Buying a home with a friend is a good way to get into the housing market. The pandemic has affected businesses everywhere, the Real Estate market has rebounded well. House sales experienced a little interruption early on. It has bounced back bigger and better than what could have ever expected. This has been a result of a great demand brought on by low inventory and motivated buyers. Buyers also want to take advantage of low-interest rates. The house prices will continue climbing, so it only makes sense to become a homeowner as soon as you can.

Buying homes as an Investment

A trend we are seeing more of is people buying homes with their friends as an investment. It is an excellent way to build wealth and plan for the future ahead. The benefits of buying are obvious, two incomes and two down payments. This decision will need much planning, consideration, and honest communication. Here are some tips on how to buy a home with a friend. This will help make a positive and educated investment in your future.

Co-ownership: Joint Tenants & Tenants-in-Common.

When buying a home with a friend, there are two different options you have as co-owners. You can own as “Joint Tenants”, or as “Tenants in Common”. To keep it simple, the word “Tenants” refers to a co-owner when more than one person owns an estate. The difference between these two options is what happens if one of the tenants were to die. In the Joint Tenant agreement, if one of the co-owners were to pass, their share of the home goes to the other owner(s). For a Tenant in Common situation, the part of the property owned would go to the individual’s estate. What all co-owners should be aware of is that no matter the arrangement, there can only be one lender. All owners will have to sign the mortgage. If one of the co-owners misses a mortgage payment, it will affect everyone’s credit scores. Be honest about your financial situation and enter into these agreements with people that you know well and trust.

Create a Strong Agreement or Contract.

“What if’s” are a big thing when it comes to making a buy as big as a home. Unfortunately, it is hard to predict what could happen in the next five or ten years is unlikely. Because of this, it is important to work out an agreement on what to do in case of hardships in the future. Have a contract in place in case something goes wrong. This will help if someone wants to rent out or sell the home.

Credit Scores Matter

Even with a large down payment, you don’t want to accumulate a lot of debt or have a poor credit rating. This could affect the rate you receive, or have lenders turn away altogether. Be open and honest about your financial situation when purchasing a home. If one of your co-owners has poor credit or an unstable income, you should leave them off of the ownership. Instead, work out a separate agreement to secure a better rate from the lender of your choice.

Finally, your Mortgage

When it comes to securing a mortgage for a Joint Tenant or Tenant in Common situation, get advice from a mortgage specialist. Mortgage Specialists live and breathe mortgages. They have a wealth of information to share with people in all types of situations. There is a variety of lenders to shop from, they can help you find the best rates for your circumstances. They will listen to your goals and offer a holistic approach so that you can get the most out of your investment.

Buying a home is a big decision that requires much thought and planning. With house prices continuing to climb, it is better to get in sooner rather than later if you have the means. Whatever your situation is this is something your REALTOR® can help with.  The current real estate market is moving fast so if you are thinking of buying take a look a look at our articles on Understanding Multiple Offers Contact us today with any questions you have about investing in Real Estate. We are always happy to help.

When looking to buy a home, there are many options. Last week, we took a look at condos as compared to freehold properties but what about a freehold home with a homeowner’s association? In many cases, a homeowner’s association can appear very similar to a condo but this is not actually the case. It is very important to understand these differences before buying into a home with a homeowner’s association.

Differences Between a Condo and Homeowner’s Association

If you purchase a condo, you are purchasing your unit along with a share of the common element(s). These could include green spaces, amenities, private roads, or services and they are jointly owned by all condo owners. In the case of a homeowner’s association, those common elements are owned by a third party and your monthly homeowner’s association fees are paid to cover their maintenance and to allow usage of these amenities. In a homeowner’s association, you own your home and property but pay to use these common elements. Payment for these common elements is not usually optional so it is important to consider the cost and whether or not you will actually take advantage of them.

Homeowner’s Association Fees

Just like condos, homeowner’s association fees can vary dramatically depending on the amenities. They are generally charged monthly and go to cover anything from a parking lot or green space, or an amenity like a pool, golf course, or tennis court. The more that is offered, the higher the homeowner’s association fee.

Restrictions

Like a condo, a homeowner’s association may impose restrictions  or bylaws. These restrictions can include exterior modifications, pets, or even people (some homeowner’s associations will not allow children to stay for long periods if the community is geared towards adult living). These restrictions can be strict so it is important ensure that the homeowner’s association bylaws fit your lifestyle.

Perks of Buying a Home in a Home Owner’s Association

• Amenities – Some home owner’s associations offer great amenities.
• Ongoing Maintenance – Depending on what your homeowner’s association covers, it may mean that certain aspects of your property, or the property around your home is maintained. This can include snow removal and landscaping.

Before You Buy

As a buyer, you will need to sign a “Joint Use Agreement” and it is important to review this carefully to ensure that you fully understand the details of the homeowner’s association. By signing this agreement, you are agreeing to pay all monthly fees and abide by any bylaws that have been put into place.

With all real estate transactions, it is important to work with a Realtor. A Realtor will be able to guide you through the decision making process to ensure that you know what you are buying.

When it comes time to buy a home, more and more people are making the decision to buy condos instead of a freehold home. Condos can be a great option if they match up with a buyer’s lifestyle, but it is important to do your research and know the differences between a freehold home and condo before you make the final decision of which to purchase.

There are many different types of condos but they all have one thing in common: shared ownership of at least one common element. This element could be the building itself, in the case of an apartment building, or it could be a green space, private street, or an amenity like a pool. It is important that you do your research before buying a condo to understand exactly what you are buying.

Condo Fees

 When you purchase a condo, you will be required to pay a monthly condo fee to pay for the shared element along with the fees associated with managing the condo. Condo fees can vary dramatically between different condos depending on the shared elements. As a general rule, the more amenities and services a condo provides, the higher the condo fee.

Condo Restrictions

 Condos generally have their own set of bylaws which govern the entire condo. Some can be incredibly restrictive while others are very minimal. A person who has exclusive ownership of a home can do anything they want with the house or surrounding grounds, within the limits of local by-laws of course. Condo owners, on the other hand, are sometimes limited in the changes they are allowed to make to their property. This can range from simple restrictions on renovations that affect the home’s outside, to limitations on exterior decorations and even decorations that can be seen from the front windows, depending on how strict the rules are for an individual condo. These rules are set out by the condo association that oversees the condo, and are heavily dependent on the individual condo location. As shared owner of the condo and all that goes with it, each individual owner has a vote in decisions that affect all condos, but this rarely includes altering rules that have already been established.

Perks of Buying a Condo

• Amenities – Some condos offer exciting amenities such as pools, fitness rooms, and party rooms.
• Insurance – Most condo fees cover some form of insurance on your unit, whether an apartment or detached home. This will reduce your monthly personal insurance costs.
• Restrictions can be good – Depending on what you are looking for, restrictions can be a good thing as it keeps the neighbourhood looking cohesive and can restrict the likelihood of an “eye sore” appearing.
• Major Maintenance – Some condo fees include the maintenance of all exterior components of your unit including the roof, windows, siding, and bricks. These can be major expenses for home owners.
• Ongoing Maintenance – Some condo fees cover ongoing maintenance fees such as snow removal, lawn mowing and landscaping. This could leave you with more free time if you don’t have to take care of these things on a regular basis.

Before You Buy

Have you lawyer thoroughly examine the Status Certificate of the condo association. Make sure that they go over the following information with you:

• The financial status of the condo, including the reserve fund. Some condos are managed better than others. You want to ensure that the association has money in the bank to pay for repairs and incidentals because if they don’t, your fees may go up.
• The history of the condo fees. Have they been steady or been increasing rapidly?
• What your condo fees cover exactly. Have your lawyer review with you what the condo fees cover and what they do not. Do not make assumptions as all condos are different.
• Restrictions and condo bylaws.

Condos come with advantages and limitations, just as owning a freehold home does. The important thing is to do careful research and decide which option best fits your needs and lifestyle. When researching condos, be sure to look around at multiple locations, as the rules, fees, facilities and size of condos can vary greatly from one area to another. And don’t forget, a Realtor will be there to guide you through every step of the process.

BUYERS

Spring hasn’t begun to crack through the winter thaw, but that doesn’t mean there’s time to wait if you’re planning on purchasing a home this spring. Be prepared for the Spring Market, and ensure your home buying experience is a great one by organizing your paper work, mortgages, ideal houses, and pricing ahead of time. Spring into this home-buying season ready to buy, so that house you’ve been dreaming of, doesn’t land in the hands of another buyer.

Credit Check

A credit score is a numerical representation of your credit report, and having good credit is like gold when obtaining a mortgage. Spend some time understanding where your credit falls, as credit scores range from 300-850, and the higher the score you have, the better. If there are any issues with your credit score, now is the time to work at repairing them (paying bills on time, getting a raise in your credit limit etc.) It’s not recommended to begin opening new credit cards, as opening new credit may hurt your score in applying for a mortgage, or lower your opportunity of getting the best rate on a loan.

Mortgages & Interest Rates

A key to a good mortgage, is a lower interest rate. However, not everyone gets the same interest rate on a mortgage, as it is dependent on your credit, and your mortgage lender. Talk to a mortgage lender to learn if you can afford to buy a home at this point, what the price range you can afford is, and what interest rates are currently being offered. Make an appointment with your bank provider, or with a mortgage associate to get a full understanding of how mortgages work, and what you should expect. Once you’ve had these meetings, and your finances have been reviewed, you can be “pre-approved” for a mortgage and confidently show sellers that you can buy their home. To prepare to get pre-approved, gather together your financial documents (listed below) in advance of the actual home-purchase.

• Last 2 years of tax returns
• T4 forms for the past 2 years
• Paycheck stubs from the past 6 months
• Proof of rent and/or mortgage payments for the past year
• A list of all debts, student loans, credit cards, automobile loans etc.
• A list of all assets (bank statements, automobile titles, investments etc.)

Contact A Realtor:

Realtors are professionals when it comes to the processes of both buying, and selling homes.  Your choice of realtor can make the difference between finding the house you like, and finding the house you LOVE.  Realtors have a wealth of knowledge, and experience, so while you are in search, take the recommendations that come from friends and family into consideration, and interview those that have the right experience for you. You want to look for an agent who is knowledgeable, motivated, and can assist you with your goal of homeownership. Finding a good realtor is a vital to your end goal of purchasing a home.