Ex­perts help prop­erty vir­gins get to third base

Calgary Herald - Calgary Herald New Condos - - New Condos - COLLEEN BIONDI

There are lots of firsts in a per­son’s life: first time rid­ing a bike to the park by your­self, first date, first kiss, first job and first car. Then, there is the pur­chase of your first home. Like any leap of faith, div­ing into the un­fa­mil­iar ter­rain of real es­tate can be scary and in­tim­i­dat­ing. There are the teas­ing ads in the pa­per, the flir­ta­tious links on the In­ter­net and the come-hither For Sale signs on man­i­cured lawns.

It is at this point, many re­al­ize de­cid­ing on your first condo is even more daunt­ing than se­lect­ing the per­fect en­sem­ble for a blind date or how to del­i­cately make the first move in the movie the­atre. In fact, once you take that first-base step to condo own­er­ship, all you re­ally need is some good-old-fash­ioned ad­vice to talk you through it.

From a real­tor

Be­fore you set off on your condo trek, make sure you get pre-ap­proved for your mort­gage, then you’ll know your lim­i­ta­tions “so you’re not looking at some­thing well be­yond your means or be­low what you can af­ford,” says Mar­lene Swin­ton with Real Es­tate Pro­fes­sion­als in Cal­gary.

As a first-time buyer, you need to dis­tin­guish your needs from your wants, she adds. Do you re­ally need two bed­rooms and two bath­rooms, a fire­place and un­der­ground park­ing? Or are th­ese fea­tures ne­go­tiable? Con­vey this in­for­ma­tion to your real­tor who will then show you only units that fit and you won’t be wast­ing each other’s valu­able time.

“The knowl­edge of neigh­bour­hood is also very im­por­tant,” she adds. Drive around ar­eas you think you might like; fa­mil­iar­ize your­self with the com­mu­nity, its as­sets and li­a­bil­i­ties.

Next, hire a rep­utable real­tor. The “open house” route is a great way to meet real­tors. Ask ques­tions about the real­tor’s busi­ness his­tory (how long has he been in prac­tise and how many con­dos has he sold?) and re­quest ref­er­ences. Or ask your friends for their rec­om­men­da­tions. “Nine­ty­nine per cent of my busi­ness is from re­fer­rals,” says Swin­ton.

Hav­ing a condo check will give you a re­view of the fi­nan­cial sta­tus of the condo de­vel­op­ment, plans for its fu­ture, what its by- laws are (the liv­ing rules for the build­ing, such as if you can have a pet), min­utes of meet­ings and what re­pairs have been done and are an­tic­i­pated. Old build­ings will have a re­serve plan study and new ones will be in the process of cre­at­ing one. “This will cost you $300, and it will be the best in­vest­ment you’ll ever make,” says Swin­ton.

From a mar­ket


Are you aware that as of Jan. 27, you are able to claim up to $750 on next year’s tax re­turn, says Lai Sing Louie with Canada Mort­gage and Hous­ing Corp. (CMHC) in Cal­gary? Due to th­ese re­cent fed­eral tax breaks, you can now also draw up to $25,000 from your RRSP plan to use as a down pay­ment for your condo without penalty. “You’re ba­si­cally bor­row­ing from your­self,” he ex­plains.

Louie says you should shop around for good in­ter­est rates. In­ter­est rep­re­sents the “hid­den com­po­nent” of pur­chas­ing a house, but is a large piece of the ac­tual cost of home own­er­ship, he says. Rates are at his­tor­i­cal lows; th­ese days you have ac­cess to rates as low as four per cent for five-year mortgages.

If you are putting down less than 20 per cent on your prop­erty, you will need mort­gage in­sur­ance. Emili can help. This is the name of CMHC’s elec­tronic un­der­writ­ing pro­cess­ing sys­tem. It is used by lenders to help cus­tomers get quick pre-ap­provals for mort­gage in­sur­ance (the in­sur­ance pre­mium will be built into the loan that the bank gives you). If you are try­ing to get a home that is be­yond what you can af­ford, you may not be ap­proved for in­sur­ance. The more you put down — let’s say 15 per cent ver­sus 10 per cent — the lower your pre­mi­ums will be.

“You don’t want to make an of­fer then find out that you can’t get mort­gage in­sur­ance; you’ll be in le­gal limbo be­cause you can’t get fi­nanc­ing,” adds Louie.

From a mort­gage spe­cial­ist

Know how much your condo fees are go­ing to be, rec­om­mends Cal­gary’s Alex Wolder of the Royal Bank of Canada. First-time condo buy­ers tend to fo­cus on what their monthly pay­ments are ver­sus what their eq­uity po­si­tion is, such as whether they’ll be able to eat some­thing other than Kraft Din­ner, he adds. But condo fees can range from $125 to $500 per month; your pre-ap­proval amount will be based on an av­er­age condo fee rate. If you dis­cover your rate is higher, your pre-ap­proval may be com­pro- mised (a $400 in­crease in a condo fee rate can re­duce your pre-ap­proval value up to $100,000).

“It could com­pletely ki­bosh the deal, es­pe­cially for first-time buy­ers who are putting down a min­i­mal amount,” says Wolder. “There is very lit­tle wig­gle room.”

By get­ting an estop­pel cer­tifi­cate, which is like a real prop­erty re­port when you are buy­ing a house, the condo man­age­ment com­pany will ver­ify all condo fees are paid and there are no levies or caveats on the unit. It en­sures ev­ery­thing is in good stand­ing with the condo man­age­ment com­pany. If you are do­ing a quick clos­ing — and there are more of th­ese given to­day’s mar­ket — you will need one of th­ese to ac­com­pany your other condo-re­lated fi­nan­cial doc­u­ments.

Down pay­ment ver­i­fi­ca­tion is the cur­rent “flavour-of-the­month” in the condo-buy­ing in­dus­try, says Wolder.

CMHC and lenders are abid­ing by stricter anti-money laun­der­ing rules and reg­u­la­tions than ever be­fore.

As a re­sult, down pay­ment monies need to be on de­posit for 90 days prior to ap­ply­ing for a mort­gage. An au­dit goes along with ev­ery mort­gage ap­pli­ca­tion.

From the In­ter­net

Van­cou­ver-based Na­tional Real Es­tate In­sti­tute Inc. (www.home­buyer.ca) of­fers th­ese ad­di­tional sug­ges­tions:

Ex­am­ine the park­ing fa­cil­ity. Is it safe? How far do you have to walk to your unit? Is there space for a sec­ond ve­hi­cle and suf­fi­cient park­ing for your guests?

Look for stor­age. Is there enough for your bike, skis or golf clubs?

How many units are housed by renters ver­sus own­ers and what per­cent­age of ten­ants are al­lowed? The more own­ers that are present, the more like­li­hood there will be greater con­sid­er­a­tion and care of the com­plex. Be aware if the rental per­cent­age is not capped at a cer­tain amount or is over 25 per cent.

Is the condo man­aged by a pro­fes­sional group, a res­i­dent man­ager or is it self-man­aged? Con­sider vis­it­ing the com­plex on evenings and week­ends to get a feel for what is hap­pen­ing (par­ties, noise lev­els) at var­i­ous times of the day.

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