the homebuying -...

The Homebuying ProcessY

OU

R G

UID

E T

O

DIGITAL VERSION AVAILABLE AT:HOMEOWNERSHIP.CA

FALL 2016

INVEST IN FAMILYGenworth Canada’s Family Plan Program enables people to help buy a home for immediate family members who have good credit but insuffi cient income, with as little as a 5% down payment.

Watch the HomeOpeners® video series and learn more about Genworth Canada’s Family Plan Program:

www.homeownership.ca/FP

800.511.8888 | Genworth.ca | Homeownership.ca | Homeownership.ca/fb

Debbie McPhersonSenior Vice-President, Sales & Marketing,Genworth Canada

NEW BEGINNINGS

Produced by:

Co

ver

Pho

tos:

iSto

ck.c

om

PS: Please bookmark Homeownership.ca. You’ll find online tools, education and services to help simplify your road to homeownership!

Doesn’t autumn feel like the real start of the year? It’s a time of fresh potential – probably a healthy dose of goal-setting too! It’s also the season when Canadians start shifting focus towards indoor living, making it an ideal time to reflect on what “home” means to us.

At Genworth Canada, home is at the heart of everything we do. It’s why we strive to offer you the information and tools you need to simplify your first-time home-buying experience.

In this edition of the Digest we’re sharing the expertise of real estate insiders and first-time homebuyers. Should you rent or is now the time to buy? How can you save for a downpayment? Which professionals can help simplify the buying process? What tools does every homeowner need? We cover all this and more.

We hope you’re as excited about fall as we are. Here’s to new beginnings!

GENWORTH CANADA FALL 2016 3

05HELPYou asked, we answered.

06THE EDGECountdown to your mortgage approval.

CONTENTS

08DREAMING OF HOMEOWNERSHIPRENT VS.BUY What to consider.

14 THE BUYING PROCESSHow to build your dream team.

10 FINANCINGNine savvy ways to save and fast-track your finances to homeownership.

16 CLOSING & MOVING INSmart moves: tips for a stress free move.

12 HOUSE HUNTINGOld or new, what’s right for you?

THE HOMEBUYING PROCESS

18TOOLBOXStock up!

20COMMUNITYHands across Canada.

22WHAT'S ONLINEHouse Hunting Checklist.

FALL 2016

For more tips and tools on every step of the homebuying process, visit Homeownership.caGENWORTH CANADA FALL 2016 4

How it works:Apply just as you would for a typical mortgage, subject to the standard income and employment verification, as well as credit bureau score checking.

Your down payment can be as little as five percent of the property purchase price and can be funded from your personal resources, such as your savings, an RRSP withdrawal or equity from your existing property.

All qualifying applicants must be on the property title, including the resident; in this case, that would be your daughter.

One caveat: Genworth Canada’s Family Plan Program doesn’t include non-owner-occupied properties, which means that converting the condo into an investment property after your daughter graduates won’t be an option. Instead, encourage her to stay put (who doesn’t need a little help as they enter the workforce?), or refinance the remaining mortgage once she’s ready to move out.

Visit Genworth.ca for more info on Genworth Canada’s Family Plan Program.

Q: My daughter is starting university this fall, and rents are high enough that I’m considering buying a condo for her instead, which could become an investment property after she graduates. Are there any programs that can help us make this ambition a reality?

A: Absolutely! Genworth Canada’s Family Plan Program is a perfect fit for situations like yours. The program enables Canadians to help immediate family members attain the security of homeownership, with as little as five percent down. Not stressing over rent will allow your daughter to focus on her studies and extracurricular activities, allowing her to make the most of her university education.

Other suggested applications of this program include parents buying a home for an entrepreneurial adult child, or an adult buying a property for elderly parents on a fixed income.

YOU ASKED, WE ANSWERED

HELP


1 YEAR OUT:

REVIEW YOUR CREDIT REPORT.Download it from equifax.ca or transunion.ca and correct any mistakes.

TIP If your score is low, work on fixing it now – there’s enough time to make an improvement. Start by paying off debt such as a car lease and credit card accounts with limits upwards of $1,500, as this can help boost your credit score.

COUNTDOWN TO YOUR MORTGAGE APPROVALFinding the right mortgage is as important as finding the right home, and with careful planning, responsible homeowners can qualify for the best rates. Start following this timeline a year before you want to buy a home, and you’ll be set for financial success by moving day.

10 MONTHS OUT:

TACKLE DEBT.Responsible buyers enter homeownership with as little debt as possible.

TIP Focus on bringing your credit card balances to less than 50% maxed out. Loans that are at capacity hurt your score.

THE EDGE


3 MONTHS OUT:

START HOUSE HUNTING! Attend open houses and private showings knowing exactly how much you can spend.

TIP Remember that your pre-approval is a maximum. You may find your perfect home for less. Don’t over extend yourself as it is always better to have a buffer for emergencies.

4 MONTHS OUT:

ASSEMBLE THE PAPERWORK AND APPLY FOR A MORTGAGE.Most pre-approvals are valid for three months, but your broker (or bank) will need time to process your application.

TIP Order your credit report yourself. Why? When someone else (such as your broker, who needs a copy) orders your report, that’s recorded and can impact your standing. Pull the report yourself, and it isn’t recorded.

8 MONTHS OUT:

LIVE ON LESS.Homeownership comes with expenses that renting doesn’t: property tax, water, heat and so on. Start putting aside those amounts every month to help you prepare to take these bills on when you are a homeowner.

TIP Park the money in a high-interest savings account and apply it to your closing costs later.

6 MONTHS OUT:

RESEARCH MORTGAGE RATES AND COMPARE. Banks and mortgage brokers can sometimes offer different rates. Keep your options open and take the time to do some research on both. Compare what kind of mortgage each one can secure, what their best rate is and what documentation they will need from you.

TIP There's no such thing as being too prepared! Find three banks and three brokers and compare, so you get the best rate you can.


STEP

To buy or not to buy. It’s a question many people struggle with. And, it’s important to know if you truly want to own a home before you’re firmly entrenched in the homebuying process.

To help you decide, here are some things to consider:

RENT VS. BUY



Dreaming of Homeownership

A sound investment.

If you choose a home you can afford, the payoff can be great. When you make a mortgage payment each month, you build equity in a place of your own (unlike a rent payment). Equity is the difference between the value of the home and your outstanding mortgage. The longer you stay in your home (and the more payments you make), the more equity you’ll have. And, unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.

A first step.

As you build up equity in your current home and comfort level in being a homeowner, it may be easier to move up to another home in the future.

Satisfaction and security.

As a homeowner, you can decorate and renovate your home any way you like. You don’t have that luxury as a renter. Owning a home also gives you a new sense of pride in your surroundings. Your family may also feel strong ties to your community.

Higher costs.

When budgeting, you’ll have to factor in more than your monthly mortgage payments. Consider things like condo maintenance fees and repair expenses.

Tying up cash.

Your home will probably increase in value as time goes by, but don’t count on getting a big return quickly. If you need to sell your home during the

first few years of homeownership, you could lose money given the various costs involved, such as REALTOR® fees and possible fees for breaking a mortgage.

No guarantees.

There’s no guarantee your home will increase in value, especially during the first few years. Although historically, over the longer term, homes have proven to increase in value.

Cons

Pros

To help calculate what you can afford, visit.genworth.ca/en/homebuyers/what-can-i-afford.aspx


STEP

GAUGE YOUR FINANCIAL FITNESS

You need an honest assessment to know which areas of your finances are on track and which areas need improvement. Get your Financial Fitness Score by taking the Genworth Canada/Canadian Association of Credit Counselling Services Financial Fitness survey at caccs.ca.

Thinking about buying your first home? Saving for a down payment sooner rather than later is easier than you think. Here are nine strategies to boost your financial fitness and fast-track your way to homeownership.

CHECK YOUR CREDIT

Order a copy of your credit report from TransUnion or Equifax so you can check your credit score and history, as well as ensure there are no errors. Contact the credit reporting agency if you identify any mistakes.

THE FAST TRACK TO YOUR FIRST HOME



Financing

BUMP UP YOUR CREDIT SCORE

The higher your credit score, the better the lending terms you’ll receive, whether for a mortgage, car or consumer credit loan. The most effective ways of improving your credit score are paying your bills on time, dramatically paying down – or, better yet, clearing – your credit card balance each month and repaying any loans.

CREATE A MONTHLY BUDGET – AND TRIM THE FAT

Find a template online or download a household budgeting app to your smartphone. How much do you spend each month on rent, utilities, transportation, groceries, child-care, insurance, gym memberships and clothing? You need accurate info about your income and expenditure to evaluate how much house you can afford. At the end of the month, you’ll be able to spot patterns and identify the most effective places to save money, whether your spending vice is a two-lattes-per-day habit or too many taxi rides each month.

Try: Mint or You Need a Budget (iPhone, Android).

DETERMINE HOW MUCH HOUSE YOU CAN AFFORD

Use your budget to evaluate how much of a mortgage you can afford. A bank may approve you for monthly mortgage payments of up to 32 per cent of your gross monthly household income, but can you afford it? Work out what your future expenses will look like each month (mortgage + insurance + utilities + taxes + other expenses). Do you make enough to cover this – with enough left over to save? If not, maintain breathing room by opting for a more affordable first home.

START “PAYING” YOUR MORTGAGE

If your future mortgage payments will cost approximately $1,800 per month and you currently pay $1,300 in rent, now’s the time to start setting aside an extra $500 per month, so you can get into the habit of budgeting $1,800 per month for shelter. This will in turn help grow your savings even faster.

BULK UP YOUR INCOME

Another way to hold on to your money is to make more of it! Consider a second job, extra hours or selling those collectibles on eBay. (Bonus: Fewer boxes on moving day!)

PAY YOURSELF FIRST

Get serious about paying yourself first by setting up bi-weekly automatic transfers from your chequing account to your savings account. Beyond the down payment and closing costs associated with a new home, homeownership might come with surprise expenses like a leaky roof or a broken washing machine. A healthy savings account will make you less stressed about those possibilities.

CONSIDER PROFESSIONAL ADVICE

Once you’re on track, see a financial advisor to work out short- and long-term strategies for your ongoing financial goals, from homeownership to retirement savings. You’ll get more from the meeting if you have already determined your goals and actions.


STEP

OLD OR NEW WHAT’S RIGHT FOR YOU?

What you choose depends on your needs, lifestyle and budget.

When it’s time to select a property, homebuyers face many choices: location, housing style, interior layout and number of bedrooms and bathrooms. All come into play when picking the perfect place to live. Among the most important decisions is whether to buy new or resale. According to John Oborne, owner of Oborne Contracting Inc., in Richmond Hill, Ont., there are pros and cons to both. What you choose depends on your needs, lifestyle and budget. To help potential buyers decide which

home suits them best, Oborne offers the following considerations.

The scoop on NEW BUILDSFor homebuyers who want to avoid the costs and responsibilities of renovating and maintaining an older property, a new build might be the answer.

A brand new property is a “blank slate” that buyers can truly make their own, says

Oborne. “When you’re buying a new home, you may be able to choose the



House Hunting

layout and work on the design prior to construction.” You may also have the opportunity to customize finishing features such as flooring, cabinetry and countertops.

Plus, there’s less chance you’ll have to pay for significant repairs or renovations during the first few years you own the home. Some new builds even have warranties that protect against defects, and “a builder will sometimes provide an additional warranty on top of that,” Oborne notes.

But purchasing a new build has its cons, too. If you prefer an urban lifestyle, it may be

tough to find new builds in established downtown communities. Homebuyers should also be prepared for the possibility of ongoing construction – and the noise, dust and unpaved roads that come with that.

If you’re in the market for a newly built property, carefully research the “financial strength and reputation of the builder by looking into its history, its rating with the Better Business Bureau, the number of homes it produces each year, and its membership with home builders’ associations,” Oborne advises

The scoop on RESALEFor a buyer interested in unique style and classic design, an older home is the way to go.

“Generally, people are buying older homes because of the architecture,” Oborne says.

“The exterior provides the character of an older home, which a lot of people

like, and allows you to do interior work, such as incorporating contemporary styles.” Outdoor space is another attractive feature of buying resale. “You’re getting a lot of greenery with an older home; you’ve already got landscaping established. With a new home, you don’t,” Oborne points out.

Living in an older neighbourhood – with parking, paved roads and nearby amenities – may be important to some homebuyers, as purchasing a new build may mean putting up with months or even years of construction in your community.

Taking advantage of the perks of a resale home, however, may come with

high maintenance and renovation costs. “There are issues with older homes,” Oborne warns. “They could be anything to do with updating the house – dealing with an older roof or older infrastructure of the home, such as plumbing, electrical and waterproofing.”

Older homes also tend to be a lot less energy efficient than new builds. Buyers may want to factor in the costs of replacing windows and doors to improve efficiency.

Oborne recommends that buyers get an independent home inspection that can reveal potential issues. He also suggests hiring a reputable contractor to join you when viewing a resale property. “The contractor’s time will need to be paid for, but the right person can provide you with valuable information about the integrity of the home,” he says.


STEP

BUILD YOUR DREAM TEAM

A licensed real estate agent

Don’t try to go at it alone. These days, with lots of options available online, it’s easy to convince yourself that you

can be your own agent. That’s not a good idea. A REALTOR® will help locate homes in your price range and in the right neighbourhood, and then present your offer to the seller.

As a first-time homebuyer, you’ll require assistance from housing industry pros to simplify and guide you through the complex homebuying process. To get the most value out of these relationships, it’s important to understand the role of each professional and how best to work with them. Your “home team” should include the following players.



The Buying Process

Be selective, taking the time to interview the agents in person to see if they’re a good fit. Not only is it important to find an agent who really knows their stuff, but it’s also essential to have good chemistry – you’ll be spending a lot of time together, after all. A qualified agent will round out the rest of your team.

A reputable broker or lender

Chances are you will need to borrow money to purchase your home, so a broker or lender may be the most important member of your real estate team. A mortgage professional, such as a mortgage broker or a lender’s mortgage specialist, will assist in negotiating your mortgage and financing conditions.

A lender has the ultimate decision-making authority on whether to approve your mortgage application and under what conditions. Lenders include banks, trust companies, credit unions and mortgage banks.

Get referrals and don’t be afraid to ask questions. Look at a variety of lenders, including big national lenders, regional banks, local community banks and credit unions.

A professional home inspector

Although a home inspection is optional, it’s highly recommended, even for newly built homes. Having a professional home inspection will assist in determining if the property that you intend to buy has any serious issues. Over the long term, that will save you time and money, as well as ensure your family’s safety, especially if a problem is found. Knowing what to expect will help you to make an informed decision about the value of your potential future home.

An experienced real estate lawyer

Think of a real estate lawyer as the coordinator of the homebuying process. A lawyer will review information pertaining to the purchase and mortgage, handle such things as title insurance and land transfer tax, and confirm that paperwork is filed, transactions are processed and payments are made.

It is recommended that first-time buyers connect with a lawyer before beginning the house-hunting process. Booking a 30-minute meeting will give you the chance to discuss what to expect after a purchase offer is accepted, as well as clarify how much time it will take until you can call the home your own.

Your lawyer will also prepare the transfer of property title from the seller to the new owner, determine the amount of land transfer tax owed and make sure that you, the buyer, have met all the legal and financial conditions. Finally, your lawyer will receive the keys to your new home.

Before choosing a REALTOR®, mortgage professional, home inspector or real estate lawyer, be sure to shop around and ask friends and family for recommendations. Take the time to meet the experts in person to determine if they are right for you. Ask about their experience and track record, to assess their knowledge base and determine their reliability. It’s also a good idea to ask how they are compensated for their job, so you fully understand how they are being paid and by whom.


STEP

THREE MONTHS AHEAD

• Create a moving-day file system; include key phone numbers

(lawyer, REALTOR®, insurer).

• Collect recommendations for movers.

• Start to sell, use up, give away, recycle or discard anything you won’t move.

• Arrange school transfers.

• Update your address with the following: financial institutions, government,

employers, pension plans, doctors, dentists, lawyers, accountants, motor

vehicle bureaus, insurers, associations and subscriptions.

SMART MOVES



Closing & Moving in

TWO MONTHS AHEAD • Get written estimates and hire a mover.

• Collect boxes.

• Start packing non-essential items; label boxes and keep inventory.

• Arrange changeovers: mail, cable, telephone, Internet, utilities, and home and

auto insurance.

ONE MONTH AHEAD • Measure new home, create floor plan and colour-code boxes for each room.

• Make moving-day plans for your children and pets.

• Dispose of flammables and drain fuel-burning equipment.

• Send out items for cleaning/repair; arrange for delivery to new home.

• Arrange to transplant or take cuttings from prized outdoor perennials.

• Identify valuable/fragile items (jewellery, houseplants) to be moved

separately.

• Begin to disassemble large furniture pieces; continue packing.

FINAL WEEK • Confirm everything; give directions and phone numbers.

• Finish packing; dismantle fixtures (shelving, curtains).

• Visit new home: test keys, lights, appliances, furnace and doorbell;

ensure all agreed items are in place (light fixtures, blinds).

• Arrange vehicle parking; book elevators.

• Clean fridge, stove and bathroom.

• Assemble keys and documentation for new owner.

• Create a moving-day kit: sleepwear, next-day clothes; medications, toiletries;

essential foods, utensils; charged phone, laptop, chargers; cleaning supplies;

moving-day file system.

Tips for a stress-free move


STOCK UP!As a new homeowner, you need to be prepared to tackle minor repairs and tasks around your property. To keep costs down and avoid countless trips to the hardware store, it’s important to establish what equipment you will require before you actually require it. Here’s the lowdown on the top tools every DIY newbie should have in their home-repair kit.

TOOL STORAGE Start with the perfect container to house the essentials. A traditional metal tool box, plastic bin or tool bag will do the trick; which one you choose will depend on how much storage you have in your home or garage.

SCREWDRIVERS For an all-in-one solution, try a multi-bit screwdriver – the interchangeable tips are suitable for a wide range of screw types and sizes. Or, opt for individual screwdrivers, starting with flat- and Phillips-head styles in various sizes (a flat-head screwdriver has a flat tip that fits into the single slot of a flat-head screw, while a Phillips screwdriver fits into cross-shaped slots).

HAMMER When it comes to tapping something into place or pulling nails, an easy-to-handle 16-ounce fibreglass claw hammer will do the trick.

LEVEL With a standard carpenter’s level, also known as a bubble level, you’ll take the guesswork out of determining if something is perfectly straight. A level contains a series of glass vials, each marked with a pair of lines and filled with an air bubble. If the bubbles are centred within those lines when the level is placed on the object you’re checking, the item is level. Although levels are available in a variety of lengths, a 24-inch model should be sufficient for most household jobs.

TAPE MEASURE A dependable 25-foot retractable metal model is a must. Spend wisely and purchase a quality tape measure with a sturdy, one- to 1¼-inch-wide blade that can extend several feet without bending, which is essential if you are going to be measuring on your own. (Narrower tapes usually collapse when extended a few feet.)

TOOLBOX


EXTENSION CORDS Available for both indoors and outdoors, extension cords come in various lengths and plug types, so consider use and location when selecting one. Those designed for outdoor use are more durable and offer protection from moisture, direct sunlight and abrasion, making them suitable for yardwork.

HARDWARE This includes nails, screws and various sizes and styles of hooks, including eye and cup hooks, as well as picture-hanging wire and anchors appropriate for your walls.

UTILITY KNIFE With this workhorse, you can tackle several jobs, such as opening boxes, cutting vinyl flooring and slicing through dry caulking. For comfort, buy one with built-in blade storage and a rubber-covered handle.

WORK LAMP Illuminate your projects with an LED work lamp to ensure that you’re sawing, screwing, nailing and otherwise DIYing correctly in low or no light.

QUICK TIPAt this stage, buy quality and focus on the basics, since you can always add to your collection with each new task. For those one-time home improvement projects, such as sanding your floors, hire a pro or rent the proper equipment.

PLIERS Buy two types: slip-joint pliers can adjust nuts and bolts; needle-nose pliers are good for almost any household project that requires gripping small objects or bending, cutting or stripping wires.

CORDLESS POWER DRILL Don’t skimp on this power tool. When you have larger jobs that require a bit more muscle, you will appreciate the luxury of having a lot of power. For basic tasks, eight or nine volts should be enough, but if you plan on drilling into brick, it’s best to go with at least a 12-volt model.

WRENCH Opt for a 10-inch adjustable crescent model instead of an entire set. The moveable lower jaw can be adjusted to grip different sizes of hex nuts.

PUTTY KNIVES Generally used for smoothing putty or spackling compound, a putty knife also doubles as a scraper, for peeling off loose paint or dried glue. Choose a 1½-inch blade for scraping and a five- or six-inch blade for spreading.

SAW A 15-inch handsaw is ideal, as the blade is long enough to complete a variety of tasks yet short enough to fit in most tool boxes. Stanley’s SharpTooth technology uses three cutting surfaces to enable the blade to cut on both the pull and the push strokes, which means the saw cuts twice as fast.


The program allows Canadians to be part of a Habitat build within Canada, immersing them in the local culture. Each year, volunteers, including Genworth Canada employees, help complete projects in communities that have been struck by disaster, have a limited build season or are in rural areas.

Last year, Brian Kelly, a Genworth Canada board director, led a team of 12 to the Yukon. The group, which included seven Genworth Canada employees and three youth members of the Curve Lake First Nation, located near Peterborough, Ontario, spent eight days in Whitehorse, learning

new skills and forging new bonds. Together, they built a duplex for two local families: Jeff, Tanya and their four children, and Brendan, Jasmine and their two children.

For Brian, a great supporter of the program, what made this build special was the participation of the First Nations youth. “It added so much to the cultural experience, as 25 per cent of the Yukon population is First Nations,” he said. “In fact, we were building for two First Nations families.”

Zac McCue, head of the Curve Lake First Nation Youth Council, agrees. The experience enabled the group to reconnect with the long-held traditions

HANDS ACROSS CANADA

Helping Canadians work together to build stronger, more sustainable communities is at the heart of Genworth Canada’s commitment to social responsibility. Recognizing that affordable homeownership is a luxury many Canadian families do not enjoy, in 2014 Genworth Canada partnered with Habitat for Humanity to launch Canada Builds to help change that reality.

COMMUNITY


of trading and working together among First Nations people. “They say it takes a community to raise a family, but at the core of that is a good home,” Zac explains.

And as the community came together to build something tangible,

something else happened, says Brian: “It’s always a great Habitat experience to move from simply understanding that we ought to be more appreciative of what we have to understanding how happy others are who have so much less.”


STAY CONNECTED WITH GENWORTH

HOUSE HUNTING CHECKLISTThe indispensable tool for your homebuying journey!Download at: Homeownership.ca/checklist


WHAT'S ONLINE

HOMEBUYING CALCULATORSTools to help you calculate what you can afford, your mortgage payment and your mortgage insurance premium.Homeownership.ca/calculators

Join the conversation, learn about homeownership, or follow us for up-to-date information designed to help you make smart homebuying decisions!


THE GUIDE TOHOMEOWNERSHIP

The journey to Homeownership is fi lled with excitement, challenges and choices. Wherever you are on that journey, we can help you to achieve the dream of homeownership with expert resources and tools at each step.

800.511.8888 | Genworth.ca | Homeownership.ca | Homeownership.ca/fb

Receive Expert Knowledge, Resources and Tools, Right to Your InboxThe Homeownership.ca Newsletter

Sign up atwww.homeownership.ca/sign-up

http://www.homeownership.ca

the homebuying -...

Documents