When consumers choose a Realtor to help them buy or sell a property, they are placing their trust in someone who is knowledgeable and who will protect their interests. A Realtor's role is to provide clients with sound, effective, timely advice and professional service.

More than ever, in today's fast-paced, high-tech world, Realtors are being challenged to continually improve their professional standards by keeping informed of developments and trends in real estate. Buying and selling a property today is a complex undertaking that involves large sums of money, stringent legal requirements and a tremendous depth of knowledge and experience. Along with accountability and high moral conduct, education has become a cornerstone of the real estate profession.

Real estate licensing changes

Realizing the need for real estate education that emphasizes consumer protection and the development of increased skills and knowledge, a new integrated learning system for real estate licensing education was recently introduced in Ontario. The new system, spear-headed by the Ontario Real Estate Association, recognizes the need to standardize learning across all provinces and incorporates innovative techniques, new program designs and diverse delivery systems.

Already serving as a model for other provinces, Ontario's new system includes a Real Estate Encyclopedia and CD Rom (which integrate all textbooks and materials into one easy-to-use resource), course changes and a new curriculum. The system places an emphasis is on multi-media communication and hands-on learning.

Keeping standards high

Public expectations of the real estate profession today are higher than ever. Ontario's new approach to real estate licensing education and emphasis on ongoing educational development by real estate practitioners continue to uphold the profession's commitment to fair dealing and high integrity.

The individual receiving his or her real estate licence today has been through an intensive process of interactive learning, self study and examination. People are going into real estate today with ever-increasing levels of education. A recent U.S. study showed that 30 per cent of people entering the real estate profession had a college degree and 20 per cent had a graduate degree.

The purchase or sale of property is a business transaction of tremendous complexity. There are distinct advantages to having a Realtor who is well-educated, knowledgeable, experienced and sincere. A Realtor also has access to an array of services, including the Multiple Listing Service, which can provide you with instant, thorough and accurate information on properties that might interest you or issues that concern you.

If you are selling, a Realtor will not only fairly assess your property, but listen to you and develop a marketing plan that best meets your needs. He or she will give you tips on how to improve the marketability of your home and make a first good impression to potential buyers.

If you are buying, a Realtor will act as an intermediary and help you deal at arms length with potential vendors. He or she will assess what you can realistically afford, target appropriate neighborhoods, provide facts on the costs of running a home and what to look for when considering a particular property.

A Realtor can also provide you with a list of lenders, lawyers, mortgage brokers and other professionals whose expertise you may require to complete a real estate transaction. In addition, he or she can help you evaluate all the mortgage options available today to help you obtain financing at the most attractive prevailing rates and terms.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: Ontario Real Estate Association

More than Just a Sign on the Lawn

If you're thinking of selling your home in the near future, you may think that all that's required is a "for sale" sign strategically placed on your front lawn -- but any real estate professional will tell you there's much more to it than that.

While a sign on your lawn is of paramount importance to the sale of your home, a well-thought-out marketing plan is also essential. Your Realtor, of course, is another vital component in the process, and one of the first things he/she will discuss with you is a marketing strategy designed to give your home maximum exposure.

Keep in mind that effective marketing of your home requires a lot of communication between you and your Realtor and there are several things you can do to make sure your home gets the best possible exposure.

Be Candid with Your Realtor

First of all, disclose everything you can about your property and the neighbourhood in general. This information will help your Realtor a great deal and he/she can choose how and when this information can be related to prospective purchasers. For example, there may be something about your home or the area you live in that you may take for granted, but that characteristic could be a major selling point for your home -- such as its close proximity to local schools and recreation facilities.

It's also wise to be candid about any potential drawbacks as well, so both you and your Realtor can be realistic in arriving at a suitable list price. Where possible, your Realtor is likely to have some suggestions as to how these problems can be improved upon.

As well, your Realtor may notice some serious flaws in you home or even some basic elements that are missing. They may not bother you, but could work to your detriment when it comes to selling your home. As a result, your Realtor is likely to make helpful, reasonable recommendations that will enable you both market your home successfully. It's important to keep an open mind and follow his/her advice.

Operating Costs

It's also a good idea to have information on hand that will give the Realtor an idea of the costs of running your home -- annual heating bills, along with documentation of any recent major repairs or upgrades -- such as a new roof or new wiring or plumbing. These can be very effective marketing tools.

Open House

Your Realtor will also tell you that an open house can be another effective marketing tool. While some homeowners are adverse to this idea, it's one you should discuss with your Realtor if you really want your home to receive maximum exposure to interested buyers. During an open house or prearranged showings, it's a good idea to make sure that you and any other members of your family (including pets) are absent. Many buyers are intimidated by the presence of homeowners and tend to rush through a home as a result.

Clean and Clutter-Free

Before any showing or open house, it's imperative to make sure your home is clean and uncluttered -- both inside and out. Get rid of junk (don't forget the garage) and any unpleasant odours from smoke, cooking or pets. A neat exterior is inviting and a clean and neat interior just makes good, plain marketing sense.

Consider having your home painted. It's a relatively inexpensive way to show it in its best light.

Financing and Closing

Financing is another area where you may be able to help market your home more effectively. You can make your home more attractive to some purchasers by taking back a mortgage. It's an excellent marketing tool, especially if you're trading down to a less expensive home.

Flexibility on the closing date is another important factor in the successful marketing of a home. Real problems can arise when vendors and purchasers can't agree on a closing date. Again, it's important to work with your Realtor and listen to suggestions. Some deals are lost simply because the vendor and purchaser can't agree on a closing date.

Stay Informed

Your Realtor should keep you informed by following up after each showing and providing you with a weekly update on how the marketing of your home is progressing. By the same token, if you have any questions or ideas, don't hesitate to share these with your Realtor.

You'll find that a team effort, combined with a realistic approach will help you market your home much more effectively.

Article Provided by: David Pusey Personal Real Estate Corporation

Source:  OREA

Buying or selling a home is no simple business transaction. It takes a team of experts and professionals you can trust to achieve your goals and protect your interests.

Bringing in the right experts at the right time will ensure your purchase or sale goes smoothly and you don't pay a big personal and financial price. The experts you need may vary, but usually include the services of a Realtor, a lender, a lawyer, a home inspector and an insurance agent.

Selecting your team

Whether you're selling or buying, the first individual to get on your team should be a Realtor. In BC, a Realtor is a licensed real estate professional who is a member of a local real estate board as well as the Canadian Real Estate Association (CREA) and the BC Real Estate Association (BCREA). This individual has successfully completed an intensive course of study and has skills, knowledge and experience that most buyers and sellers don't have.

Having a Realtor act on your behalf has many distinct advantages. The key benefit is that he or she can negotiate on your behalf, advise you on how to proceed with your purchase or sale and when to bring in the other experts and professionals you'll need.

The Realtor you select should be someone that knows the neighbourhood you live in or want to live in, has a good track record and will handle your sale or purchase as if it were their own.

One of the most important decisions you must make as a seller is deciding the asking price of your home. A Realtor can help you analyse your home and compare it with similar properties for sale or recently sold in your area. A Realtor will also develop a marketing plan for your home that may include open houses, advertising and listing options. As well, a Realtor will provide you with tips on small improvements you can make to help your home "show" better to prospective buyers.

Few people buy a home for cash. Most usually combine savings with money borrowed from a lender through a financial arrangement called a mortgage. Your search for a lender should begin with your search for a home.

Your Realtor can assist you in evaluating the many mortgage options and getting financing at the best available interest rates and terms. When deciding which financial institution or lender to deal with, begin with your own bank, credit union on trust company -- they already know who you are. But shop around and compare what different lenders have to offer.

Whether you are a buyer or a seller, it's important to have a lawyer to represent your interests. That's why you should have one on stand by before you put your home on the market or begin your search for a new home. Real estate documents, such as the agreement of purchase and sale, are complex and should be reviewed by a lawyer who specializes in real estate transactions.

As a seller, it's wise to have a lawyer review an offer to purchase before signing anything. As a buyer, when an agreement is reached with a seller, a lawyer will help ensure you receive valid title to the property and that it is clear of any registered claims. Your lawyer will also calculate the amount of land transfer tax you will be required to pay as well as any adjustments to compensate the seller for prepaid bills.

If you are a buyer, you can avoid a lot of expensive surprises by bringing in a home inspector as a condition of your offer to purchase. The older the home you plan to purchase - even if it has been substantially upgraded - the more potential there is for problems. Being aware of any structural defects can help you decide whether you want to buy the property at all, or for the price you are considering.

For purchasers, another key member of the real estate team is the insurance broker. Creditors and mortgage lenders, almost without exception, require insurance on the home you buy before any purchase can be finalized. Start by approaching the same broker you use for other insurance policies - often, you are able to negotiate a better rate. But still shop around and ensure you get the coverage you need for what you want.

Article Provided by: David Pusey Personal Real Estate Corporation

There's little doubt that Canadians are on the move. Whether moving from an apartment to a home, apartment to apartment or home to home, moving is no simple matter. With careful planning, however, your transition can be facilitated in an organized and efficient manner, allowing you the peace of mind you need to settle into your home. The following moving tips are provided by the Ontario Real Estate Association.

Advance Planning

Planning should begin at least two months in advance. Confirm with your Realtor your closing date before scheduling your moving date. If you are renting, confirm your move-in date. Make a list of all records that must be transferred to a new location, such as children's school records, and financial and medical records.

Whether moving two blocks or 2,000 miles, decide what must go with you. This may be a good time for a serious cleaning of the closets or the basement where you've been storing your "valuables." It can be expensive and time consuming to move things you really don't need, or worse, to find that there's no place to put them in your new home.

If you are disposing of a large number of items, consider holding a garage or moving sale to offset some of your moving expenses. If you're donating items to charitable organizations, ask for a receipt for tax purposes.

New Address

Send change of address cards to magazine publishers and organizations who you are affiliated. Most magazines request 4 to 6 weeks notice. Provide change of address notice on credit card bills and leave forwarding instructions with the post office. Let your friends and neighbours know your new address. This also is a good time to request help you may need with packing and moving. If you are moving yourself, schedule a moving party providing pizza and beverages for anyone who can help.

Take inventory of borrowed or lent items. Return what is not yours and retrieve your items. Mailing that hedge trimmer across the miles to its owner will be expensive as well as a nightmare to package. Dispose of flammable liquids, such as gasoline or oil. Is there gasoline in your lawn mower?

Two weeks before you move, contact local utility companies to advise of a date to disconnect service. Arrange for utility service in your new home. Clear up outstanding accounts, particularly if you are leaving the area. Plan carefully for the transfer of checking and savings accounts. Open an account in advance in your new community so you have access to money, but make sure your old account stays open until all checks have cleared.

If you are driving any distance, service you car before you move. Car problems in an unfamiliar community can be troublesome. This is also a good time to make appointments with doctors and dentists arranging for a final check-up and discussion of potential problems of which to advise a new doctor.

Packing up

Begin packing early, particularly those items seldom used. If you have a hired a moving company, request boxes and packing paper. A local grocery store is a good source for boxes and packing paper. Ask for boxes in advance. Smaller stores may receive shipments only once a week and will only give away boxes if you are there at a specified time to pick them up. Collect both large and small boxes, keeping in mind that filling a large box with books or records will make moving them difficult at best.

Have plenty of packing supplies handy. Save old newspapers for packing material. For delicate items, you may want to purchase special packing boxes to materials to ensure safe moving.

Be creative in your packing particularly with odd-sized or fragile items. For example, move mattresses with old sheets on them as a protection from dirt. An antique floor lamp rolled up in a rug, or a crystal decanter packed in the middle of bath towels adds increased protection.

Of course, creative packing can lead to confusion when unpacking. Make sure all boxes are clearly labeled with their contents. Mark boxes "fragile" which have breakable items. For those items too precious to risk damaging move by hand.

Make a list of items to pack separately; items needed on the road (maps, prescription medicines, toys for children); items needed to settle in (cleaning supplies, light bulbs, tools); and those items you will need within the first few days of arrival (food and utensils for the first meals). Pack a suitcase which you could live out of if it should become necessary. Keep important papers such as medical records and insurance policies in one place where they can be retrieved quickly if needed.

Moving Day

When the moving day has finally arrived, makes sure someone is home to meet the mover and point out items to be loaded onto the truck. If your are handling your own move, organize loading to maximize space in the truck and to ensure that the heavy box of books does not get loaded on top of the china box.

Before leaving, make a final check of all rooms, closet shelves and other spots where items may have been overlooked. Have an empty box handy for those "found items," or items which didn't seem to fit in anywhere else. Turn off all lights and close and lock all windows and doors. Leave your keys with the Realtor, Landlord or new owner.

Make sure you are there to meet the movers to avoid possible additional charges. During warm weather, have cold beverages available for movers--professionals or volunteers. Finally, don't try to unpack everything at once. Unpacking carefully and in an organized manner, keeping in mind which boxes can be stored as they are, will save time in the long run.

The OREA suggests that by following these tips, your move into a new home or apartment will be a smooth and enjoyable experience.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

Getting the maximum exposure possible is a key part of any home sale. That's why it pays to sell your home with the help of a Realtor through the Multiple Listing Service (MLS). MLS provides details of your home to all real estate professionals in the area and markets the property to a broad range of potential buyers including local, regional and international.

Your Realtor may also recommend one or more open houses for the general public. Although this type of open house tends to attract a lot of "browsers," if your home is clean, attractive, well-priced and in good repair, it could turn a "browser" into a buyer. Some purchasers want to get the "feel" of several neighborhoods before they begin working with a Realtor. Open houses will attract these potential buyers.

Most open houses for the public are held on a weekend afternoon when potential buyers often have more time to drive through neighborhoods. You will have to work out dates with your Realtor that fit your schedule. If you have pets, the Realtor may suggest you remove them from the home during the open house, since their presence could be distracting.

Your Realtor will likely recommend you and your family be away from the home during the open house as well. If you remain home, prospective buyers may feel compelled to rush their visit to avoid disturbing you. You want them to feel relaxed and to take the time to really see the features of your property.

Potential buyers may also feel uncomfortable commenting on your home in your presence. This hampers your Realtor's ability to sell the home since buyer feedback is essential in making any deal.

Your Realtor will suggest ways to prepare your home for an open house to make it a secure, enjoyable experience for everyone. Do ensure that the Realtor asks for the name, address and telephone number of everyone who attends. Your Realtor should also try to walk through the home with each visitor.

Here are some general tips to help you prepare for the big day:

• Attend to any potential hazards - electrical wires crossing open areas, sharp table or counter top corners, slippery stairs and walkways, fragile items that can be easily damaged.
• Lock away or remove valuables such as jewelry, cameras, compact discs, coins and currency.
• Avoid cooking food with strong odors such as fish. The scent of fresh-brewed coffee, home-made bread and cookies can be very welcoming.
• In poor weather, provide a place for overshoes, boots, umbrellas and coats.
• A warm fire on a cold day will make your home feel inviting and cozy. But be sure your Realtor is prepared to look after the fireplace while you're not home.

A tiny hand-print on a wall or the slightest door squeak can be quite distracting to some potential buyers. Use this handy check list to assess what needs to be cleaned, repaired or changed before opening your home to potential buyers:

Kitchen and bathrooms

• Clean all surfaces, including floors.
• Organize countertops.
• Ensure all sinks and faucets work properly.

Other rooms

• Vacuum and dust all areas thoroughly.
• Collect and remove all clutter, including excess furniture.
• Neatly store books, toys and clothes in closets and on shelves.
• Clean all mirrors.
• Open drapes and pull up blinds on windows.

Floor coverings

(Includes carpeting, tile, linoleum, hardwood, etc.)

• Remove all dirt and stains.
• Repair any damaged areas.
• If there is hardwood under old carpeting, remove the carpeting and restore the hardwood--a much desired feature in homes today.

Walls, ceilings, baseboards

• Clean any fingerprints or stains.
• Repair any holes, cracks, chipped paint, ripped wallpaper, water damage.
• If necessary, repaint in neutral or complimentary colors.

Doors

• Fix squeaks and any other problems.
• Ensure the handles secure and work properly.
• Clean any stains.

Windows

• Clean and repair any cracks.
• Ensure they open easily.

Lighting

• Check to see there is sufficient light.
• Attend to any broken switches, exposed wiring.

Pet areas

These should be clean, organized and odor free.

Outside the home

Ensure all gates open easily.

Clean all exterior surfaces, including decks, pools, walkways and driveways and make them tidy.

Depending on the time of year, lawns should be mowed, walkways and driveway cleared of snow, leaves removed, trees pruned, gardens weeded, hedges trimmed.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

It's an exciting time. You have accepted an offer and you are trying to close the deal on your new home at the same time. You can't wait to move  - but don't start celebrating yet.  There is one final stage involved - closing the deal.

Closing is the point at which ownership and usually possession of the property is transferred from the seller to you.  It takes place after the parties involved agree that all legal and financial obligations have been met.  Your lawyer and your Realtor and perhaps Accountant will do much of the work, but here's a checklist that will show you what to expect as the process unfolds:

• Make sure a copy of the signed Agreement of Purchase and Sale is sent to your lawyer right away. Your Realtor will usually do this for you.  Your lawyer needs to see any conditions that exist, and the date you and the seller have agreed to close. The lawyer will ask you how you (and others involved in the purchase) want to be registered on the title to the property.
• Immediately begin satisfying any of the conditions of the agreement that require your action. These have definite dates attached to them and if you miss one you may have to arrange an extension or possibly risk losing the entire deal.  As each condition is met, the Realtor will fill out a waiver form for signatures.  Note that most lawyers won't be doing many of the tasks they need to do for closing until the conditions are waived.
• It is strongly recommended to have the home inspected,  and your offer should contain a condition that the property passes inspection.
• If no current land survey exists on the property, you may consider having one done. Your lender may require it, and you'll want it for your own peace of mind, anyway
• You may also consider having a third party appraisal done, and your lender may require it so contact them to confirm if they are doing one and make a decision that is right for you.
• Upon your direction and after the conditions have been met, your lawyer will begin searching title to the property.  This is an exercise of going back through government records to ensure a clear title that is transferable.   Electronic registration and title insurance have significantly changed the way titles on properties are transferred.
• Contact your lending institution to begin the process of finalizing mortgage documents.  Ask if your lawyer can draw up the documents; this will usually save money.
• Your lawyer will contact the seller's lawyer with any questions or issues regarding title and costs.
• You or your lawyer may wish to to check with local utilities (hydro, gas, water) to ensure there are no outstanding claims and to get final meter readings on the day of closing. You should contact the utilities and telephone and cable companies well in advance to arrange for services in your name.
• Meanwhile, your lawyer is busy making sure that property taxes on your new home are up-to-date and there are no liens on personal property, such as appliances, to be sold with your house.  You want your lawyer to make sure that what you've agreed to buy is what you'll get -- nothing more or less.
• Well before closing; contact your insurance agent to arrange homeowner's insurance coverage to become effective on the date of closing.  Your agent can give you a "binder" letter, certifying coverage is in place. If you're moving from your current owned (rather than rented) home to another, your agent will handle the homeowner's insurance transfer for you.
• Your lawyer will review the statement of adjustments and other closing information provided by the seller's lawyer, and will deal with any problems as they arise.
• A day or two before closing, you'll meet with your lawyer to go over and sign the closing documents. Bring the certified cheque(s) to cover costs involved. Your lawyer will let you know the amounts in advance.

The big day arrives. You may need to be present. The lawyers for both parties work with their respective clients to make sure the money, mortgage (if any), sale and title are exchanged and registered.  Soon thereafter you'll be given the keys to your new home.

Now the celebration begins.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

With today's low interest rates, deciding to buy a home is one of the best decisions anyone can make. Financing such a big purchase, however, often means combining savings with money borrowed through a financial arrangement, commonly referred to as a mortgage.

Mortgages allow you to pay back the principal, or amount borrowed, plus interest, in regular installments. The taxes on your home can also be added to the mortgage payments. Most mortgages are amortized over 25 years - that's the length of time it takes for you to pay the debt off in full.

For most home buyers, paying off the mortgage is a long-term commitment. That's why it's important to begin looking at options before buying, or before renegotiating your existing mortgage. When home buying, your Realtor can help you calculate how much mortgage you can afford and provide advice on the many options available.

But even if you find yourself locked into a long-term mortgage you can afford, there may still be ways to pay it down and be mortgage-free sooner.

Pre-payment options

Most financial institutions now offer generous pre-payment options. Although many limit how often you can use an option, it is well checking into them and comparing what one lender offers over another. Many lenders now permit an annual lump sum payment on your mortgage with the amount going directly to reducing your principal. A lump sum payment of $2,000 a year on an $80,000 mortgage, for example, can significantly cut years off your mortgage.

Other pre-payment privileges include doubling up payments whenever you have extra cash. Some lenders allow additional payments against the mortgage balance up to the equivalent of a full monthly payment on every payment date or several times throughout the year. Accelerating payments by paying every two weeks instead of monthly, for example, can also result in substantial savings over the life of a mortgage.

While taking advantage of pre-payment privileges can save you thousands of dollars in interest costs over the life of your mortgage, it also pays to consider all your options. You may be reducing the principal, but you are not reducing your existing payment obligations. You still must make your regular payments.

Pre-payment critics also say that if your interest rate is reasonably low, you may be able to put the extra money to better use. When you pre-pay $2,000 a year, you reduce your principal, but you get no tax benefit. Put the same amount of money into a registered retirement plan and you get a tax break. If you invest this amount in a mutual fund at 10 per cent and your mortgage rate is seven per cent, you're making three per cent more on your investment.

Lower your amortization period

The average mortgage must be paid off in 25 years. By selecting a shorter amortization period you can cut years off your mortgage. The shorter the period, the larger the payments, but the more you save on interest and the long-term cost of the loan. Shortening the amortization period is a great idea when interest rates are low and you can afford the larger monthly payments.

Re-finance your mortgage

This is only a good idea if you have a fixed, long-term mortgage and rates have fallen more than two per cent. But the cost of refinancing a loan to get a better rate can be very high. To have your closed mortgage discharged, you will usually have to pay either a three-month interest penalty or an "interest differential", which can cost considerably more.

You can reduce the penalty, which is based on the outstanding principal, by exercising a prepayment privilege and reducing the principal first. This can be done using your own money or by arranging with another lender to borrow enough to discharge your mortgage and pay the discharge penalty. Whatever you decide, seek expert advice before re-financing, or you may end up paying more than if you stayed the course.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

Arranging your mortgage doesn't have to be a baffling experience

Buying a home today is an extremely attractive proposition. Interest rates are at their lowest in decades and the housing market is full of homes to suit just about any budget or family requirement. Still, you'll inevitably have to deal with financing and this will mean taking on a mortgage.

Sorting through the numerous mortgage options available to today's home buyers can be intimidating for everyone from first-time purchasers to long-time owners. The rules seem to change constantly and there's a smorgasbord of terminologies to learn.

Fear not--the basics are fairly simple and there are a host of real estate professionals more than willing to help, with your Realtor and bank's mortgage specialist at the top of the list.

Nonetheless, you'll want to at least familiarize yourself with the mortgage process, how to arrange one and the different financing strategies involved.

First, it's necessary to know exactly which kinds of institutions will lend you money. Banks and trust companies lead the pack, but credit unions and private lenders also offer funds.

There's also an option to consult a mortgage broker. Brokers have access to a wide variety of lending sources, including domestic banks and trust companies, but they can also employ other alternatives such as pension funds, real estate syndicates and foreign banks.

You may also find yourself in a situation where you can 'assume' an existing mortgage held by the seller. Advantages of assuming a mortgage are that you can speed the buying process due to reduced paperwork and save money in lower legal fees and closing costs. A disadvantage is that the current lending rate may be less than that of the assumed mortgage.

Now that you have an idea who will lend you money, you'll need to know the different kinds of mortgages that are offered. The most common by far is the 'conventional mortgage.' Lenders will loan you up to 75 per cent of the appraised value or purchase price of the property (whichever is lower), and you must come up with the remaining 25 per cent yourself. Many people save specifically for this purpose, but in some cases, alternate or 'secondary' financing maybe available.

A 'high-ratio' mortgage is one alternative if you don't have the 25 per cent down payment. These are available for up to 95 per cent of the appraised value or purchase price of the property (whichever is lower) to a maximum set by government regulation. The proviso is that high-ratio mortgages must be insured, and the cost, from one to three percent of the mortgage amount, falls to you.

'Variable-rate' mortgages are usually offered for both conventional and high-ratio mortgages. Typically, your monthly payments remain fixed for the term, while the interest rate fluctuates with economic conditions. This means that if interest rates climb, you'll be paying more per month in interest. If rates drop, you'll then be paying more off your principal. Conversely, 'fixed rate' mortgages maintain the same rate of interest over the entire negotiated term.

There are some other concepts to become familiar with that will impact your mortgage and financial well-being.

Amortization refers to the time period in which the mortgage is assumed to be paid. A common amortization period is 25 years. This means interest and principal payments are set as if you were paying the amount borrowed over a 25 year payment schedule. Obviously, the shorter the amortization period, the less interest you will pay.

Prepayment privileges are very important for borrowers to consider. These arrangements allow you to pay money against the principal, reducing the total amount of interest you'll ultimately pay.

Open mortgages generally denote those that allow prepayment with few restrictions, while closed mortgages carry no prepayment options.

Don't be daunted by the many concepts and terms regarding mortgages. Arranging one isn't that difficult--all it takes is a little brushing up on your part and the experience and advice of a good Realtor or mortgage professional.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

Don't forget closing costs when buying a home

Despite the low cost of carrying a mortgage these days, you should keep in mind "closing costs" in addition to your down payment for that dream home.

These various charges can add up, and for the most part they are all legally required payments in buying a property. Here is a list of most of your major "closing costs."

• Legal fees: Since a lawyer is an essential part of your home-buying team, the work provided involves fees. Most legal fees include searching the title of the property, arranging a mortgage if necessary and handling other disbursements as required.
• Mortgage insurance and application fee: For any high ratio mortgage, which is any mortgage in which 75 or more per cent of the house's purchase price is covered by the mortgage, the lender requires mortgage insurance.
• Home Inspections: A Home/Property inspection is highly recommended for any purchase. This information may be critical in negotiations for items such as heating, electrical, roofing or moren that may result from the inspection not to mention piece of mind. Waiving this option is a big risk. Also some banks and lending institutions may require it.  the cost for such is in the 400-600 range for an average home and may be higher for larger homes and acreages as well as commercial properties.
• Surveys: A Survey is highly recommended and will tell you what the property boundaries are  insure you know what you are buying and where fences, pools, hedges, driveways, right-of-ways, easments etc are located. Without a survey of the property, it's anyone's guess where things are.
• Appraisal: A 3rd party Appraisal may be required by the lender and can cost anywhere from $300-600 for a basic home and go up from there. Make sure you ask your lender what the fee is and if it is included in the Mortgage for free or if there is a charge for it. Also some Buyers may find it a good idea to obtain one prior to removing Subjects as a confirmation of value.
• Mortgage broker's fee: A mortgage broker may charge a fee to set up a mortgage for you. In some cases the fee may be included with the legal fees if your lawyer arranges the mortgage, or included in the lender's fees if you deal directly with a lender such as a bank.
• Property insurance: This insurance covers the replacement value of your home and its contents. Most mortgage lenders will require proof that you have this insurance before processing a mortgage.
• Land transfer tax: Anyone buying property in BC must pay a land transfer tax called property Purcahe Tax or PPT. It usually runs at 1% of the first $200,000 and 2% for evey dollar thereafter, depending on that price.
• GST: GST  may be payable on the purchase price of properties, although  in many cases a resale residential home may be exempt from GST. Various other closing fees, however, do involve payment of GST and as we are not accountants or experts, we insist that you get tax advice from an accountant before you make any decisions to move forward on the purchase of a property.
• Extra charges: You may also be required to pay the costs of such things as heating oil in the tank, septic pump0-out or other costs incurred by the seller, but included with the house, prior to the closing day.
• Hook-ups: There may be hook-up charges required for appliances and services such as telephone, TV cable, hydro and other utilities.
• Moving costs: Don't forget the basic costs involved in moving from your old place into your new home, particularly if you use a professional moving company.

A Realtor can explain further details on closing costs. Just remember to add them to your financial plan when saving to buy a home.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

Owning your own home has a lot of payoffs, especially these days when mortgage rates are still among the lowest in 30 years. There are also many housing options available in a wide range of prices.

Simply put, you can carry a home of your own for no more than what you would pay in rent. And, unlike renting, your payments go toward increasing the equity in your home.

So, what's stopping you? For most people who have never owned a home before, it's the initial down payment and the ability to keep up with the monthly financial obligations (mortgage payment, insurance, utilities, maintenance).

The effort to save for and buy a home may require you to make significant changes in your way of life. For most people, it means changing their spending and lifestyle habits to support the additional costs of saving for, paying for, and maintaining a home.

One of the best ways of saving for a down payment is to take advantage of government programs available to first-time home buyers. A real estate professional can help you understand how these programs work and ensure that you get the maximum benefit possible.

RRSP Home Buyers' Plan

Contribute to a Registered Retirement Savings Plan (RRSP) regularly and to the maximum allowed. The federal government's RRSP Home Buyers' Plan enables eligible taxpayers to withdraw up to $20,000 tax free from their plan to buy or build a qualifying home. The amount of money withdrawn must be repaid within 15 years.

If you buy the qualifying home together with your spouse or other individuals, each person can withdraw up to $20,000 tax free. A government form must be completed for each withdrawal.

Generally, an RRSP holder can participate in the Home Buyers' Plan only once in a lifetime. The pamphlet, Home Buyers' Plan (HBP) - For 1998 Participants, is available from Revenue Canada and will help you determine if you are considered a first-time home buyer.

A qualifying home is a housing unit located in Canada. Those participating in 1998 have to buy or build a home before Oct. 1, 1999. You must also agree to occupy the home as your principle residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time that you have to live there.

Ontario Home Ownership Savings Plan

(OHOSP) OHOSP is a provincial program where participants receive interest on the money they deposit and may receive a tax credit. If you earn less than $40,000 a year, or if you and your spouse have a combined income of less than $80,000, you can benefit from the program. To be eligible, you must be an Ontario resident over 18 years of age with a social insurance number and have never owned a home.

While there is no limit to the amount of money you may deposit in your OHOSP, you can only receive OHOSP tax credits on annual contributions of $2,000 ($4,000 per couple) or less. Depending on your annual income and the amount of money you invest, you can earn up to $500 individually or $1,000 a couple in OHOSP tax credits. Participants are eligible for tax credits for five consecutive years and must close the plan and use the funds to purchase a home by the end of the seventh year. Otherwise, OHOSP tax credits must be repaid with interest.

An OHOSP plan, with interest earned at competitive rates, may be opened at any participating financial institution. To qualify, a home must be located in Ontario and be suitable for year-round residential occupancy. In addition, you must live in the home for at least 30 consecutive days within two years of the date of purchase.

CMHC five per cent down

While Canada Mortgage and Housing Corporation's (CMHC) five per cent down option program doesn't help you save for the down payment, it sure eases the way to home ownership.

With as little as five per cent down, all home owners now have access to CMHC mortgage insurance. This means CMHC may insure the mortgage on your home (against default in payments) for up to 95 per cent of the lending value of the home. This helps make home ownership a reality for many Canadians who can afford monthly mortgage payments but would have trouble saving for a larger down payment.

Previously available only to first-time home buyers, the program was expanded earlier this year to include all home buyers. Eligible borrowers include anyone who buys a home in Canada and occupies it as a principle residence. The mortgage insurance premium in 1998 is about 3.75 per cent of the mortgage loan and can be added to the mortgage or paid on a monthly basis.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

How to match the home you buy to your pocketbook

So, you've decided to take the big leap and purchase your first home. Most of us have a "dream home" tucked away at the back of our minds -- complete with six bedrooms, two fireplaces and a panoramic view. Before setting off to view properties you likely can't afford, step back and take a reality check.

Your "dream home" can easily become a nightmare when most of your money goes to pay the mortgage and there's little left over for anything else. Overextending yourself financially is the quickest way to destroy the excitement of home ownership and add stress to your life.

Smart home-buying means knowing what you can afford and being practical about it. Most first-time buyers, in particular, lack the funds needed to buy a home without assistance from a bank or financial institution. Buying a home means combining savings with money borrowed through a special arrangement called a mortgage.

To keep mortgage payments within their means, most first-time buyers purchase what is commonly known as a "starter home." A starter home is just that -- a way of getting started in long-term real estate investment.

To match the home you buy to your pocketbook you have to realistically assess your needs, determine what you can afford and, usually, lower your expectations. Begin by enlisting the services of a real estate representative. This individual will help you target your home ownership dreams and provide valuable information on mortgage options, interest rates and incentives, such as government programs, for first-time buyers.

In the meantime, here are some ways to determine how much you can afford.

Set a maximum price range

To determine your "affordability" price range, you must calculate two amounts: the amount of cash you can afford to put towards the purchase (down payment) and the maximum amount of loan (mortgage) you can comfortably carry. Typically, household expenses should not exceed 35 per cent of your gross income.

Put down as much as you can

The key to getting started for most first-time buyers is the initial down payment. This is the part of the purchase price you have to put down as cash. You may be able to buy a home for as little as five per cent down. But remember that the larger the down payment, the easier it will be to manage the other expenses (mortgage, utilities and property taxes).

An ideal down payment is 25 per cent of the purchase price. Keep some cash in reserve though for unexpected expenses related to a home purchase and typical expenses such as land transfer tax, legal fees and moving expenses.

Know how much to borrow

To establish your maximum mortgage limit, a financial institution will determine the monthly payment you can afford by calculating your debt-service ratio. List all your loans (car, personal loans, monthly credit card balances). The sum of these and your mortgage payment, including principal, interest and taxes, should not exceed about 40 per cent of your gross income. The mortgage payment and taxes should not exceed about 30 per cent of your gross income.

Understand interest rates

The size of the mortgage you can arrange, based on payments you can afford, depends on interest rates. The lower the rates, the larger the possible mortgage and the more affordable home-buying will be.

However, there are other variables to consider: How open is the mortgage? Is it portable? Would prepayment be allowed? Discuss your mortgage options with your Realtor, banker or financial advisor. Decide what's best for you, establish a limit and stick to it.

Look at other sources of funds

If you have been contributing regularly to a Registered Retirement Savings Plan (RRSP), you may have to look no further for your down payment. The federal government's RRSP Home Buyers' Plan allows eligible taxpayers to withdraw up to $20,000 per person ($40,000 per couple) tax free from their plan to buy a qualifying home. However, you have to pay back every year at least 1/15th of the amount taken out until it is all paid back, or there will be a tax penalty.

The BC Government may have a provincial program which provides tax credits on annual contributions to a resident who has never owned a home.

The Canada Mortgage and Housing Corporation's (CHMC) five per cent down mortgage program is available to both first-time buyers and those who have already owned a home. This benefits buyers who can afford the monthly payments, but would have trouble saving for a larger down payment. Under the program, CMHC may insure the mortgage on your home (against default in payments) for up to 95 per cent of the lending value. An insurance premium of about 3.75 per cent of the mortgage loan is charged. This amount can be added to the mortgage or paid on a monthly basis.

Other sources of funds you can tap into for a down payment include savings and investments and loans or gifts from your family or relatives. If you're already a homeowner and moving up, you can use money that you get from the sale of your present home.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA

Just like you take a car for regular tune ups to ensure it continues to run smoothly, your home also needs some special attention. There's a lot more to keeping up a house than cutting the grass and clearing snow from the driveway. Ensuring your home "looks" good and is in proper working order, not only makes it more attractive and comfortable, but it can also increase the market value of the property.

Homeowners who plan to move within a few years are often reluctant to invest time and money on improvement projects that may not pay them back. But unless these improvements are very specialized, any project you choose - from fixing leaky faucets to installing new energy efficient windows - will start to pay you back in energy savings and comfort long before you sell.

The wisest improvements you can make to any home are those that keep it running smoothly and bring it up to the standards of other homes in the immediate area. And these don't need to break your budget.

Easy maintenance, repairs

Start with simple repairs that don't cost a lot and you can do yourself: securing loose tiles, adjusting a door, installing a lock, repairing a leaky faucet or pipe, and so on.

It's also a good idea to locate and read your gas, electricity and water meters on a weekly or monthly basis. This will help you gain an understanding of seasonal increases and decreases in consumption and enable you to take measures to become more energy and water efficient. The savings could be substantial.

You should have your furnace inspected and serviced annually to ensure there are no problems and change or clean the filter regularly. Also, inspect the smoke and carbon dioxide detectors around your home. You want to be certain that these will work in the event of a fire or other emergency.

Bigger upgrades

While replacing leaky faucets can drastically improve a bathroom's appearance and cut down on water usage, sometimes it takes a lot more than that to bring an old bathroom, for example, to an acceptable standard.

A bathroom tune up can pay big dividends. The first items to replace should be the fixtures -- the sink, faucets, vanity, bathtub, shower, and toilet. This is where you will add value and save money by opting for a water-efficient fixtures and energy-saving devices.

The floors, walls and accessories are not an essential part of a bathroom tune-up, but you can save time and money when you do the complete overhaul at once, rather than one piece at a time.

If the decor in your home is bothering you, don't decide right away to rip everything out. All it may take to make your home look more attractive and in better repair are small improvements such as: refacing cabinets and counter tops, changing the colour scheme, repainting, hanging new wall coverings and installing new lighting.

Other good major home improvements include replacing old carpets and flooring with new, more durable products; adding a garage or a carport if your home does not have one; installing central air conditioning; repairing or adding a fireplace; upgrading your basement space; replacing old windows with new energy-efficient ones; adding terraces, wooden decks and fences that add privacy; and investing in landscaping that adds value and is easy to maintain.

Article Provided by: David Pusey Personal Real Estate Corporation

Source: OREA