost calculator" + the name of your province. There are some excellent tools out there that will incorporate the estimated closing costs. You can do the same for the land transfer tax calculation.

Mortgage brokers should not charge you a fee. If the one you are working with wants to charge you a fee then I would find another one. Mortgage brokers check with the banks on your behalf to find the best deal rather than you having to do the leg-work.
 

steaky

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You don't need a SIN. You can get TTN (temporary tax number) from the CRA though. It replace the SIN until you get PR.

Although you have no job, you still could be in the mortgage. Just check with banks.

As home owner, you might also need to pay utilities (such as water and garbage removal) charges to the municipal government.
 

amikety

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Thanks guys! This mortgage broker sounds better than bank hopping, the boring cousin of bar hopping. :p

Do you need to pay a realtor earnest money?
 

scylla

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I'm not sure what you mean by "earnest money".

The realtor's pay all comes from the proceeds of a property sale. Their pay is taken directly out of the proceeds of the sale itself. The seller of the property receives less $ than the buyer paid and this difference is the realtors' pay (covering the realtors on both sides of the transaction).
 

amikety

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In the USA, most realtors collect earnest money upfront. Last I heard, it was around $800 (where I was living at the time). Basically, it's to compensate a realtor for their time worked, showing you houses, doing research, etc, if you decide to bail on the realtor and use another agent/don't purchase a property.

(I don't know if was legal and/or common practice in all states, just Georgia.)
 

scylla

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Interesting...

That's definitely not the case here in Canada. If anyone tries that with you - walk away.

However you do typically have to sign a contract with your agent (whether buying or selling) in which you agree to work with them for three months. If you bail on your agent during this three month period after they have done a bunch of work for you and buy with someone else - they can go after you.
 

amikety

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Good to know. Thanks! :)
 

ALRIVAS

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Hello I will speak for Ontario
Realtors will be paid by the seller of the property and will give you the buyer a present for using their services normally.

2 weeks ago I had a meeting with a Financial institution that specializes in newcomers if you come from countries with credit record such as the US,Australia,etc. you might qualify for 0 down payment,5% or 10% with only a year in the country.

Property Tax are paid both ways depending on the lender you direct to the city or in the mortgage.

You must do a home inspection even if the the property is new and has warranty

Closing cost will be 2% of the purchase price and includes lawyers fee and L.T.T. for you been a first time home buyer you will get a $2000 dollar rebate on the land transfer tax(L.T.T.) normally the lawyer will discount it directly on the final bill.

Your Husband may use up to $25,000 from his R.R.S.P. without paying any tax or penalties.

A person can purchase even if doesn't have a sin as long as he or she proves the status and work commitment from the employer

2 months is the average time to move to your new house and the price of the property will be negotiated around this date in most cases.

Deposit must be given with 24 hours of an agreement reached by buyer and seller and depends on the purchase price is around 3% of purchase price.

for more info go to alrivas. com
 

steaky

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ALRIVAS said:
Hello I will speak for Ontario
Realtors will be paid by the seller of the property and will give you the buyer a present for using their services normally.
In BC, realtors are also paid by the seller of the property and some realtors will give you the buyer a rebate for using their services normally. It probably the same in Ontario.
 

abbicory

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Some building societies now provide buyers with a certificate that states that a loan will be available provided the property is satisfactory. I would say that if someone is willing to rent you their house before buying it, their price is probably too high and they have had zero other people interested for a long time. I will be paying cash for this house as a place to live in home so I can have the peace of mind of being rent and mortgage.
 

amikety

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CanadianJeepGuy said:
LOL. Yes we are so backward that we have regulations on our financial institutions that do not allow them to accept mortgages with no money down.

The housing growth in the States was primarily due to the irresponsible and unethical predatory lending practices by banks. An economy based on supply and demand then more people demanding houses the more they can charge for one. But if 20% of the new mortgages are doomed to fail because the banks have doctored loan applications for people who can't afford to pay off a house then not only is the value of the housing market artificially inflated there is not enough momentum to carry it.

Canada was saved from this because the Liberals had maintained regulations on the practices of Canadian banks. Harper would have deregulated the banks if he had won a majority government prior to 2008 and we would all be in a world of hurt now. Our slow economic growth is not due to internal collapse/stagnation but due to the fact that our trading partners cannot afford to purchase our exports.

Currently you can get fixed mortgages as low as 2.4%. So now is the time to buy. I purchased my house in 2009 and it has increased in value by almost $60000 in less than 5 years. Now is the time to buy before interest rates climb.
CJG, this guy is clearly a troll. (Look at his profile.) I saw we ignore him.
 

CanadianJeepGuy

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amikety said:
CJG, this guy is clearly a troll. (Look at his profile.) I saw we ignore him.
Cheers. Its a slow night around my house anyway.... :D
 

amikety

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CanadianJeepGuy said:
Cheers. Its a slow night around my house anyway.... :D
You want to know what's odd. I have no idea what people mean by "Cheers." I get it's a greeting/salutation, but I don't understand the idioms and their meanings. People in the USA don't say it and no one I've met physically in Canada says it either. :(
 

CanadianJeepGuy

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amikety said:
You want to know what's odd. I have no idea what people mean by "Cheers." I get it's a greeting/salutation, but I don't understand the idioms and their meanings. People in the USA don't say it and no one I've met physically in Canada says it either. :(
"Cheers" is an Anglo-Saxon salutation generally related to sharing in drink. Its just a way of saying thanks and wishing someone well. I've used it as long as I can remember.