A pre-approved mortgage certificate is a written commitment, by a lender,
that you will get a mortgage for a set amount of money, at a specific rate
of interest that is guaranteed for a set period of days. The commitment
is made subject to a property assessment. The service is free and without
A pre-approved mortgage gives you an edge. Before you even go house
hunting, you will know the size of your mortgage, the interest rate,
and the size of your monthly mortgage payments. With your financing already
mapped out, you can concentrate on finding the right home in your price
range. A pre-approved mortgage also puts you in a strong bargaining position
when you make an Offer to Purchase. If the seller wants to make a quick
sale, you may be able to negotiate a price lower than the list price,
because the seller knows that you are a serious buyer. On the other hand,
if several people are bidding on the home you want, you may decide to
offer to purchase at the list price, to beat out earlier offers.
Shopping for a Home
You are ready to go shopping if you have:
- Set aside money for your down payment and additional costs
the price of home you can afford
- Investigated your mortgage options
- Your pre-approved mortgage certificate
Draw up a Wish List
Think about where you would like to live (what area or neighbourhood)
and what kind of house you would like to live in (which features are
absolutely essential, which you can live without and which are entirely
out of the question).
Take a look at real estate ads for the area you're interested in to
see what's on the market and the prices. Also drive around a few neighbourhoods
and see what's for sale or visit Open Houses. This can help crystallize
what you want or don't want in a home.
Choose a Real Estate Agent
Your friends, relatives or co-workers may be able to recommend a real
estate agent. If not, call around and talk to a few agents. Ask if their
real estate licence is in good standing, find out if they have access
to the Multiple Listing Service (MLS) and see how the agents respond
to your questions. Also, notice what questions they ask you - are they
interested in knowing exactly what you are looking for, do they try to
assess your financial situation, are they knowledgeable about neighbourhoods
that interest you?
Also, have a discussion about fees. Typically, a real estate agent's
commission is about 6% of the purchase price of a home. In some parts
of Canada, there are now buyer/agency agreements that set out how the
agent will be paid. Again, make sure you have the discussion about fees
at the start of your relationship with your real estate agent.
The best real estate agent will be a combination of personal advisor,
consultant and negotiator. He or she will show you homes that match your
criteria, guide you through the home buying process, negotiate the best
possible price for your home and deliver your closing paperwork.
Retain a Lawyer
Retain a lawyer (or notary in Quebec) who specializes in real estate .
Depending on the volatility of the real estate market, you could find
yourself in a bidding war for the home you want and you will want to
have your lawyer look over any offer to purchase before you submit it.
Knowing exactly what you want in a home will save you a lot of time
when house hunting. Think about your immediate needs, your future plans
and your lifestyle. When you look at homes, you will be concentrating
on the house, but don't forget to look at the property as a whole - the
lot, the neighbourhood, the surroundings - and how close the home is
to facilities and services that are important to you.
Buying a home can be an emotional decision, but the home you purchase
should strike a balance between your wish list and the practical realities
of the property, its location and the housing market. Use our house hunting
checklist to compare the homes that you view and get a clear understanding
of what exactly is included in the purchase.