Real estate agent and home tips provided as a service by Sandra Conley, Broker of HB Land and Homes, Palmdale, California.
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Regardless of where you live, or the size or type of property you're looking at, buying a home will often be the single largest purchase you ever make. And, of course, if you're like most people and take out a mortgage, it will also lead to the single largest loan you'll ever take out!
This home buying checklist will help you get the most from your money, and find a place you're truly happy to call home!

The Checklist:
1. Find out how much you can borrow
2. Decide what you can afford to spend
3. Understand the total cost of buying a home
4. Appreciate the ongoing costs of home ownership
5. Decide on your house type and features
6. Consider the general location
7. Think neighborhoods
8. Size up the specific site
9. Hire a home inspector

Find out how much you can borrow
Most financial institutions will lend you up to 75% of the value of the home you want to purchase. You have to come up with at least 25% of the purchase price. This is the down payment. When you borrow 75% or less of the purchase price, it is called a conventional mortgage. You can bargain for the best rates available, and you don't need to pay an extra fee for mortgage insurance.

But even with a conventional mortgage, lenders will still put your finances to the test. They want to feel confident that you will be able to make your regular mortgage payments. Before they give you a mortgage, most lenders want to get a sense of your ability to repay the money they lend you. To get a feel for whether your finances can withstand the extra burden of regular mortgage payments, lenders have two tests: the gross debt-service ratio test and the total debt-service ratio test.

Gross debt-service ratio test
For this test, lenders add up your estimated monthly mortgage payments and your property taxes. These are called your housing costs - essentially what you have to pay to keep a roof over your head. (Sometimes lenders will also include your heating costs.) In general, this number can be up to 32% of your gross monthly household income.

An example? Say your family's monthly income before taxes is $10,000. Up to 32%, or $3,200, can go towards your housing expenses. If your anticipated property taxes are $300 a month, that leaves $2,900 as your maximum monthly mortgage payment.

Total debt-service ratio test
In addition to your housing costs, lenders also want to make sure you aren't carrying too much debt overall. The more debt you have, the more likely it is you may run into trouble making your mortgage payments. To assess whether your debt load will still allow you to comfortably pay them back, lenders use a second ratio. This is known as the total debt-service ratio.

In addition to your monthly housing expenses (your monthly mortgage payment and property taxes) they add the total payments you have to make on all your other debts, including credit card balances, car loans, and home equity lines of credit. Together, these monthly payments can't be greater than 40% of your gross monthly income.


Decide what you can afford to spend
No matter how much a lender says you can borrow, do your own analysis. Just because the bank is willing to let you take out a certain-sized mortgage doesn't mean you should. While a lender may feel safe lending you a certain amount, it's what makes sense for you and your family that's important.  Owning a home can bring a lot of happiness. But borrow too much, and the roof over your head may end up dictating all your saving and spending. Being "house rich and cash poor" can mean everything from having to cut back on entertainment expenses to shortchanging your retirement savings.

Before you decide to spend a certain amount for a property, it pays to:
Consider how your day-to-day cash flow will be affected
Look at whether you'll have to cut back in other areas, such as holidays or entertainment
Assess the impact on your savings strategy


Understand the total cost of buying a home
It's easy to fall in love with a property, figure out you can handle the mortgage, and take the plunge. But those who do leap too quickly often have a rude financial awakening. The problem is they haven't considered the total overall cost of owning a home. Taking the full costs of home ownership into account before you buy will help ensure you don't purchase a property that's more expensive than you can really afford.

Here's a look at the additional costs of buying a home:

Sales tax
Legal Fees
Moving Costs
Repairs and renovations
Home inspection fees
Sales tax
You may have to pay sales tax when you buy a home. Called a land transfer tax, this is a percentage of the purchase price. If you buy a new home, you'll also have to pay G.S.T. However, if the home costs under $450,000, you will be eligible for a rebate of up to 2.5%. This means that you'll pay G.S.T of 4.5%, instead of the usual 7%
Legal Fees
A lawyer is an important part of the home-buying process. A lawyer's key tasks include reviewing the agreement, searching the title, reviewing the survey plan, and ensuring the transaction is completed properly. The cost can range from a few hundred dollars to over $1,000.

Moving Costs
This isn't truly a part of the home purchase, but you'll have to get all your belongings out of your present abode and into your new home. The costs will depend on how much of the work you can do yourself, and the distance involved. You may be able to claim your moving expenses as a tax deduction.

Repairs and renovations
To get the best value for your home-buying dollars, it's often best to buy a home that isn't in mint condition. However, this can mean extra up-front costs. Be sure to put a dollar value on everything you'll need to do when you move in, from cleaning and repainting to repairing walls and fixing faulty plumbing and wiring.

Home inspection fees
A good home inspection will typically cost between $200 and $500.


Appreciate the ongoing costs of home ownership
In addition to your mortgage payments, there are a number of extra bills you'll have to regularly meet when you become a homeowner. When you rent, you just have to pay the rent, and sometimes your own heating and possibly electric bills. But when you own your own home, you have to foot the bill for everything.

Below is a list of common ongoing home-ownership expenses. Estimate the cost of each item, and ensure you will still be able to make ends meet with a little left over:

Mortgage payments
Property taxes
Utilities: gas, electric, water, cable television, telephone
Insurance
Repairs and maintenance
Gardening and grounds expenses
Snow removal
Condominium fees and expenses


Decide on your house type and features
Like any shopping expedition, it pays to make a list of what you're after before you set out.

Consider:
Where you currently live
Your room and layout requirements
Common likes and tastes
Are you the do-it-yourself type?
Where you currently live
Begin by looking around you. Consider what features you like in your present home, what you don't like, and what you would find useful or more comfortable.
Your room and layout requirements
The next step is to think logistics. How many children do you have or hope to have? Do you want them all to have their own bedrooms? Do you want a separate den? Do you need an extra room for a home office?

Common likes and tastes
In addition to your preferences and requirements, you should also keep what others like in mind. The less "unique" characteristics and the more commonly desired features your home has, the wider its appeal and the higher the price you'll get when and if you sell. You may want a pool, for example, but they generally take away from a home's resale value. By contrast, off-street parking can add thousands to a property's value.

Are you the do-it-yourself type?
You should also consider how much work you want to do yourself. If you have the time, energy, and inclination, buying a fixer-upper can save you a lot on the purchase price, and give you the satisfaction of working on your own property. If you already lead a busy life, or simply aren't the do-it-yourself type, consider paying more for a home that's already in good, livable condition. Alternatively, look for a smaller property or one in a less popular neighbourhood.


Consider the general location
In most cases, you'll already have an idea of the province or region you're interested in. But beyond that, take a moment and consider all your possibilities. Do you want to live in the country? In a small village or town? What about the suburbs with their sidewalks and large lawns? Or maybe you're a big city kind of person. Of course, no location is perfect. You'll need to assess the pros and cons of each, including:

Local recreational facilities
Availability of medical care, clinics and hospitals
Access to local sports centres and activities
Driving distances to work, family, and friends
Schools or day-care
Entertainment and cultural opportunities
Access to public transit
Availability of street parking
Zoning and by-laws
Getting around


Think neighborhoods
Neighborhood feel or "ambiance" : Ask people about what they like - or dislike- about where they live, and the first comment is usually about the feel and character of their neighborhood. Don't underestimate the impact the local area can have on your enjoyment of a property. Here's how to evaluate a prospective neighborhood:

Try to visit the neighborhood you're considering at different times of the week - during work hours, in the evening, and on weekends.
Don't just drive around. Get out of your car and walk. You'll see and hear things that you might otherwise miss. People are generally more than happy to share their experience of where they live. Don't be shy. Ask people out working in their yards or washing their car what they think about the area.

Zoning and by-laws
Renovating, additions, and building in most areas are heavily controlled by a number of regulations. If you like the feel of a neighborhood, investigate whether there are regulations in place to prevent changes. The last thing you want is to move in, only to find your next-door neighbor is converting their property to a rooming house or replacing their existing dwelling with a monster home.

On the other hand, you may be considering adding a suite to have an elderly relative live with you at some point. Or perhaps you need to build an addition to make room for a growing home-based business. Check to see if the zoning allows you to use the property in ways you are considering in the future. Some of the larger lots will allow you to place two separate houses on the lot - one house usually is unrestricted with regard to square footage, while the second house usually has a limit of, say, 1200 square feet. (This is true of the two and a half acre lots in Palmdale Ca).

Getting around
One area that needs serious consideration is how far will you be from the places you need to go, and how easy it will be to get there. Your quality of life is often affected by how much time you need to get from point A to point B. Here are a couple of points to think about:

Ease of commuting: Find out how long it will take to drive to work from any area you are considering. The only way to find this out is to do the drive yourself. And do it during regular work hours - rush hour may tie you up longer than you think. The same goes for special rush-hour traffic restrictions.
Public Transit: Look at how close your neighbourhood and your regular destinations are to transit stops. Call the transit company and ask about the frequency of service, routes, and fares. Check transit via the community links here

In addition, you should consider the availability, location, and condition of the following services and amenities:
Sidewalks
Parks
Community centre
Sport facilities
Playgrounds
Curbside garbage and recycling pickup
Home mail delivery
Snow removal


Size up the specific site
This is where you get down to the nitty-gritty. First, think about the type of house you want to buy - detached, semi-detached, townhouse or condo. And of course, part of assessing a specific site is whether it suits your fancy. Do you like the clapboard siding? Is the tree in the backyard going to mean too much yard work in the fall? Is the sunroom so beautiful that you plan to live out the rest of your days there with a good book? But don't let your heart get ahead of your head. Once you've narrowed down your options, you'll need to look critically at many different elements of the lot and the buildings. This means everything from the size of the closets to the state of the plumbing. You'll get a lot of help on this front when you hire a professional house inspector.


Hire a home inspector
Given the cost, it makes more sense than ever to apply that old cliché, "Buyer beware" when shopping for a home.

The best way to know what you're getting for your money is to have a professional home inspector look it over before you sign on the dotted line. A bright new rug, a fresh coat of paint, and the warm comfy smell of bread baking in the oven can make you feel that you've found your dream home. But such last-minute touch-ups can hide some serious problems. A professional home inspector will be a lot more objective than you can ever hope to be. Taking a cold, hard look at the state of homes and appraising properties realistically is what they do for a living.

More importantly, they are trained to look for problems and warn you of costly repairs that may lie ahead that you might not notice, or even know to look for. A home inspector can tell you if termites are eating the timbers, if the roof needs replacing, or if the heating system is on its last legs. They also give you an assessment of everything from the state of the plumbing to the safety of the electrical system.

A home inspection will generally cost between $200 and $400. Don't be tempted to think this is one extra expense you can skip. Spending a few hundred dollars is great value, giving you some comfort that you haven't overpaid for a property that may need thousands, if not tens of thousands of dollars of work.

Be sure to choose a home inspector who is licensed.


Source: SUN LIFE FINANCIAL

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