Buyer FAQs
A fixed-rate mortgage has a constant interest rate and payment, while a variable mortgage has an interest rate that can change after an initial period, potentially making payments higher or lower depending on economic conditions.
These answers can vary based on the market and location, but they provide a solid foundation for first-time buyers.
The spring and summer months typically offer more options, but there is often less competition and potentially better deals in the fall and winter.
In many cases, you can make changes once you’ve closed on the property. However, check with the seller and ensure any agreed-upon repairs or renovations are completed before moving in.
While it’s not mandatory, a real estate agent can offer valuable expertise, help with negotiations, and guide you through the entire home-buying process.
Consider factors like location, the home’s condition, local real estate trends, and potential for future growth. Researching comparable sales (comps) can help you understand the home’s market value.
If you need to sell your current home before buying a new one, there are a few options to consider:
1. Bridge Loan
A bridge loan is a short-term loan that lets you borrow against the equity in your current home to help finance the new one. It’s useful if you need to buy before your current home sells, but it can be costly with higher interest rates.
Pros:
- Helps you buy a new home without waiting to sell your current one.
- Makes it easier to make offers without contingencies.
Cons:
- You’ll be responsible for two mortgages for a period, which can be financially challenging.
- If your current home sells later than expected, repayment may be difficult.
2. Home Sale Contingency
A home sale contingency makes the purchase of the new home dependent on selling your current home. If your home doesn’t sell, you can back out of the deal without penalty.
Pros:
- Reduces financial risk by ensuring you don’t buy before selling.
- Offers peace of mind with no need for extra financing like a bridge loan.
Cons:
- Sellers may not accept offers with contingencies, especially in competitive markets.
- You risk losing the home if another buyer comes in without contingencies.
3. Selling First and Then Renting or Staying with Family
Another option is to sell your current home first and then rent or stay temporarily with family while you search for a new place. This approach lets you avoid the risk of carrying two mortgages and ensures you have a clear budget for your next home.
Pros:
- No risk of carrying two mortgages at once.
- You can take time finding the right home without the pressure of needing to buy immediately.
Cons:
- You might face a temporary period of inconvenience if you need to move out before finding a new place.
- The housing market can change during your search, potentially affecting your options.
When buying a home, there are certain buyer’s conditions that protect you and allow you to back out of the deal if specific circumstances arise. These conditions are written into the purchase agreement and give you the flexibility to cancel the sale without losing your deposit. Here’s how they work:
1. Home Inspection
A common buyer’s condition is that the sale is contingent on the home passing a professional inspection. If the inspection reveals significant issues (e.g., structural problems, faulty plumbing, or mold), you have the option to back out of the deal or renegotiate the price.
Example: If the inspection uncovers major repairs that you’re unwilling to take on, you can either ask the seller to make repairs, renegotiate the price, or cancel the agreement entirely.
2. Financing
If you cannot secure financing for the purchase—whether due to a low appraisal, lender issues, or not meeting the requirements for the mortgage—you can back out of the deal. This condition protects you from being locked into a purchase if financing falls through.
Example: If the home appraises for less than the agreed purchase price and the lender will not approve the loan for that amount, you can cancel the deal without penalty.
3. Title Search
A title search checks the property’s legal ownership history to ensure there are no unresolved claims, liens, or legal issues that could affect your ownership. If anything suspicious arises in the title search, you can walk away from the deal.
Example: If the title search reveals unresolved legal claims or ownership disputes, you can choose not to proceed with the purchase.
4. Sale of Your Current Home
If you need to sell your current home before buying the new one, you can include a condition that the purchase of the new home is dependent on successfully selling your existing property. If you can’t sell your home in time, you can back out of the deal.
Example: If you’ve made an offer on a new home but your current home doesn’t sell by the agreed-upon deadline, you can cancel the deal on the new home without penalty.
Buyer’s conditions are essential for protecting your interests and reducing financial risk. They give you the flexibility to back out of a deal if something unexpected happens, such as issues found during the inspection, financing problems, or title concerns. Without these conditions, you would be bound by the terms of the contract, even if significant problems arise.
Title insurance protects you against future legal claims on the property’s title. It’s highly recommended as it ensures you won’t inherit any problems from previous owners.
New homes offer modern features and fewer maintenance issues but may come at a premium. Resale homes can offer better value and a well-established neighborhood, but might require more repairs or updates.
If the home appraises for less than the asking price, you can renegotiate the price with the seller, pay the difference out-of-pocket, or back out of the deal if it’s contingent on the appraisal.
You can typically afford a home that costs up to 3 to 5 times your annual household income, depending on other factors like debt, down payment, and interest rates. It’s best to get pre-approved for a mortgage to have a clearer picture of your budget.
The standard down payment is usually 5% to 20% of the home’s purchase price. If you put down less than 20%, you may need to pay for mortgage insurance.
Pre-qualification is an estimate based on basic financial information, while pre-approval involves a more detailed review of your finances and provides a specific loan amount.
Closing costs include fees like title insurance, inspections, appraisal costs, and legal fees. They usually range from 2% to 5% of the purchase price.
On average, it takes about 30 to 45 days to close on a house, although this can vary depending on factors like the complexity of the transaction or local regulations and buyer or seller prefrences.
It depends on your financial situation. Fixed-rate mortgages provide stability, while variable-rate mortgages may offer lower initial payments but can fluctuate over time.
Pay attention to the condition of the foundation, roof, plumbing, electrical systems, and appliances. It’s essential to understand any major repairs or issues that might arise.
Yes, there are ongoing costs like property taxes, utilities, maintenance, homeowners insurance, and potentially HOA fees. You may also need to budget for unexpected repairs.
Research the neighborhood’s safety, schools, amenities, and proximity to your workplace. Visiting at different times of day and talking to residents can give you a better feel for the area. Ask your realtor for their honest opinion.
Yes, many buyers successfully negotiate the price, especially in a buyer’s market or if the home has been on the market for a while. Your real estate agent can assist with this.
Here's a list of common terms that might confuse a homebuyer in Nova Scotia, along with their definitions:
Deed
- A legal document that proves ownership of a property. It is transferred from the seller to the buyer during the sale of the property.
Closing Costs
- The fees and expenses associated with finalizing the purchase of a home. This includes legal fees, title insurance, home inspection costs, and land transfer taxes. In Nova Scotia, land transfer tax is typically a percentage of the home’s sale price.
Deed Transfer Tax
- A tax levied by the provincial government on the transfer of property. In Nova Scotia, the land transfer tax is typically 1.0% of the property’s purchase price up to $150,000 and 1.5% on amounts above that.
Title Search
- A review of public records to verify the legal ownership of the property and check for any liens, claims, or other issues related to the title. This ensures the property is free of any legal disputes before it’s sold.
Zoning
- The local government’s regulation that specifies how a property can be used (e.g., residential, commercial, industrial). In Nova Scotia, zoning regulations vary by municipality and are essential for determining what you can and cannot do with the land.
Restrictive Covenants
- Conditions placed on a property that limit certain uses or activities (e.g., restrictions on the type of structure that can be built, the animals you can keep, or the business activities you can conduct).
Encumbrance
- Any claim, lien, or legal liability attached to a property, such as a mortgage or unpaid property taxes. Encumbrances can affect the transfer of ownership, so it’s important to clear them before purchasing.
Mortgage Pre-Approval
- A process in which a lender evaluates your financial situation and provides a letter stating how much they are willing to lend you for the purchase of a home. Pre-approval is not a guarantee of a loan but gives you an idea of your budget.
Condominium Fees
- Monthly fees paid by owners of condo units to cover the cost of shared building maintenance and amenities (e.g., heating, water, cleaning, property management). In Nova Scotia, condo fees also typically cover the reserve fund for future repairs and replacements.
Reserve Fund
- Money set aside by a condominium association to cover major repairs and replacements (e.g., roof replacement, elevator repairs). It’s important to inquire about the reserve fund’s health before purchasing a condo.
Chattels
- Personal property included in the sale of the home, such as appliances, furniture, or fixtures that are not permanently attached to the property. Buyers should verify which chattels are included in the sale.
Fixtures
- Items that are permanently attached to the property, such as light fixtures, built-in appliances, and cabinetry. Fixtures are typically included in the sale, but it’s important to confirm this with the seller.
Property Disclosure Statement
- A document provided by the seller that outlines any known issues or defects with the property. This statement is meant to give the buyer a clear understanding of the property’s condition, though it may not cover everything.
Fixed-Rate Mortgage
- A mortgage with an interest rate that remains the same for the entire term of the loan, offering predictable monthly payments.
Variable-Rate Mortgage
- A mortgage with an interest rate that can change over time, often linked to the prime lending rate. Your monthly payments may fluctuate based on market conditions.
Home Inspection
- An assessment of a property’s condition by a licensed professional. This inspection can uncover issues with the home’s structure, systems, and appliances that may not be immediately visible.
Amortization Period
- The length of time it will take to pay off your mortgage in full, usually 25 years. The longer the amortization period, the lower the monthly payments, but the higher the total interest paid over time.
Home Equity
- The difference between the market value of your home and the amount you owe on your mortgage. As you pay down your mortgage, your equity increases.
Assumption of Mortgage
- A process where the buyer agrees to take over the seller’s existing mortgage instead of obtaining a new one. This can be an advantage if the seller has a low interest rate.
First-Time Home Buyer Incentive
- A government program that provides financial assistance to first-time homebuyers in Canada. It can include a shared equity mortgage or down payment assistance, aimed at making homeownership more affordable.
Tarion Warranty
- A new home warranty provided to homeowners in Nova Scotia (and other parts of Canada) that protects against certain defects and construction issues for the first few years of homeownership.
Lawyer Review
- The process where a lawyer examines the contract to ensure it is legally sound and in the buyer’s best interest. It typically occurs before the firm date and provides an opportunity for the buyer to address any concerns.
Firm Date
- The final date when the agreement becomes legally binding after all conditions are either satisfied or waived. After this date, neither party can back out without serious consequences.
Condition Dates
- Specific deadlines for fulfilling conditions like financing, home inspection, etc. These dates are crucial in determining whether the buyer can back out or move forward with the purchase.
Closing Date
- The date when the home purchase is finalized, the buyer takes possession, and the seller receives payment. This is when you typically sign the final paperwork and receive the keys.