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Top 5 Tips for Homebuyers

By Real Estate

There are several steps you can take to save time and money when purchasing a home in Winnipeg. Here are five things you need to know when buying a home:

 

  1. Understand closing costs.

In most cases, your lawyer will collect the balance of the purchase price, fees, and disbursements up front, directly from you.  If you are buying and selling at the same time, you may need to arrange bridge loan financing with your lender.

Closing costs are explained in more detail in this article.

 

  1. Secure your home insurance.

An insurance binder is a one-page document that proves that you have placed insurance on the property. Your lender will require you to have an insurance policy in place prior to possession. Ensure that your insurer has sent your “insurance binder” to your lawyer at least three days before possession. The “loss payable” must be your mortgage lender.

 

  1. Arrange financing two weeks prior to your possession date.

Once loan documents have been signed with your mortgage specialist, your lender will send mortgage instructions to your lawyer. Your lawyer can only move forward with your deal after they have mortgage instructions. A delay in mortgage instructions could result in additional rush fees. If your lawyer receives mortgage instructions early, it will be much easier for you to schedule an appointment at a convenient time, and you will save money on legal fees.

 

  1. Choose your lender carefully.

From credit unions, to banks, to broker-channel lenders, there are a wide array of institutions who will lend you funds to buy your home. Shop around, not just for your interest rate, but also for less obvious but equally important terms such as pre-payment privileges and penalties, renewal fees, and front-end servicing fees. You may want to specifically ask if additional documentation will need to be signed with your lawyer. Law firms will often charge additional fees on home purchases where significant additional paperwork is required. Remember that you will be dealing with your lender for the full term of your loan, and early experiences may be a telling sign.

 

  1. Be available to pick up keys.

Depending on the specifics of your transaction, you may need to pick up the keys to your new home on the business day before the possession date. Make sure you are available to swing by your lawyer’s office during regular office hours, or that you have made alternate arrangements for key pick up.

 

Being well-prepared and well-informed on all aspects of your purchase is key. Make sure you have a trusted team of professionals to guide you through the process.

If you have any questions, or wish to inquire about our real estate services, please do not hesitate to contact our office at 204-977-1706 ext. 8, and we would be more than happy to help you.

 

Davis Johnson is a legal assistant at Wolseley Law LLP who works primarily in the area of real estate.

Closing Costs Demystified

By Real Estate

When buying a home, you will need to bring money to your lawyer before the possession date to close the deal. This money is commonly called “closing costs.” The funds will need to be provided to your lawyer by certified cheque or bank draft.

Your lawyer will send you a detailed Estimate of Closing Costs after they receive mortgage instructions from your bank or credit union. However, understanding closing costs in advance will help avoid last-minute surprises.

Closing costs are made up of 3 parts, the balance of the purchase price, legal fees, and disbursements.

 

  1. Balance of Purchase Price

 

The balance of the purchase price is calculated using the following formula.

Purchase Price MINUS Initial Deposit on House MINUS Mortgage Funds being provided by the bank or credit union PLUS OR MINUS Adjustments

Example:


Purchase Price: $250,000.00

MINUS Initial Deposit: $10,000.00

MINUS Mortgage Funds: $200,000.00

PLUS Adjustments – Annual Property Taxes ($3,650.00) paid in full for year and prorated to possession date of September 22 (100 days): $1,000.00


Balance of purchase price: $41,000.00

 

Mortgage Funds – If there are additional fees (for example: mortgage insurance premiums such as CMHC, appraisal fees, or servicing fees), these fees will be taken off at the bank or credit union, before your lawyer receives the funds.

Adjustments – No matter what date taxes are due, they are adjusted for the entire calendar year, as of the possession date. Depending on whether the vendor has paid the taxes, you will either give or receive a credit. Additional adjustments beyond taxes may apply if you are purchasing a condo, rental property, or new build home.

 

  1. Legal Fees

Fees represent the amount charged for legal work and they will vary based on the particulars of your transaction.

 

  1. Disbursements

Disbursements are out-of-pocket costs that your lawyer will pay as part of the transaction.

 

  • Registration Costs are paid to the Government of Manitoba. As of 2021, it costs $109 to register the Transfer and $109 to register the Mortgage.

 

  • Title Insurance protects both you and your mortgage lender. It is usually required by the bank or credit union when you are getting a mortgage. The cost is mostly determined by the purchase price of your home and the amount of your mortgage.

 

  • Searches are required to investigate the title at Land Titles and the tax account. You are only charged for the actual number of searches conducted.

 

  • Couriers are used to deliver documents and cheques. Again, you are only charged for the actual number of courier deliveries called.

 

  • Administrative costs such as photocopying, software transaction charges, file storage, and postage are charged differently by each firm. When choosing a lawyer, be sure to inquire about these types of costs, as they can quickly add up.

 

Taxes are applicable to fees and some disbursements.

 

Being well-prepared and well-informed on all aspects of your purchase is key. Make sure you have a trusted team of professionals to guide you through the process.

If you have any questions, or wish to inquire about our real estate services, please do not hesitate to contact our office at 204-977-1706 ext. 8, and we would be more than happy to help you.

 

Davis Johnson is a legal assistant at Wolseley Law LLP who works primarily in the area of real estate.