What is a pre-approval?

Mortgage pre-approvals are conducted by your bank, credit union or other lenders to determine your financial capability to carry a mortgage loan, and to give you an estimate of the amount of the loan they will approve. Not only does this help you narrow down your house-hunting search to find properties within your budget, but your lender can give you a good idea of what interest rate you can expect to pay as well. While a pre-approval can make your home-buying process run more smoothly, keep in mind that it doesn’t happen overnight; it’s a deep dive into your financial background and there’s a lot of paperwork involved. Let’s learn more about mortgage pre-approvals and why you should get started sooner than later.

Here are your top tips to better understand the process:

1. Gather up all your documents – Your lender will review your credit score, as well as ask for pay stubs, financial records, credit card bills, debt and asset lists, income tax information and more in order to determine if you are a safe financial bet.
2. Avoid ‘online’ mortgage pre-approvals – Make sure you connect with a real finance expert during this process.
3. Feel free to shop around for your mortgage – Mortgage lending is a competitive business, and you have every right to shop around to find a lender and/or rate that works best for you.
4. Get a written copy of your pre-approval letter – Although your pre-approval is not a legally binding document (it’s more of a guideline), make sure you get it in writing and don’t settle for a verbal agreement.
5. Read the fine print – There is a lot of legal, financial terminology in a pre-approval letter, so be sure you understand it all before going forward with your offers or purchases.
6. Start your house hunting – Just don’t forget to stay in your lane when it comes to looking at properties that fall into your budget as outlined in your pre-approval. If you go beyond that amount, you may find yourself without enough financing to close the deal.
7. Don’t waive the financing condition – Even with a pre-approval in hand, you can still ask for a financing condition when you put in your offer. While some people might feel fully confident in pushing the offer through without it – they do so at their own risk. Remember that the pre-approval is not binding, and your lender will need to appraise the home’s value and so they can certify there’s enough equity in case of a default on the mortgage.
8. Don’t change up any life events – At least between the time that you got your pre-approval and you are house-hunting, it’s not a good idea to change jobs, make a big purchase, take out a new credit card or loan…or anything else that can impact your finances, thus impacting your mortgage pre-approval. The lender may decide that you no longer meet their qualifications, and you could find yourself suddenly without a mortgage approval.
9. Make sure you understand all the details of your mortgage – Especially if you are a first-time home buyer, there’s a lot to know and understand about a mortgage. For example, you need to know about incentive programs, interest rates, fixed vs. variable mortgages, payment schedules, amortization, and so on.
10. Work with a real estate lawyer –Be sure to work with a reputable real estate lawyer, who will review all the necessary paperwork with you, including your mortgage documents.
    

Whether this is your first home purchase or your 12th, getting pre-approved is an important step you don’t want to miss out on. There’s nothing worse than seeing someone’s dream home or cottage purchase fall through because the financing wasn’t properly sorted out. Be sure to connect with Ares Law for all of your real estate transactions. As independent legal advisors, we’re the only ones in your home-buying process who are completely impartial. It’s our job to make sure you and your investment are protected. Call our Bracebridge office today to make an appointment at 705-645-8743. We’re here for you every step of the way.

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Here are 5 reasons why an inspection is an essential part of your home-buying process:

1. Safety & protection

Your home inspector will look for safety issues such as mold, mildew, carbon monoxide, asbestos, electrical problems, leaks, foundation issues and so on. If any worrisome issues are detected, you can then decide if you want to proceed with the purchase and begin repairs or renovations, or you can back out of the offer and continue with your search.

• Peace of mind

A home inspector looks at things that the average home-owner doesn’t know much about. For example, they will inspect the foundation, plumbing, electrical, insulation, furnace/AC units, ducts, eavestroughs, flooring and so on. In every area of the house both inside and out, they are trained to look at not just the general conditions, but also search for potential problems. They can also ascertain if something has been recently covered up or repaired, which can send off alarm bells for an undisclosed issue that can then be further investigated.

While a home inspector may not find every single issue with the home, particularly if it’s an advanced electrical issue, for example, their analysis is a great starting point for you to decide if the home is worth buying or not. If you don’t have the time or finances for big repairs, you can simply walk away from the deal! Alternately, if you get a glowing home inspection report, you’ll have the peace of mind knowing your home is in great shape.

• Negotiation leverage

If your home inspection reveals that repairs are needed, you can work with your Realtor to decide if you want to negotiate a lower price, or that the seller will conduct (and pay for) the repairs within a specified time.

• Education

Many new homeowners aren’t familiar with the basics of home construction or the various types of maintenance needed. The suggestions in your report will help educate you on ongoing and future issues, such as your attic insulation that may need raking and a top-up, window sill covers to protect against basement leaks, or knowing which kinds of tree roots can damage your foundation. Keeping your home in tip-top shape is the best way to protect your big investment, get top dollar when it comes time to sell, and most importantly, to keep you and your family safe.

• Insurance & legal issues

The condition of your home or cottage can impact your home insurance premiums, or whether or not you’ll be insured at all. If your property has features such as an oil tank, wood stove, or outdated wiring and plumbing, it’s a bigger risk to insure. Your home inspector can alert you to any concerns, and likely recommend upgrades or suggestions.

When it comes to buying a home, it’s important to do everything you can to learn all about it. While a home inspection takes a little more time and money during an already busy period, it’s worth it, in the end, to be fully informed and know the big picture. Be sure to select a reputable, certified and insured home inspector, and review your report carefully. At Ares Law, it’s our job to protect our clients by ensuring you are armed with all the facts and legalities regarding your property purchase. If you’re looking to purchase in Bracebridge, Huntsville, Gravenhurst and the greater Muskoka region, call us today at (705) 645-8743; you’re in good hands.

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The origins

Back in the mid-to-late 1800s, land surveyors for the Crown would lay out a 66-foot section of what’s called ‘road’ along the shores of rivers and lakes across much of cottage country. This was originally designed for commercial use to support logging and transportation industries (before railways and vehicles took over) and also for any waterway travellers or emergencies so boats and canoes could come safely to shore.

As cottaging became more popular in later years, owners essentially disregarded this legislation and built their cottages, docks and/or boathouses on this section of public ‘road’ without any implications. However, with the intensification of cottages in the past several decades as well as increased use of ATVs and snowmobiles on these public lands, concerns around shore road allowances surfaced.

Rights & public use

Currently, the majority of waterfront properties in our region still have this 66-foot shoreline allowance, but owners are allowed to build (or rebuild) docks and boathouses in this designated section as long as they meet municipal and other regulations.

Purchase or ‘road closure’ options

It’s actually possible in most areas to purchase your shore allowance, depending on environmental or other protections that may be in place. Further, it can’t negatively impact neighbours or deny access for nearby property owners. This purchase is often referred to as stopping up or ‘closing the road’, and local municipalities are happy to reap the lucrative financial benefits from the sale of these lands. You need to inquire with your local municipality to find out if the shore road is for sale, and then apply to purchase it. If approved, they will close the road and the shoreline will legally be yours. As with any property purchase, there are costs involved beyond the purchase price including new surveys, applications, legal fees and in some cases, an increase in property taxes.

This shore road allowance is just one of many reasons why it’s important to retain the services of a real estate lawyer for any Muskoka cottage purchase. It’s our job to do a title search to uncover any such allowances, find out if there are structures on the property that may be impacted, and what the legal implications may be. You may discover that you don’t actually own your boathouse or dock for example. Further, if purchasing your shore allowance is something you’re interested in pursuing, we’ll help you with the application process to ‘close’ the shore road. Simply connect with our experienced legal team at Ares Law today by calling 705-645-8743.

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Get pre-approved

Don’t assume you’ll get the same mortgage term or interest rate on your cottage that you have on your home. Lenders or banks may treat recreational or second properties differently than a primary home purchase. Also, pre-approvals are important to gain a solid grasp of the many expenses involved with cottage ownership so that you don’t find yourself in over your head financially.

Do a LOT of research

A cottage is much different than a home, especially if you’re only used to big city living or don’t have familiarity with this type of property ownership. For example, you’ll need to know about septic and sewage systems, winter access, shore allowances, docks, boathouses, and local by-laws governing the area. You’ll also need to find out what any additional fees and expenses may be, as well as the resale value and possible environmental protections to be aware of. 

Work with professionals

Don’t have a Realtor yet? Buying your first recreational property is no time to call on your second cousin Joey who’s new to the business. For example, you need to know the best time of year to buy, have a carefully-drafted purchase agreement and be confident that the best price has been negotiated.

Working with a pro team also includes your home inspector, contractor (if needed) and real estate law team; be sure to work with experienced, local experts with good references who know the specifics of cottage ownership and municipal regulations.

Renting it out?

It’s not always easy to get up to the cottage every weekend, so renting it out for part or most of the year can be a great financial opportunity. Don’t forget that you’ll have to claim those earnings as income on your tax return and secure additional insurance. To help with the cottage rental process, you can retain the services of a local maintenance or property management company. Here at Ares Law, we’re the local, experienced professionals you need for your dream cottage, condo or home purchase. Our specialty is real estate law in Bracebridge, Gravenhurst, Port Carling, Huntsville, and the surrounding Muskoka region. We’ll work closely with you to help your purchase run smoothly so that your dream Cottage becomes a reality. Call today to book your appointment at 705-645-8743; we look forward to working with you!

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Does a realtor have a responsibility to tell me everything about a house?

If a realtor has knowledge of an event or stigma associated with the house, such as a death or illegal substances grown in the home, for example, they must disclose the information. All real estate sales agents/realtors are governed under the Real Estate Council of Ontario (RECO) and are regulated by the Ontario Real Estate Association (OREA). With that governance, all realtors in Ontario have an ethical obligation to disclose the existence of stigmas concerning the home such as a murder, suicide, drug lab, brothel, death by natural causes or even paranormal activity. They are obligated to tell you the buyer before you put in your offer. However, in many instances, a realtor may not know the home’s history.

Is the seller required by law to share information?

Simply put, if a seller and their agent are asked a question about the property, they cannot give a false answer…it’s unethical. In fact, when listing their home, sellers complete a Seller Property Information Statement (SPIS) which details defects and concerns about the home, including any renovations, big repairs, and so on. They are trusted to complete this ‘to the best of their knowledge’. However, as of yet, there is no formal law in Ontario that states a seller must disclose information like a violent crime that has occurred on their property. Without an actual law in place, the responsibility rests on the buyer and realtor to ask as many questions as possible. The saying, ‘buyer beware’ really rings true and you’ll want to do as much research as you can on the property so you have peace of mind as the new owner.

What about grow-ops?

The police maintain a list of marijuana grow operations they have discovered in Ontario, but of course not all operations get discovered and documented. It is completely up to the seller to disclose if they knew their property was a grow op previously and report any existing defects that might have resulted from this past use. If it is shared with you that such activity has occurred on the property, you may ask for proof that the defect was fixed or will be fixed from the local health or building authorities. Again, if the buyer asks the question, the seller is obligated to answer truthfully.

Can the seller record my comments when I’m at an open house?

In more recent years, sellers have been known to set up hidden cameras and recording devices in various parts of their home. They want to hear what potential buyers are saying to be able to use that information to their benefit, by leveraging it when it comes to negotiations. The dark side to this is that if people touring the home talk about personal financial details, like how much they are willing to offer, that can allow sellers to use that to their advantage.

Canadian laws are fairly clear when it comes to privacy boundaries, but it has created a bit of a grey area in the real estate business. The legislation states that a person cannot intentionally record or listen to a private conversation using a range of devices. If a seller does use the conversations to their advantage and they are found out, the law says it can result in jail time.  

On the flip side, if a seller has disclosed they are recording the home visit or open house, it is completely legal. This is something that all potential buyers should be made aware of and be very cautious about in their conversations while touring homes. As a buyer, it’s best to save your impressions about the home for the privacy of your own vehicle or away from the property.

These are just a few factors to consider regarding disclosure issues when working with your realtor. Buying a home is a complicated process; there’s a lot to know and understand. For that reason, it’s advisable to work with an experienced real estate lawyer to make sure everything is valid, thoroughly researched and above board. At Ares Law, we specialize in helping clients in Bracebridge, Huntsville, Gravenhurst and the greater Muskoka region to ensure their property purchase runs smoothly and all legal bases are covered. Connect with us today at (705) 645–8743 and see how we can help.

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