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The Importance of Good Credit
There are a number of steps to getting mortgage financing. A particularly important step and one many people don't give much thought to - is the credit check. As a routine part of the application process the lender will order a copy of your credit history...
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The credit bureau does not rate you - it merely provides information on your credit history. The lender will examine the credit report to aid in determining whether to lend you money. If the lender has any concerns about something on the report the lender may ask you for an explanation. Though lenders usually work as quickly as possible in processing mortgage applications - the process can be slowed down if the lender needs to go back to the applicant for an explanation concerning items on a credit history. So, don't worry, but be prepared to answer questions the lender may have - often a simple explanation will do.
The lender will also use the report to verify other information on your mortgage application, for example: information about your employment status, your address (including the name of your landlord and perhaps rental payment history), etc. The credit report will also indicate inquiries made by other creditors over the period of the report. This information might be useful to a lender to show what other avenues of financing you might have tried and it may raise questions about why another potential creditor declined to lend it to you.
Honesty is the best policy - and that certainly holds true when applying for a mortgage. If you think there might be any credit problems - tell the lender up front and ask about the lender's policy prior to applying for the mortgage. There is no point in trying to hide something that will show up in your credit history. Of course, even if you think your credit record is fine, there may be detrimental comments on the report about which the lender may ask you.
Just like the old saying - a stitch in time saves nine - by getting a copy of your credit report before you apply for a mortgage you may be able to avoid surprises and possible delays that may occur in having to answer questions about your credit report. Because the report contains information about you, you have a right to inspect a copy of it. Equifax, one of Canada's largest credit bureaus, will mail consumers a free copy of their personal credit file upon request. The request must be by mail or via fax, and certain information must be supplied with the request. For more information, call Equifax at 1-800-465-7166.
If you disagree with something in your credit history you have the right to challenge it and ask that the information be corrected. For example, perhaps the report shows that you were over 90 days late paying a bill but the report does not indicate that you withheld payment pending a settlement of a dispute with the creditor. OR perhaps you were late with a particular payment because you were away. Whatever the explanation, contact the credit bureau to attempt to clarify the matter and have the file corrected. Equifax, for example, ensures that file correction procedures to personal credit files are made within seven days, and they send amended copies of your history to any company that has received your credit report in recent months.
Have the home inspected
Buying a home is one of the most important investment decisions you will make in your lifetime. As such, it makes sound financial sense to enlist the services of a qualified home inspection company to ensure your home is as solid and secure on the inside as it is on the outside...
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A home inspection will determine the structural and mechanical soundness of your home. Your home inspector will identify existing and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required. Shortly after the inspection has taken place, a report summarizing the findings is generally provided to the potential purchaser.
By commissioning a home inspection prior to purchase, you're protecting both yourself and your investment, as well as buying a little peace-of-mind.
Home inspection costs often range according to size, age, and location of the home. Your Royal LePage sales representative can recommend a reputable home inspection service or arrange for a home inspector to visit your property.
Title insurance explained
Title insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? This article will provide you with some background information about title insurance to help you make an informed decision...
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Title to property
Title is the legal term for ownership of property. Buyers want "good and marketable" title to a property - good title means title appropriate for the buyer's purposes; marketable title means title the buyer can convey to someone else. Prior to closing, public records are "searched" to determine the previous ownership of the property, as well as prior dealings related to it. The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects property that is free of such claims, so normally they must be cleared up before closing. For example, the seller's mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.
Sometimes problems (or defects) regarding title are not discovered before closing, or are not remedied before closing. Such defects can make the property less marketable when the buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without permission. The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.
Who is protected with title insurance?
Title insurance policies can be issued in favour of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance protects purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.
Types of risks that are usually covered under a title insurance policy include: survey irregularities; forced removal of existing structures; claims due to fraud, forgery or duress; unregistered easements and rights of-way; lack of pedestrian or vehicular access to the property; work orders; zoning and set back non-compliance or deficiencies; etc. For a risk to be covered, generally it has to have existed as of the date of the policy. As with any type of insurance policy, certain types of risks might not be covered, for example, native land claims and environmental hazards are normally excluded. Be sure to discuss with your lawyer what risks are covered and what are excluded.
The insured purchaser is indemnified for actual loss of damage sustained up to the amount of the policy, which is based on the purchase price. As well, some policies have inflation coverage, which means that if the fair market value of the property increases, the policy amount will also increase (up to a set maximum).
How long is the insurance coverage?
In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser's death, or certain family members (e.g., a spouse or children) to whom the property may have been transferred for a nominal consideration.
In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured in the event the lender realizes on its security and suffers actual loss or damage with respect to a risk covered under the policy. Lenders are usually covered up to the principal amount of the mortgage.
The premium for title insurance is paid once (at the time of purchase). Generally speaking, in Canada the purchaser of the property pays for the title insurance, though there can be situations where the seller pays for it. Some policies automatically cover both the purchaser and lender; others will cover both for a small additional fee.
Protection and peace of mind
Title insurance can help ensure that a closing is not delayed due to defects in title. And, if an issue relating to title arises with respect to a risk covered under the policy, the title insurance covers the legal fees and expenses associated with defending the insured's title and pays in the event of loss.
Housing options available to empty nesters and retirees
The kids have grown. Pension is just around the corner. The home that you've lived and loved is just too big for the two of you. Your friends have downsized to smaller homes and retirement communities. The advantages are obvious they say - smaller homes translate into lower costs and less maintenance. Retirement communities ensure like-minded neighbours. The lifestyle decision is yours...
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For empty nesters and retirees, moving can be an overwhelming experience both physically and emotionally. But preparing yourself for your move - before you make your move - can make all the difference in the world. Once you've determined that you're ready to take the plunge, there are an abundance of options available to you.
Ideally, the perfect "retirement" home is one that provides for the inevitabilities of aging and accommodates changing needs. The closer the home matches your needs; the less chances are of a subsequent move.
Options, options, options
Making the right choices can save you a substantial amount of money. Determine how much you have to spend and what your dollars will buy in areas which you are interested.
When choosing a new home, your first decision is whether you want to remain in the same neighbourhood. You've called this neighbourhood home for many years. Can you leave behind the friends and acquaintances you've made over a lifetime? Can you say goodbye to your trusted doctors, friendly shopkeepers, and familiar surroundings? Only you can answer these questions.
If the decision is made to move out of your neighbourhood, determine where it is that you would like to go. A better neighbourhood within the city? A community outside a major center? Down South?
What type of property would suit your lifestyle? Is it a condominium promising little or no upkeep or a small bungalow that would still allow you to garden?
Condominium cozy
Short on maintenance and long on amenities, the condominium lifestyle has been a favourite of empty nesters and retires since its inception. Condominium apartments and townhomes are available in virtually every price range and neighbourhood. Many offer recreational facilities such as swimming pools, tennis courts and fitness areas. Some include golf courses. Unlike owning your own property, owning a condominium means that you're governed by the by-laws, rules and regulations established by the condominium board. Generally, these rules are necessary to ensure the enjoyment, safety and cleanliness of the condominium. It may be a wise move to check with the condominium board to determine how these by-laws, rules and regulations will affect you as an owner, especially if you have a pet.
Single, detached and a bungalow
Bungalows provide empty nesters and retirees with the best of both worlds - the opportunity to own a house and a yard with minimal maintenance.
The "bungalow living" concept has surged in popularity in recent years, especially in smaller communities outside major centers. Many empty nesters and retires are considering the sale of their larger, more expensive homes in the city to purchase less expensive bungalows in more rural areas.
Retirement villages
Retirement communities offer retires the amenities often associated with condominium living, smaller homes and the opportunity to live with like-minded individuals.
Adult lifestyle communities came into existence in the 1970s in Canada. Today's complexes generally house approximately 500 - 1000 families in dwellings ranging from apartment units to single detached homes. The focal point of these communities is the clubhouse, where a variety of amenities including fitness facilities, tennis courts, games rooms, swimming pools, and in some areas, golf courses are available.
Current day retirement communities are resort-like in nature. For the most part, they're built in rural areas that are close to large urban centers, but far enough away from the hustle and bustle of city living.
If you're uncertain about the alternatives available to you, you may want to speak to your Royal LePage sales representative. He/she can provide you with a free estimate of the value of your home and help you to determine what type of property will best suit your lifestyle.
Choosing a neighbourhood
It is important that the neighbourhood you choose to live in is well suited to you and your family. The following is a list of considerations and possible problem areas...
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Environment
The quality of air, water and soil is a top concern as a polluted neighbourhood can be detrimental to both your health and property value. Ask your real estate agent, neighbours and local media about any known environmental issues in the area.
Appearance
The home you are considering may be tidy and attractive inside and out, but how does it compare to the surrounding area? Explore the neighborhood, keeping an eye open for signs of neglect (overgrown lawns, houses in need of paint, trash and junked appliances littering yards). No matter how diligent you are in the upkeep of your property, a run-down neighbourhood can drive your property value down.
Crime rate
Check with the local police department to find out if the home you are considering is in a safe neighbourhood. Police may be able to provide statistics regarding break-ins and other crimes.
Schools
If you have children, the proximity and quality of schools is an important consideration. Talking to neighbours with school age children can be helpful. In some areas schools will provide data (such as average test scores) that can aid you in determining a school's quality.
Transportation
Convenient access to public transportation and/or major highways can mean the difference between a pleasurable and not-so-pleasurable commute to work.
Amenities
Amenities like a grocery store, parks, recreational facilities, post office, dry cleaner and a doctor's office can make life easier if they are located nearby.
Property Values
By researching the selling prices of homes in over the past decade or so, you may be able to predict future trends. Your real estate agent may be able to provide helpful data.
Utilities
Avoid unpleasant surprises by finding out what utility costs are before you decide to purchase. Fees for water, electric, cable tv, phone and gas vary greatly by region.
Noise and Nuisances
It can be hard to get an accurate impression of a neighbourhood in just one visit. Be sure to return to the neighbourhood at different times of the day and night. Listen for traffic noise, barking dogs, low-flying airplanes and any other noises that could bother you as a resident.
