Alright, here we go! Part two of our real estate FAQ extravaganza. Get ready for some fresh knowledge, blasted like drinking from a fire hose!
Number 11: What is a mortgage pre-approval? It's like a golden ticket from the lender, saying, "Hey, you're approved for a loan up to a certain amount." It doesn't guarantee the financing, but it can give you some serious negotiating power when you're hunting for that dream home. This one is important. Many buyers jump in head first, looking to find the perfect property before they're ready to buy or even know their budget. This might not matter too much in a slow market, but as soon as things pick up, you're at risk of losing out big, and I don't just mean in terms of time. Getting your preapproval done early lets you confidently know what you can afford and write offers with shorter conditions. Picture this: you and another party both want to buy the same place. You both offer the same price, except you're pre-approved meaning you can remove conditions in about a week. The other buyers are not preapproved, so they are going to need at least two weeks. All things equal, the seller is going to pick you because it's a shorter timeline and more of a sure thing. However, if you aren't pre-approved, you might be the one on the losing end!
Number 12: Mortgage insurance - the lender's safety net. This stuff protects the lender if you can't keep up with your loan payments. You'll likely need this insurance if you're putting down less than 20%. For a lot of people, it's the price of admission into a new home, but fortunately, once you move onto you're second purchase, you usually have 20% down, and often this comes from the appreciation of your first profit, so it makes that initial mortgage insurance cost a worthwhile investment.
Number 13: Home warranty, anyone? It's like a shield against costly repairs. Builders or sellers of new homes usually offer it, but you can also grab one for an existing home. Just in case Murphy's Law decides to pay you a visit. Brand new homes are required to have 2, 5, and 10-year warranties. These cover labor and materials, building envelope, and home structure. Something to give you peace of mind when spending all that money on a brand-new home. My favorite situation, though, is buying an almost new home (i.e., within a few years); that way, you get the remainder of the 5 and 10-year warranties without the upfront additional cost of having to pay GST for a brand-new home.
Number 14: Closing disclosure - the final countdown. This document lays out all the juicy details of your mortgage loan. You'll get it at least three days before closing, so you'll know exactly what you're getting into.
Number 15: Deed - the key to ownership. It's the official piece of paper that transfers the property from one person to another. You've gotta get that John Hancock from the seller to seal the deal.
Number 16: Title - your proof of ownership. Think of it as the real estate birth certificate. Do a title search to make sure no one else has a claim on your property.
Number 17: Liens - a property's dark secrets. They're like legal claims on your property for unpaid debts or taxes. One example could be an unpaid builder putting a lien against a property where the owner has failed to pay them for completed work. Checking a prospective property title for hidden dangers like an existing lien is valuable. Hidden risks in a title are not always apparent, lawyers will tell you to get a title review done every time.
Number 18: Easements - sharing is caring. It's like a permission slip to use someone else's property for a specific purpose. Access roads or utility lines anyone?
Number 19: Eminent domain - when the government plays Monopoly. They've got the power to take your property for public use, like building roads or schools. It's a wild game. In Canada we also refer to this as expropriation legislation. Although the government has a claim over all Canadian land, expropriation is rare, and Canada is known to fully compensate owners in cases where this becomes necessary.
Number 20: Homeowner's association dues - pay to play. These are fees you pay to the home association if you're part of it. They keep things running smoothly and maintain those shared spaces. More commonly, those who live in a condo or townhouse are used to paying strata fees to maintain the common property. same kind of idea!
Boom! Now, you've got the answers to more of the most commonly asked real estate questions. Armed with this knowledge, you'll be like a real estate ninja, ready to conquer the market. Whether you're a first-time buyer or a seasoned pro, keep this list in your back pocket, and you'll breeze through any obstacle in your way. Got more questions? Let me know! We're here to help you out.
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I am a Victoria-based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty, and hard work have been essential pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!
I service Vancouver Island, but my focus is on Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.