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Home Ownership is the Key to Your Future. Joanne Lozinski. Sales Representatives RE/MAX Professionals Inc. 905-270-8880. Real Estate is unlike any other commodity And here’s why…. Real Estate Principal residence Tax Free

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Home Ownershipis the Key to Your Future

Joanne Lozinski

Sales Representatives

RE/MAX Professionals Inc.

905-270-8880


Real estate is unlike any other commodity and here s why l.jpg
Real Estate is unlike any other commodityAnd here’s why…

  • Real Estate

  • Principal residence Tax Free

  • Practical (everyone requires shelter)

  • Offers security (temporarily unemployed)

  • Now you’ve got extra room

  • Take in a boarder

  • Help with the payments

  • Your house is appreciating in value and you’re continuing to build equity

  • Other commodities

  • Taxable

  • You can’t raise a family living in a mutual fund

  • Less Secure (you lose your job)

  • Limited space

  • Cash in your stocks and bonds

  • Pay your landlord and up with 0


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Why NOW is the Time to Buy

  • 5% Down-Payment Plan

  • In the 1980’s the minimum down-payment required to purchase a home was 10%

  • The minimum required down-payment today is 5%!

RRSP & Home Buyers Plan

  • May borrow up to $20,000.00 each from RRSP

  • Repay back over 15 years in equal installments

Low Interest Rates

  • The average mortgage rate for past 20 years 11.08%

  • The current 5 year mortgage rate is 5.33% lower than the past 20 year average


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What does that equate to in dollars and cents?

5.45%

$250,000

(mortgage)

$1,527.77

(per month)

  • 11.08%

  • $250,000

  • (mortgage)

  • $2,464.76

  • (per month)

Difference of $936.99 per month savings


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1985 - $109,094

1986 - $138,925

1987 - $189,105

1988 - $229,635

1989 - $273,698

1990 - $255,020

1991-$234,313

1999 - $228,372

2000 - $343,255

2001 - $251,508

2002 - $275,331

2003 - $293,067

2004 – $314,661

2005 - $335,971

Market Trends and Prices

Average Price of Single Family Dwellings in the GTA

1992 - $214,971

1993 - $206,496

1994 - $208,921

1995 - $303,028

1996 - $198,150

1997 - $211,307

1998 - $216,815

1989 Market highly speculated

Over-built, over-inflated

Interest rates 14%

Price adjustment


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Why Real Estate is a good investment

  • Over the past 36 years real estate has increased 1470%

Data from Toronto Real Estate Board

This chart represents average price trends for houses in the Toronto area during the last 24 years. House prices clearly peaked in 1989 and bottomed out in 1996.


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Toronto Real Estate Board Historical Stats

1966

$21,360

1976

$61,389

1986

$138,925

1996

$198,150

2004

$315,231

2005

$335,791


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Historically Real Estate has proven to be anexcellent investment

  • It is a hedge against inflation

  • It can provide excellent collateral

  • It is easy to liquidate

  • It provides an avenue for forced savings

  • It’s value increases over time

  • Your principal

    residence is a tax

    free gain


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Historically Real Estate has proven to be an excellent investment

1986 - $119,900

2004 - $345,000

tax free gain of $225,100

1986 - $143,900

2004 - $462,000

tax free gain of $318,000


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Renting vs. Owning

  • With rent increasing

  • Mortgage rates decreasing

  • Property values increasing

  • There is absolutely NO benefit to renting

NO

At a rental rate of $1,200.00 per month it will cost you $60,000.00 in rental payments over a 5 year term!!


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Retrofit

  • Most existing two-unit houses (built before Nov. 16, 1995) will be "grandfathered" (continue to be allowed) under the new legislation, provided they meet applicable municipal planning standards. As well, two unit houses should have met Fire Code requirements by July 14, 1996. In general, new apartments must comply with the Building Code, and existingapartments must comply with the FireCode.  Both new and existing apartments must comply with certain property and municipal zoning (planning) standards.

  • It would appear your best protection is to obtain a certificate of compliance from the local fire department for any property that might fall under the jurisdiction of the Fire Code, Section 9.8. You should obtain a building permit before starting any new construction. If you don’t obtain a permit, or a certificate of compliance, the dwelling unit could possibly be non-conforming, and therefore considered illegal.

  • Also, municipalities have the right to decide where they will allow homes to have additional dwelling units and can designate areas where they will not allow homes to have additional dwelling units. Units installed after November 16, 1995 without a permit are unprotected (even if they meet fire, safety & electrical standards) and the municipality could require removal of the unit.


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TREB District Map

Click on map to view larger section


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Housing Types and Styles - Townhouses

Free Condo Townhouse

Also includes a maintenance fee that is usually less than the standard condo townhouse. This fee includes general landscaping but you are responsible for exterior maintenance of the building.

Freehold Townhouse

No Maintenance fee. You own the land.

  • Condominium Townhouses

  • Monthly maintenance fees usually range from $140.00/mo - $210.00/mo. This fee includes exterior maintenance & building insurance.

Different Types of Townhouses

Two Storey

Three Storey

Multi-Level

THIRD FLOOR

SECOND FLOOR

SECOND FLOOR

UPPER LEVEL

BEDROOMS

BEDROOMS

GROUND FLOOR

GROUND FLOOR

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

BASEMENT

BASEMENT

BASEMENT

CRAWL SPACE


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Housing Types and Styles - Townhouses

  • Typical Townhouse

Freehold Condo

Freehold Townhouse

3-Storey Townhouse

Multi-Level Townhouse

2-Storey Townhouse


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Housing Types and Styles - Semi-DetachedAttached by Common Wall or Garage

Raised Bungalow

Three Storey

Bungalow

Two Storey

THIRD FLOOR

SECOND FLOOR

SECOND FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

Three Level Backsplit

Four Level Backsplit

BASEMENT

BASEMENT

BASEMENT

BASEMENT

UPPER LEVEL

BEDROOMS

MAIN LEVEL

LIVING ROOM

UPPER LEVEL

BEDROOMS

Five Level Backsplit

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

Front Split

Multi-Level

BASEMENT

BASEMENT

CRAWL SPACE

CRAWL SPACE

UPPER LEVEL

BEDROOMS

UPPER LEVEL

BEDROOMS

BEDROOMS

BEDROOMS

MAIN LEVEL

LIVING ROOM

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

LOWER LEVEL

FAMILY ROOM

BASEMENT

BASEMENT

SUB-BSMT

BASEMENT

CRAWL SPACE

CRAWL SPACE


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Housing Types and Styles - Semi-DetachedAttached by Common Wall or Garage

  • Typical Semi-Detached

Raised Bungalow

Bungalow

2-Storey

3-Storey

3 Level Backsplit

4 Level Backsplit

5 Level Backsplit

Multi-Level


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Housing Types and Styles - LinkAttached by footing or garage

Link by Footing

SECOND FLOOR

SECOND FLOOR

GROUND FLOOR

GROUND FLOOR

BASEMENT

BASEMENT

Link by Garages

SECOND FLOOR

SECOND FLOOR

GROUND FLOOR

GROUND FLOOR

BASEMENT

BASEMENT


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Housing Types and Styles - LinkAttached by footing or garage

  • Typical Link

Link by Garage

Link by Footing

Link by Garage

Link by Footing

Link by Footing

Link by Garage

Link by Garage

Link by Footing


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Housing Types and Styles - Detached

1 ½ Storey

Raised Bungalow

Bungalow

2 ½ Storey

Two Storey

3rd FLOOR

SECOND FLOOR

SECOND FLOOR

2nd FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

Three Level

Backsplit

BASEMENT

BASEMENT

BASEMENT

BASEMENT

BASEMENT

Four Level

Backsplit

Five Level

Backsplit

UPPER LEVEL

BEDROOMS

UPPER LEVEL

BEDROOMS

MAIN LEVEL

LIVING ROOM

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

UPPER LEVEL

BEDROOMS

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

BASEMENT

SUB-BSMT

CRAWL SPACE

BASEMENT

BASEMENT

CRAWL SPACE

4 Level Sidesplit

4 Level Sidesplit

Front Split

3 Level Sidesplit

UPPER LEVEL

BEDROOMS

UPPER LEVEL

BEDROOMS

BEDROOMS

MAIN LEVEL

LIVING ROOM

MAIN LEVEL

LIVING ROOM

UPPER LEVEL

BEDROOMS

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

MAIN LEVEL

LIVING ROOM

LOWER LEVEL

FAMILY ROOM

LOWER LEVEL

FAMILY ROOM

BASEMENT

LOWER LEVEL

FAMILY ROOM

BASEMENT

BASEMENT

SUB-BSMT

CRAWL SPACE

CRAWL SPACE

CRAWL SPACE


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Housing Types and Styles – Detached

Typical Detached

Bungalow

Raised Bungalow

1 ½ Storey

2-Storey

2 ½ Storey

3 Level Sidesplit

4 Level Sidesplit

4 Level Backsplit

5 Level Backsplit


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Pre-approval

Price determination

Buying profile

Product availability

Viewing and feedback

Offer

Negotiations

Waivers

Closing

Agency

The Home Buying Process10 Steps


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Mortgage Pre-Approval

  • Before we even begin to investigate the marketplace we must have a pre-approved mortgage in place. We can arrange for you to meet with our mortgage consultant at a mutually agreed upon time. Most of the preliminary information can be done over the phone.

  • Our mortgage consultant will shop for the absolute best rate and terms possible to suit your needs.


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What You Need To Apply For A Mortgage

  • Verification that the down payment came from your own resources

  • (ie. Bank account, gift letter)

  • Copy of agreement of purchase and sale

  • Copy of the listing

  • Survey

  • Credit Check

  • (done with your initial pre-qualifier)

  • Salary letter from employer

  • (and/or T4 slips for the past two years)

  • If self-employed, financial statements & income tax returns for the past two years

  • List of assets and liabilities

  • (including account numbers)


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Mortgage Financing

Two Types of Loans

  • Conventional Mortgage

  • 25% or more down payment

  • Under Canadian Law lending institutions cannot provide first mortgages in excess of 75% of the value of the property.

  • CMHC

  • Less than 25% down payment

  • Under Canadian Law all high ratio mortgages (less than 25%) down must be insured through CMHC.

  • This fee ranges anywhere from 0.5% to 3.25% of the mortgage amount which varies according to your down-payment.

  • This mortgage insurance is only for the protection of the lender should there be a default in the loan.



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CMHC Insured Mortgage

Example

  • Purchase Price $250,000.00

  • Down-Payment $12,500.00

  • Mortgage Amount $237,500.00

  • Insurance Fee (2.75%) $6,531.25

  • Actual Mortgage $244,031.25

  • The insured portion of the mortgage

  • is subject to Provincial Sales Tax


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Associated Costs

  • Deposit - The standard deposit that is submitted with an offer is usually about $5,000.00. This can be adjusted if necessary according to your specific financial situation.

  • CMHC Insurance Fee - CMHC fee is subject to PST.

  • Appraisal Fee - CMHC appraisal fee is $235.00, Conventional loans the fee will vary anywhere from about $75.00 – 150.00.

  • Land Transfer Tax - This is a tax that is paid by the Buyer when any property in Ontario is transferred. Under a purchase price of $250.00 the fee is calculated at 1% of the purchase price less $275.00.


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Associated Costs

  • Building Inspection - Will vary from about $250.00 – 325.00

  • Legal Fees (Estimated)

  • Lawyer $450.00

  • Mortgage $200.00

  • Disbursements

  • Title Search $100.00

  • Executive % Sheriff’s Certificate $100.00

  • Tax, Building & Hydro Certificates $150.00 – 200.00

  • Adjustments Vary

  • Land Transfer Tax (see next page)

  • You may wish to discuss the benefits of title insurance with your lawyer


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Land Transfer Tax Table

Land transfer tax is a provincial tax payable on the purchase of a home.

This tax is paid by the Buyer and is calculated as follows:

0.5% of the first $55,000

plus 1.0% of the amount from $55,001 to $250,000

plus 1.5% of the amount from $250,001 to $400,000

plus 2.0% of the amount in excess of $400,000


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Typical Closing Costs

  • Typical Closing Costs on a purchase of $250,000.00

  • 5% Down Payment

  • Legal Fees (all Inclusive) $1,000.00

  • Land Transfer Tax $1,725.00

  • Appraisal (CMHC) $235.00

  • PST on insured portion $617.50

  • Building Inspection $321.00


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Typical Closing Costs

  • It is usually safe to assume that on a $250,000.00 purchase $4,000.00 will adequately cover all of your closing fees. The only time this may be higher is in the case of a property tax adjustment.

  • For example: If you purchase a home closing in February and the Seller had pre-paid the taxes until June, he would be credited the amount pre-paid.

  • The building inspection fee is due at the time of the inspection.

  • The CMHC fee is due at the time of the application.


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Price Determination

  • Price range will be established based on the results of your meeting the mortgage consultant.

  • Although you may qualify for a loan

  • amount higher than what you anticipated,

  • you may choose not to purchase up to

  • your maximum qualification level.

  • Staying within your comfort zone may

  • be more suitable to you.


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Product Availability

  • Our main frame database will source available listings in the price range, area and with the features you have requested.

  • Our data is updated frequently throughout the day.

  • We will keep you fully updated on all

  • new properties as they become available.


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Selections

  • Our job is to assist you in selecting those properties that suit your needs.

  • Through the process of elimination, we will choose those homes that represent the best value.

  • At any give time there will be only a handful of homes that you will even consider.


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Power of Sales

  • Owner defaults on loan

  • Lender takes property back

  • Scenarios

  • there is more mortgage owing on the property than what the property is worth

  • there is equity in the property that must be returned to the Seller.

  • The lender must try to obtain the best price for the home.


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Viewing & Feedback

  • Appointments will be made to view the most appropriate homes.

  • Asking questions and taking notes will prove to be very beneficial.

  • Feedback is critical in order to ensure that we are on the right track.

  • Express your thoughts!


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How much do we offer?

  • Usually an owner will ask between 2 – 4% above market value for the home, therefore there is usually some flexibility in the asking price.

  • Sometimes an owner will price his home very close to or even slightly under what comparable homes have sold for, therefore there is usually very little if any flexibility. Usually these properties attract all the attention and in many cases generate more than one offer.

  • Depending on condition, location, upgrades, etc. some homes will sell for more or less than comparable homes.

  • A CMA will be prepared for you advising you of recent market activity in the area.


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Negotiations

  • Who is representing you?

  • Under Buyer-Agency it is our duty and obligation to represent you – OUR CLIENT.

  • Our Goals and Objectives are

  • to get you the best possible

  • home at the best possible price

  • with the least amount of hassles.


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What is an Agency Relationship?

  • It is the relationship an agent has with his/her client/customer.

  • Sub-Agent works with the Buyer but for the Seller.

  • Buyer-Agent works with the Buyer and for the Buyer.

  • Dual-Agent works for neither the Seller nor the Buyer. This situation would arise when the Buyer and Seller Agent are the same real estate firm.

  • All prospective Buyers have the right to representation.

  • Agency Relationships must be disclosed to all parties involved.


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Waivers & Follow-Up

  • Once your conditions have been fulfilled they are removed from the offer via waiver and the deal becomes firm and binding.

  • We look after forwarding all

  • of the paper work to your

  • solicitor and mortgage

  • consultant.


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Checklist

  • Meet with mortgage consultant

  • Choose a lawyer

  • Arrange for moving company

  • Arrange for utility transfer/hookup+ house

  • insurance

  • Arrange for keys

  • Arrange for school enrollment

  • Change of address at post office


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Helpful Resources

  • Canadian Mortgage and Housing Corporation

  • Multiple Listing Service

  • The Canadian Real Estate Association

  • ICX - Commercial Listings across Canada

  • The International Real Estate Federation

  • Terra Nova Financial Services Inc.


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Thank You

  • Joanne Lozinski

  • Sales Consultant

  • RE/MAX Professionals Inc.

  • 905-270-8840


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