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Home Ownership is the Key to Your Future

Home Ownership is the Key to Your Future. Joanne Lozinski. Sales Representatives RE/MAX Professionals Inc. 905-270-8880. Real Estate is unlike any other commodity And here’s why…. Real Estate Principal residence Tax Free

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Home Ownership is the Key to Your Future

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  1. Home Ownershipis the Key to Your Future Joanne Lozinski Sales Representatives RE/MAX Professionals Inc. 905-270-8880

  2. Real Estate is unlike any other commodityAnd here’s why… • Real Estate • Principal residence Tax Free • Practical (everyone requires shelter) • Offers security (temporarily unemployed) • Now you’ve got extra room • Take in a boarder • Help with the payments • Your house is appreciating in value and you’re continuing to build equity • Other commodities • Taxable • You can’t raise a family living in a mutual fund • Less Secure (you lose your job) • Limited space • Cash in your stocks and bonds • Pay your landlord and up with 0

  3. Why NOW is the Time to Buy • 5% Down-Payment Plan • In the 1980’s the minimum down-payment required to purchase a home was 10% • The minimum required down-payment today is 5%! RRSP & Home Buyers Plan • May borrow up to $20,000.00 each from RRSP • Repay back over 15 years in equal installments Low Interest Rates • The average mortgage rate for past 20 years 11.08% • The current 5 year mortgage rate is 5.33% lower than the past 20 year average

  4. What does that equate to in dollars and cents? 5.45% $250,000 (mortgage) $1,527.77 (per month) • 11.08% • $250,000 • (mortgage) • $2,464.76 • (per month) Difference of $936.99 per month savings

  5. 1985 - $109,094 1986 - $138,925 1987 - $189,105 1988 - $229,635 1989 - $273,698 1990 - $255,020 1991-$234,313 1999 - $228,372 2000 - $343,255 2001 - $251,508 2002 - $275,331 2003 - $293,067 2004 – $314,661 2005 - $335,971 Market Trends and Prices Average Price of Single Family Dwellings in the GTA 1992 - $214,971 1993 - $206,496 1994 - $208,921 1995 - $303,028 1996 - $198,150 1997 - $211,307 1998 - $216,815 1989 Market highly speculated Over-built, over-inflated Interest rates 14% Price adjustment

  6. Why Real Estate is a good investment • Over the past 36 years real estate has increased 1470% Data from Toronto Real Estate Board This chart represents average price trends for houses in the Toronto area during the last 24 years. House prices clearly peaked in 1989 and bottomed out in 1996.

  7. Toronto Real Estate Board Historical Stats 1966 $21,360 1976 $61,389 1986 $138,925 1996 $198,150 2004 $315,231 2005 $335,791

  8. Historically Real Estate has proven to be anexcellent investment • It is a hedge against inflation • It can provide excellent collateral • It is easy to liquidate • It provides an avenue for forced savings • It’s value increases over time • Your principal residence is a tax free gain

  9. Historically Real Estate has proven to be an excellent investment 1986 - $119,900 2004 - $345,000 tax free gain of $225,100 1986 - $143,900 2004 - $462,000 tax free gain of $318,000

  10. Renting vs. Owning • With rent increasing • Mortgage rates decreasing • Property values increasing • There is absolutely NO benefit to renting NO At a rental rate of $1,200.00 per month it will cost you $60,000.00 in rental payments over a 5 year term!!

  11. Retrofit • Most existing two-unit houses (built before Nov. 16, 1995) will be "grandfathered" (continue to be allowed) under the new legislation, provided they meet applicable municipal planning standards. As well, two unit houses should have met Fire Code requirements by July 14, 1996. In general, new apartments must comply with the Building Code, and existingapartments must comply with the FireCode.  Both new and existing apartments must comply with certain property and municipal zoning (planning) standards. • It would appear your best protection is to obtain a certificate of compliance from the local fire department for any property that might fall under the jurisdiction of the Fire Code, Section 9.8. You should obtain a building permit before starting any new construction. If you don’t obtain a permit, or a certificate of compliance, the dwelling unit could possibly be non-conforming, and therefore considered illegal. • Also, municipalities have the right to decide where they will allow homes to have additional dwelling units and can designate areas where they will not allow homes to have additional dwelling units. Units installed after November 16, 1995 without a permit are unprotected (even if they meet fire, safety & electrical standards) and the municipality could require removal of the unit.

  12. TREB District Map Click on map to view larger section

  13. Housing Types and Styles - Townhouses Free Condo Townhouse Also includes a maintenance fee that is usually less than the standard condo townhouse. This fee includes general landscaping but you are responsible for exterior maintenance of the building. Freehold Townhouse No Maintenance fee. You own the land. • Condominium Townhouses • Monthly maintenance fees usually range from $140.00/mo - $210.00/mo. This fee includes exterior maintenance & building insurance. Different Types of Townhouses Two Storey Three Storey Multi-Level THIRD FLOOR SECOND FLOOR SECOND FLOOR UPPER LEVEL BEDROOMS BEDROOMS GROUND FLOOR GROUND FLOOR MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM BASEMENT BASEMENT BASEMENT CRAWL SPACE

  14. Housing Types and Styles - Townhouses • Typical Townhouse Freehold Condo Freehold Townhouse 3-Storey Townhouse Multi-Level Townhouse 2-Storey Townhouse

  15. Housing Types and Styles - Semi-DetachedAttached by Common Wall or Garage Raised Bungalow Three Storey Bungalow Two Storey THIRD FLOOR SECOND FLOOR SECOND FLOOR GROUND FLOOR GROUND FLOOR GROUND FLOOR GROUND FLOOR Three Level Backsplit Four Level Backsplit BASEMENT BASEMENT BASEMENT BASEMENT UPPER LEVEL BEDROOMS MAIN LEVEL LIVING ROOM UPPER LEVEL BEDROOMS Five Level Backsplit MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM Front Split Multi-Level BASEMENT BASEMENT CRAWL SPACE CRAWL SPACE UPPER LEVEL BEDROOMS UPPER LEVEL BEDROOMS BEDROOMS BEDROOMS MAIN LEVEL LIVING ROOM MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM LOWER LEVEL FAMILY ROOM BASEMENT BASEMENT SUB-BSMT BASEMENT CRAWL SPACE CRAWL SPACE

  16. Housing Types and Styles - Semi-DetachedAttached by Common Wall or Garage • Typical Semi-Detached Raised Bungalow Bungalow 2-Storey 3-Storey 3 Level Backsplit 4 Level Backsplit 5 Level Backsplit Multi-Level

  17. Housing Types and Styles - LinkAttached by footing or garage Link by Footing SECOND FLOOR SECOND FLOOR GROUND FLOOR GROUND FLOOR BASEMENT BASEMENT Link by Garages SECOND FLOOR SECOND FLOOR GROUND FLOOR GROUND FLOOR BASEMENT BASEMENT

  18. Housing Types and Styles - LinkAttached by footing or garage • Typical Link Link by Garage Link by Footing Link by Garage Link by Footing Link by Footing Link by Garage Link by Garage Link by Footing

  19. Housing Types and Styles - Detached 1 ½ Storey Raised Bungalow Bungalow 2 ½ Storey Two Storey 3rd FLOOR SECOND FLOOR SECOND FLOOR 2nd FLOOR GROUND FLOOR GROUND FLOOR GROUND FLOOR GROUND FLOOR GROUND FLOOR Three Level Backsplit BASEMENT BASEMENT BASEMENT BASEMENT BASEMENT Four Level Backsplit Five Level Backsplit UPPER LEVEL BEDROOMS UPPER LEVEL BEDROOMS MAIN LEVEL LIVING ROOM MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM UPPER LEVEL BEDROOMS MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM BASEMENT SUB-BSMT CRAWL SPACE BASEMENT BASEMENT CRAWL SPACE 4 Level Sidesplit 4 Level Sidesplit Front Split 3 Level Sidesplit UPPER LEVEL BEDROOMS UPPER LEVEL BEDROOMS BEDROOMS MAIN LEVEL LIVING ROOM MAIN LEVEL LIVING ROOM UPPER LEVEL BEDROOMS MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM MAIN LEVEL LIVING ROOM LOWER LEVEL FAMILY ROOM LOWER LEVEL FAMILY ROOM BASEMENT LOWER LEVEL FAMILY ROOM BASEMENT BASEMENT SUB-BSMT CRAWL SPACE CRAWL SPACE CRAWL SPACE

  20. Housing Types and Styles – Detached Typical Detached Bungalow Raised Bungalow 1 ½ Storey 2-Storey 2 ½ Storey 3 Level Sidesplit 4 Level Sidesplit 4 Level Backsplit 5 Level Backsplit

  21. Pre-approval Price determination Buying profile Product availability Viewing and feedback Offer Negotiations Waivers Closing Agency The Home Buying Process10 Steps

  22. Mortgage Pre-Approval • Before we even begin to investigate the marketplace we must have a pre-approved mortgage in place. We can arrange for you to meet with our mortgage consultant at a mutually agreed upon time. Most of the preliminary information can be done over the phone. • Our mortgage consultant will shop for the absolute best rate and terms possible to suit your needs.

  23. What You Need To Apply For A Mortgage • Verification that the down payment came from your own resources • (ie. Bank account, gift letter) • Copy of agreement of purchase and sale • Copy of the listing • Survey • Credit Check • (done with your initial pre-qualifier) • Salary letter from employer • (and/or T4 slips for the past two years) • If self-employed, financial statements & income tax returns for the past two years • List of assets and liabilities • (including account numbers)

  24. Mortgage Financing Two Types of Loans • Conventional Mortgage • 25% or more down payment • Under Canadian Law lending institutions cannot provide first mortgages in excess of 75% of the value of the property. • CMHC • Less than 25% down payment • Under Canadian Law all high ratio mortgages (less than 25%) down must be insured through CMHC. • This fee ranges anywhere from 0.5% to 3.25% of the mortgage amount which varies according to your down-payment. • This mortgage insurance is only for the protection of the lender should there be a default in the loan.

  25. Insurance Premiums

  26. CMHC Insured Mortgage Example • Purchase Price $250,000.00 • Down-Payment $12,500.00 • Mortgage Amount $237,500.00 • Insurance Fee (2.75%) $6,531.25 • Actual Mortgage $244,031.25 • The insured portion of the mortgage • is subject to Provincial Sales Tax

  27. Associated Costs • Deposit - The standard deposit that is submitted with an offer is usually about $5,000.00. This can be adjusted if necessary according to your specific financial situation. • CMHC Insurance Fee - CMHC fee is subject to PST. • Appraisal Fee - CMHC appraisal fee is $235.00, Conventional loans the fee will vary anywhere from about $75.00 – 150.00. • Land Transfer Tax - This is a tax that is paid by the Buyer when any property in Ontario is transferred. Under a purchase price of $250.00 the fee is calculated at 1% of the purchase price less $275.00.

  28. Associated Costs • Building Inspection - Will vary from about $250.00 – 325.00 • Legal Fees (Estimated) • Lawyer $450.00 • Mortgage $200.00 • Disbursements • Title Search $100.00 • Executive % Sheriff’s Certificate $100.00 • Tax, Building & Hydro Certificates $150.00 – 200.00 • Adjustments Vary • Land Transfer Tax (see next page) • You may wish to discuss the benefits of title insurance with your lawyer

  29. Land Transfer Tax Table Land transfer tax is a provincial tax payable on the purchase of a home. This tax is paid by the Buyer and is calculated as follows: 0.5% of the first $55,000 plus 1.0% of the amount from $55,001 to $250,000 plus 1.5% of the amount from $250,001 to $400,000 plus 2.0% of the amount in excess of $400,000

  30. Typical Closing Costs • Typical Closing Costs on a purchase of $250,000.00 • 5% Down Payment • Legal Fees (all Inclusive) $1,000.00 • Land Transfer Tax $1,725.00 • Appraisal (CMHC) $235.00 • PST on insured portion $617.50 • Building Inspection $321.00

  31. Typical Closing Costs • It is usually safe to assume that on a $250,000.00 purchase $4,000.00 will adequately cover all of your closing fees. The only time this may be higher is in the case of a property tax adjustment. • For example: If you purchase a home closing in February and the Seller had pre-paid the taxes until June, he would be credited the amount pre-paid. • The building inspection fee is due at the time of the inspection. • The CMHC fee is due at the time of the application.

  32. Price Determination • Price range will be established based on the results of your meeting the mortgage consultant. • Although you may qualify for a loan • amount higher than what you anticipated, • you may choose not to purchase up to • your maximum qualification level. • Staying within your comfort zone may • be more suitable to you.

  33. Product Availability • Our main frame database will source available listings in the price range, area and with the features you have requested. • Our data is updated frequently throughout the day. • We will keep you fully updated on all • new properties as they become available.

  34. Selections • Our job is to assist you in selecting those properties that suit your needs. • Through the process of elimination, we will choose those homes that represent the best value. • At any give time there will be only a handful of homes that you will even consider.

  35. Power of Sales • Owner defaults on loan • Lender takes property back • Scenarios • there is more mortgage owing on the property than what the property is worth • there is equity in the property that must be returned to the Seller. • The lender must try to obtain the best price for the home.

  36. Viewing & Feedback • Appointments will be made to view the most appropriate homes. • Asking questions and taking notes will prove to be very beneficial. • Feedback is critical in order to ensure that we are on the right track. • Express your thoughts!

  37. How much do we offer? • Usually an owner will ask between 2 – 4% above market value for the home, therefore there is usually some flexibility in the asking price. • Sometimes an owner will price his home very close to or even slightly under what comparable homes have sold for, therefore there is usually very little if any flexibility. Usually these properties attract all the attention and in many cases generate more than one offer. • Depending on condition, location, upgrades, etc. some homes will sell for more or less than comparable homes. • A CMA will be prepared for you advising you of recent market activity in the area.

  38. Negotiations • Who is representing you? • Under Buyer-Agency it is our duty and obligation to represent you – OUR CLIENT. • Our Goals and Objectives are • to get you the best possible • home at the best possible price • with the least amount of hassles.

  39. What is an Agency Relationship? • It is the relationship an agent has with his/her client/customer. • Sub-Agent works with the Buyer but for the Seller. • Buyer-Agent works with the Buyer and for the Buyer. • Dual-Agent works for neither the Seller nor the Buyer. This situation would arise when the Buyer and Seller Agent are the same real estate firm. • All prospective Buyers have the right to representation. • Agency Relationships must be disclosed to all parties involved.

  40. Waivers & Follow-Up • Once your conditions have been fulfilled they are removed from the offer via waiver and the deal becomes firm and binding. • We look after forwarding all • of the paper work to your • solicitor and mortgage • consultant.

  41. Checklist • Meet with mortgage consultant • Choose a lawyer • Arrange for moving company • Arrange for utility transfer/hookup+ house • insurance • Arrange for keys • Arrange for school enrollment • Change of address at post office

  42. Helpful Resources • Canadian Mortgage and Housing Corporation • Multiple Listing Service • The Canadian Real Estate Association • ICX - Commercial Listings across Canada • The International Real Estate Federation • Terra Nova Financial Services Inc.

  43. Thank You • Joanne Lozinski • Sales Consultant • RE/MAX Professionals Inc. • 905-270-8840

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