Newcomer Stories: Finalising The Home Deal

Wednesday, September 10, 2014

Last week, I spoke about a big milestone with regards our new life in Canada. After months of searching, we've found our first home. But our closing date was still 90 days away.

3 months was really a long time. Like most people, I would have loved to have availed myself of my new purchase as soon as I bought it. There's nothing like the excitement over a new toy. But with homes, of course, it was different. We would need time to prepare to move in and the sellers would need time to prepare to move out. I couldn't wait for the day but I had to. There simply was no getting around it. I had to be content with just "watching" the house from a distance. I drive by the area every chance I get, just so I could get a look. It's kinda freaky actually. From house hunters, we became house stalkers!

Anyway, the days following signing the agreement were busy for me. I had to arrange to get the deposit to the seller agent. A deposit is different from the down payment that you put down for the house. The deposit is part of the down payment, and is paid to secure the purchasing agreement. You forfeit this deposit, if for any reason, you back out of the deal when you're not supposed to.

Home inspection
One condition of the agreement was that we had to arrange for a home inspection in the next 2 days to finalise the deal. A home inspection is very important since it reveals if there are any problems with the house. Should there be issues with the home inspection, you would be able to back out without losing your deposit, if this was highlighted as a condition to close the deal.

Another condition that may be attached to closing the deal was if a buyer gets financing or not.

Arranging for finance with the bank went quick since I already had the pre-approval. Down payments are normally 20% of the purchase price but if you are planning to put down anything lower than that, then an application to the CMHC (Canadian Mortgage and Housing Corporation) is required for mortgage insurance. Mortgage insurance covers the amount owed to the bank in case you default.

Just as a side note, a pre-approval does not mean a mortgage approval. The bank may issue you a pre-approval but can still reject your mortgage application at a later stage. Be very mindful of this. Fortunately though, there are quite a few financial institutions that cater for mortgages. Working with a mortgage broker might help in this case so that you can get the best deal that's in the market at the moment.

Last, but definitely not least, we had to choose a lawyer to do the property transfer. Although we did not know many lawyers (in fact, I did not know one at all), I relied much on recommendations. However, in the end, after I eventually made my choice, I realized that

a) Most lawyers charge similar fees to transfer property.
b) Transfer tax is inevitable. You will pay the exact amount as calculated.
c) A lawyer that's nearby is more convenient so that on closing day, it is easier to get the keys. :-)

Next week, I'll post about hooking up our home.

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